Imagine sending money in just a few clicks from your phone with less to zero cost. Or, Imagine paying purchased groceries, clothes, or even a cup of coffee by scanning the code through your smartphone. That would be pretty fast, convenient, and easy for everyone, right? With only your smartphone and a good Internet connection, you now have an online wallet that you can carry and transact anywhere you go.
That is what social media giant Facebook aims to achieve with Libra.
What is Libra?
Facebook made headlines in June this year as they have announced their plans of offering digital financial services through Calibra beginning next year. It is a subsidiary of Facebook that lets people access and engage in the Libra network. It also announced the utilization of its new cryptocurrency named Libra.
Libra is a digital currency that is powered through a permissioned blockchain technology. It enables users to exchange fiat currency into digital currencies and use them to make online purchases and transactions. Users can spend Libra coins through supported third-party applications or Facebook’s own Calibra Wallet, which will be integrated into Facebook Messenger, WhatsApp, and other connecting apps.
Though having the same concept with Bitcoin, the difference lies in its volatility as Libra is more stable compared to Bitcoin. Aimed to become a stablecoin, Libra is backed up by a reserve of real assets. This will provide full asset backing before Libra will be launched. The basket of currencies and real assets will be held and secured in the Libra Reserve. Among the government-issued currencies that will be held in the reserve are US Dollars, European Euro, Singaporean Dollars, Japanese Yen, and more.
Facebook does not completely control Libra. It is owned by the Libra Association, a Swiss-based nonprofit organization that validates the Libra blockchain and manages the Libra reserve. These 28 member companies work together to put the Libra Association’s mission to act and to finalize the Libra Charter. Besides Facebook, these companies include Visa, Uber, Lyft, Spotify, and many others.
Though it aims to launch next year, Libra will possibly be open for membership after five years once the Association finalizes it.
Since Libra is powered by a permissioned blockchain technology, all of the purchases and transactions will be recorded on blockchains, which is a software ledger, that confirms each transfer. Furthermore, it will be managed by the 28 founding members (validators) of the Libra Association. Since the founding members are the only validators of the network, less network traffic will happen. Consequently, it will increase transaction performance and guarantee lower transaction fees.
Cryptocurrencies like Bitcoins and Ethereum have long been in the global community for quite some time. However, only a few of the global population have known and embraced them. But with the powerful influence brought by Facebook, the use of Libra coins may be widely and easily accepted by people. Thus, the future of Libra coins is interestingly worth paying attention to.