Silicon Valley social media giant, Facebook is set to disrupt the digital currency landscape by launching its own cryptocurrency called Libra in 2020. According to Facebook, Libra is intended to provide financial services to billions of people around the world who do not have access to traditional banking. Facebook, through its new subsidiary Calibra wants to bring banking services to the billions of people who use their platform.
The co-founder and CEO of Facebook, Mark Zuckerberg in a post stated that, Calibra will roll out their digital wallet app which will integrate into WhatsApp and Facebook. They will subsequently branch out into other services. He added that, Libra will collaborate with other financial and investment partners and will not be solely a ‘Facebook only’ project.
According to their white paper, the problem that necessitated Libra was the large swaths of the world’s population who are still left behind. About 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have mobile phones and nearly half a billion have internet access. Other problems include exorbitant fees from remittances and wire costs to overdraft and ATM charges. In the light of the aforementioned problems, Libra is creating a solution for an inclusive financial system built on the following:
- Secure, scalable, and reliable blockchain
- Backed by a reserve of assets designed to give it intrinsic value
- Governed by the independent Libra Association tasked with evolving the ecosystem.
Libra will see the day of light by virtue of global partners who are dedicated to providing diverse forms of support to ensure optimum delivery of the digital wallet. These partners range from academic institutions, non-profit organisations, telecommunication companies, payment systems, tech and blockchain firms and venture capital companies. The work of the Libra Association who forms the founding members will also evolve in leading social impact grant to support financial inclusion across the globe. The Libra Association is the governing body that oversees the operations of Libra and other roles. This headquarters of the body is in Geneva, Switzerland. This is because it has a history of global neutrality and openness to blockchain technology.
How Libra Works
Libra is essentially a mobile app that allows users send and receive the digital currency. The digital wallet will be available on Facebook Messenger and WhatsApp as well as a stand-alone iOS or Android app. It will run on Facebook’s own version of blockchain technology. The value of Libra will be backed by financial reserve to make it less volatile and more stable. The app will also have very low transaction fees. The new subsidiary, Calibra will handle the transactions on Libra.
Facebook has a past of scandals concerning users’ data as a result of breach of privacy. In the light of its recent bid to launch Libra, there has been serious concerns about the use of their financial data. According to Facebook, the financial information will be handled separately from the network data. This is because will not have full control of Libra as it is one of the founding members of the Libra Association mentioned early on.
What’s Next For Libra?
In a nutshell, the Libra Association will continue to research to help develop the blockchain to be more robust. The Association will also identify social impact partners aligned with our joint mission and will work with them to establish a Social Impact Advisory Board and a social impact program.