Facebook Libra: Everything to know about the cryptocurrency

Facebook Libra: Everything to know about the cryptocurrency

To boost adoption and to become a “global currency,” Libra became a stablecoin. Libra is going to be a stablecoin which is backed by the Libra Reserve, which is a reserve of real assets. A blockchain is a series of blocks that contain time-stamped data and each block is linked to the other cryptographically. Miners in Bitcoin and Ethereum bunch up transaction data and put them in the blocks and adds them to the blockchain via the proof-of-work consensus mechanism. If Facebook can convince a vast majority of their users to use Libra, they will be able to convince their friends and family to follow suit automatically and start using Libra, in other words, move from (A, A) to (B, B).

If you are into cryptocurrencies, chances are that your timeline and newsfeed has been flooded with news about Facebook’s Libra aka GlobalCoin.

For the rest of us, there will still be advantages to Libra, especially incentives to use it instead of a credit card. Other founding members of the association include Uber and Lyft, eBay, and Spotify. These companies will all be eager to let you pay in Libra—and they might offer discounts if you do. You can’t use PayPal or Venmo to solve this; both of those require a bank account.

The Libra Association is a consortium of companies and nonprofits from around the world based in Geneva, Switzerland. It has 28 founding members — including payments, technology, telecommunications, venture capital and blockchain companies, as well as nonprofit organizations. Members include Paypal, Lyft, Coinbase and Mercy Corps, among others. The network is built with open-source code, meaning any developer will be able to create a digital wallet or other tool to use Libra on top of the network.

Cryptocurrencies can make it easy to send money directly to someone. Some cryptocurrencies, notably bitcoin, have a cap on the number of coins that can be minted, meaning that owners of existing coins don't have to worry about the arbitrary creation of new ones.

If Facebook’s 2.5 billion users adopt Libra, to pay for things and send money to each other, Facebook could disrupt banks, governments and everyone that’s involved the money business. In ancient Rome, Libra was a unit of weight, equivalent to 12 ounces. On Tuesday, Facebook unveiled it’s own a unit of money, Libra, a digital currency pegged to a basket of major currencies. Libra will start as a permissioned blockchain, with the Libra Association taking care of the overall network well-being.

Libra will make these transactions cheaper than other non-bank options. You don’t need to know this next part, but it has some consequences that we’ll explain later. On the backend, Libra handles transactions with a blockchain, kind of like Bitcoin. That’s one of several ways that Libra will try to avoid the weird, scammy, gambling vibe of Bitcoin and other cryptocurrencies.

On the other, the weight of regulation and capital controls in exactly these underbanked countries tells me that Bitcoin will survive. Because of the fact that Bitcoin is the oldest cryptocurrency and is decentralized, traders adopted it as a digital gold to store value in cold wallets.

Last summer company executives participated in a pair of congressional hearings before the Senate Banking Committee and the House Financial Services Committee. Zuckerberg is expected to defend the cryptocurrency project in a hearing before the House Financial Services Committee. This is important because the bank holdings of Libra will generate interest that can be used to pay back the cryptocurrency’s initial investors.

There are now more than 1500 different cryptocurrencies, all created in less than 5 years. And Facebook makes money by helping advertisers target you, so Libra is a money play that helps it collect more data about purchasing. Any time a big tech company has a shiny new product to offer you, ask yourself how they’ll make their money back.

Within the Libra Association will be a governing body called the Libra Association Council, comprised of a representative of each member of the association, which will vote on policy and operating decisions. Libra and the technologies to use it will be built upon a blockchain platform called the Libra Network. When it comes to digital assets, ICOs, STOs, IEOs, a lot of the new projects are coming up right now, trying to capture the money.

In the long-term, then, we can also expect some of Libra’s founder members to offer their employees all or part of their pay in the currency. Facebook isn’t going into details about how the currency will be available at launch, but signs point to a hybrid approach. The presence of traditional payments firms, such as Visa and MasterCard, in the list of founders suggests that the company will be perfectly happy to let users simply buy the currency. The company is likely to run into regulatory hurdles and antitrust concerns, especially at a time when many regulators want to break up Facebook, but no specific legislation has been put forth ahead of the launch.

You may never have the chance to make this kind of money this easily, ever again. There are lots of tiny digital currencies that can generate higher gains more than bitcoin and the rest which people can invest in and cash out big. If it tanks and no one uses it, the Libra Association still has reserve money, so if there’s a “bank run”—if all the users withdraw their money at once—the Association is good for it. There’s always some risk, but it’s nowhere near as risky as Bitcoin, where the price wildly fluctuates.

After a fantastic 2017, Ripple could just be the best cryptocurrency to invest in 2019. There are other cryptocurrencies that have entered the space, such as Ethereum, Litecoin, and Ripple. All of these have performed incredibly well over the last year and are the best cryptocurrency to invest in. Google has also been combining big data and search algorithms to make information from large blockchains, such as Bitcoin and Ethereum, publicly available to users.

The founding partners of the Libra Association, which will oversee the design and release of the currency. It is currently backed by Facebook and more than two dozen Founding Member companies, including Ebay, Uber, Lyft, Spotify, Visa, Mastercard, PayPal, Coinbase and venture capital firm Andreessen Horowitz. Unlike other cryptocurrencies, Libra will be backed by "real" government-backed assets from central banks to give it stability.

The concerns reached a crescendo on Wednesday, when a key US committee laid into CEOMark Zuckerberg, using Libra as evidence of what they saw as the company's cavalier attitude toward everything from data breaches to misleading political ads. By signing up, you agree to our Privacy Notice and European users agree to the data transfer policy. A less charitable read on Zuck’s response could also be that if converting Libras into dollars is difficult, people will be forced to spend money — and advertise their goods— on Facebook since it’ll be too hard to do so anywhere else. “When you came up with this idea and went to your board of directors, how did you tell them that Facebook could monetize or profit from the creation or use of Libra and Calibra?

Meanwhile, Libra users will simply transact using the currency tokens, perhaps gaining—or losing—ever so slightly because of periodic adjustments to the basket of reserves. Libra will be sustained through a small charge per transaction on the blockchain, Facebook said. Many of these charges will be transferred to vendors who can then absorb the costs themselves or relay them to users. Ultimately, of course, those users will need a more reliable source of Libra income than simple handouts from Facebook.