A New Era of Cryptocurrency
acebook Inc., officially announced its new virtual currency named “Libra”; a blockchain-based cryptocurrency that will focus on offering secure money transfer services over the Internet from 2020. According to the announcement made by the company, it plans to turn Libra into a common currency alternative; “the technology on which it will be based will be of the open-source type so that businesses and developers around the world will be able to manufacture services to the media that meet their needs”.
Its value would be associated with that of a real currency, so that its value cannot vary as much in just hours, as it happens with Bitcoin and other cryptocurrencies.
Libra will target the 1.7 billion people who do not have a bank account as Facebook’s CEO Mark Zuckerberg said; “Almost half of the world’s adults do not have an active bank account, and those figures are worse in developing countries and even worse for women. The cost of that exclusion is high; for example, about 70 percent of small businesses in developing countries lack access to credit, and migrants lose $25 billion each year through remittance fees”.
Zuckerberg also announced that they already have the support of 28 financial institutions, applications, and services including Visa, Mastercard, Uber, PayPal. It is estimated that each invested about 10 million dollars in the development of “Libra” which will give them the privilege of being part of the institution that will control the currency, Libra Association, as it will not be Facebook who will directly control the currency.
Calibra: Facebook’s portfolio of crypto coins
The arrival of the new virtual currency also presents a wallet, which Facebook ahs called “Calibra” and will be monitored by Libra Association which will be a subsidiary of Facebook.
The service will be available in both Messenger and WhatsApp and aims in the near future to offer additional financial services to users.
Because Facebook has previously faced controversy over the use of data, they have mentioned that their payment system will have strong protection using the same verification and anti-fraud processes that banks and credit cards use to keep money and personal information safe. Also, the affiliate will keep financial and social data strictly separate and users “will not be identified with ads based on their spending habits”.
Reactions to the new currency
Although its use is not yet official, France has already made a pronouncement on it. The French Minister of Finance, Bruno Le Marie, stated that guarantees are needed on the use of these so that they are not misused “for example for the financing of terrorism or illicit activities”.
The U.S. Senate Banking Committee mentioned that next month they will be holding a hearing to explore the bill and other data privacy considerations they may raise. While the vice-president of the European Central Bank, Luis de Guindos, mentions that it is still early and “we must know what he wants to do and what is going to happen and how they plan to land, but it is logical that in a while we will sit down with them to talk”.
Zuckerberg said in his Facebook account that with the development of “Libra” they aspire to create a simple global financial infrastructure that empowers its users: “this is the beginning of an exciting journey and I’m looking forward to sharing more soon”.