Money is the last thing you would want to trust Mark Zuckerberg with, but this didn’t deter him from announcing his foray into the world of cryptocurrency via Libra. I wonder if the fact that more billionaires are Librans than any other single zodiac sign- made him choose this name. Irrespective of the origin, Libra is aimed earning profits from people who do not have access to bank accounts, or as Facebook had put it more diplomatically: “For anyone with a smartphone, it should be as easy to send money as it is to send a photo.”
Libra is indeed a blockchain- but without the block or the chain. This implies that although it does use blockchain as underlying technology, the two part ways thereafter. Since Libra isn’t using blocks for transactions, experts question if it is even a blockchain! Whatever maybe the case- this new model threatens to change the landscape of how we transact today. Here is what you can expect to happen once the big launch in your specific country is made:
How will I get Libra?
Facebook isn’t going into many details regarding how the currency will be made available at launch, yet signs point to a blended approach. The presence of payment firms, such as Visa and MasterCard, suggests that they will let users simply buy the currency. Highly likely that Facebook will carry out what’s known in cryptocurrency circles as an air drop– meaning to give out small amounts of currency for free in an effort to kick start the ecosystem. Ultimately, people will need a more reliable source of Libra income rather than handouts directly from Facebook. In the long term, we can also expect some of Libra’s founder members to offer their employees all or part of their compensation in the currency.
What can I buy with it?
Libra will resemble cash that lives inside your phone. You’ll be able to spend it while shopping online, or potentially paying for things like Uber or your subscription for Spotify. These companies, and many more, have partnered with Facebook to make Libra popular. Since it will be free to digitally move Libra from one account to the other, you won’t have to pay processing fees for sending/receiving money from anywhere in the world. Eventually, Facebook hopes that you’ll use Libra to pay your bills, scan your wallet’s QR code to purchase coffee or tap your phone to buy your public transport tickets. At any time, you can cash out of Libra and get your local currency back in your bank account or handed over to you at a neighborhood supermarket.
Do I need to know more?
To keep and exchange Libra, you must have a digital wallet. Apart from the proposed Facebook-owned Calibra app, the current plan is to let third-party developers make their own wallets too. Each time you cash in your local currency to buy Libra via any of these wallets, that money goes into a big bank account called Libra Reserve that creates and sends you roughly one Libra token. Unlike Bitcoin, Libra’s value is tied to government-issued currency like the dollar or pound. That’s one of the several ways how owners are trying to curb uncertainties of Bitcoin world. This isn’t a coin that you buy because you think it will grow 100 times as valuable; rather it’s more like exchanging a dollar for a Euro.
In spite of facing backlash from multiple governments, this project has the potential to form the basis of a more global and inclusive financial infrastructure. However, imagine Facebook throwing adverts at you based on account balance or selling your buying history to a retailer. I wonder if Mark Zuckerberg’s standard sorry would suffice for such cases too.