Facebook launches digital currency Libra

18 Jun 2019
Financial Nigeria


Facebook aims to have Libra as a stable digital currency built on a secure and open-source blockchain, backed by a reserve of real financial assets, and governed by an independent association.

Mark Zuckerberg, Founder and CEO, Facebook

Facebook has unveiled its much-anticipated cryptocurrency, called Libra. The digital currency will enable a simple global currency and financial infrastructure that empowers billions of people, according to the Libra White Paper released by the social media giant on Tuesday.  

Facebook said there are about 1.7 billion adults who are financially excluded in the world, and Libra will help to connect the world in a unified financial ecosystem. The currency, which will be launched in the first half of 2020, will expand global financial inclusion, effectively making Facebook a financial technology (fintech) company.

Overseeing Libra will be Libra Association, a not-for-profit governing body that includes founding members such as Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa, Vodafone Group, Iliad, Anchorage, Bison Trails, Coinbase, Xapo Holdings, eBay, Lyft, Spotify, Uber, Farfetch, Bookings, Calibra, MercadoPago, Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Venture, Creative Destruction Lab, Kiva, Mercy Corps and Women’s World Banking.      

The association, according to the paper, will coordinate and provide the framework for governance for the network and reserve, and lead a social impact grant-making in support of financial inclusion. The asssociation is expected to have 100 members by 2020. There are reports that each member of the association paid $10 million to join the Libra blockchain, a Facebook-created version of blockchain.

Facebook said it will also launch Calibra, the Libra digital wallet, to allow users to send money to and from each other. Calibra will be available in Messenger, WhatsApp, and as a standalone app.

Unlike other digital currencies, Libra coin will be backed by a reserve of real and existing financial assets and supported by a competitive network of exchanges buying and selling Libra. This means anyone with Libra can convert it into a local fiat currency based on an exchange rate. The White Paper notes that this approach is similar to how other currencies were introduced in the past: to instil trust and help the currency gain widespread adoption.

With this network of support and the over a two billion users within Facebook’s social network service, Libra could become the most widely used digital currency when it’s launched in 2020. Libra will be used for peer-to-peer payments, commerce, in-app purchases and gaming.

The world truly needs a reliable digital currency and infrastructure that together can deliver on the promise of ‘the internet of money’”, the Libra White Paper said.

Since 2014, there have been indications of Facebook’s interest in cryptocurrency and mobile payment. Notably, the employment of former PayPal’s President and advisor to Coinbase, David Marcus, as Vice President of Messaging Products as Facebook. He will now be leading the Calibra team. In 2018, Facebook also launched WhatsApp Pay in India and, earlier this May, registered Libra Networks in Geneva, Switzerland, one of the most-friendly regulatory environments for cryptocurrency projects.

Facebook aims to have Libra as a stable currency built on a secure and stable open-source blockchain, backed by a reserve of real financial assets, and governed by an independent association.

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