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Facebook Makes An Ambitious Move Into Blockchain With Libra Coin

Facebook Makes An Ambitious Move Into Blockchain With Libra Coin

Disha Misal

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With more than 2000 cryptocurrencies worldwide today, there has been an increase in the number of currencies each year. According to a survey based on quarterly figures for the years 2016-2019, the number of blockchain currency users has increased from less than 6.7 million in 2016 to over 34.6 million in 2019. This increase involves a constant increase in cryptocurrencies each year.

With the growing rise of the crypto market, big companies are trying to make their entry in the world of cryptocurrency. Setting a foot in the industry, the social media giant Facebook announced that it is soon to launch its own cryptocurrency named as Libra.

Project Libra

Facebook had been planning to set its foot in the crypto market since about a year and has now announced that it will finally launch the open-source digital currency called Libra. This currency will be managed by an association of tech and finance companies, some of which include Visa, MasterCard, PayPal and venture capital firms like Andreessen Horowitz and Union Square Ventures. The currency is expected to have as many as 100 partners onboard by the time it is launched. Libra is based in Geneva, Switzerland and was chosen for its neutral status and strong support for the blockchain.

This currency is going to be for the users of Facebook and accessible through Facebook’s p[latforms of Facebook Messenger and the social media giants Instagram that Facebook owns. Users will be able to exchange money and even shop on its platforms of Messenger and Instagram. Libra can be purchased from a set of local exchange points set by Facebook, which can be spent using other wallet apps. The users will be able to issue as well as destroy the currency once redeemed. Moreover, they will also expand into other platforms such as Uber, Spotify and MasterCard. This will also provide the social media giant with a platform to advertise and e-commerce.

Facebook Libra’s initial partners. Image source: Fortune

The currency is very similar to other popular cryptocurrencies like Bitcoin and Etherium in terms of creating secure transaction records. But it differs from these cryptocurrencies in some ways. One of which is that the value of Libra, unlike that of Bitcoin, is more stable. Also, although both the Libra and Bitcoin are open source, Bitcoin allows anyone to build on it. Whereas Libra will need people to have permission from Facebook and its partners to build on it, allowing only the foundation members to run a node.

Digital Wallet Calibra

Image source: Facebook

The design of Calibra has a three wave symbol which will represent Libra’s sign of a dollar and is expected to launch in 2020.

Along with Libra, Facebook also announced a new digital wallet called Calibra with a goal to provide financial services to people using Libra. This wallet will be operated by Facebook as a separate subsidiary to Libra and will be built into WhatsApp, Messenger and Facebook. Calibra will display the value of Libra in the local currency of its user. It also has plans to expand to additional services like paying bills, buying a cup of coffee or riding a local public transit without the need of cash

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To Trust Or Not To Trust

Cryptocurrency has always been about trust. Many experts have expressed their concerns about the wallet. Considering Facebook’s previous privacy episodes, is the new Libra currency trustworthy at all?

Democratic Rep. Maxine Waters, chair of the House Financial Services Committee, requested that Facebook pause its development of Libra for its privacy issues. Given Facebook’s privacy scandals in the past, she requested Facebook to agree to a moratorium on any movement forward, on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.

Privacy concerns surrounding Libra are very natural considering Facebook being its owner. But Facebook is making sure that it has control of the cryptocurrency over it. Plus, Calibra wallet will make sure that it does not share the user account data with other platforms without the user’s permission. Libra may be stored in other digital wallet apps which perhaps have greater privacy. This ensures that Facebook will not be using user data to improve ad targeting on the Facebook family of products. According to Facebook, Calibra will use Facebook data to abide by the law, secure customers’ accounts, mitigate risk and prevent criminal activity.

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