Facebook has officially announced its first electronic currency named Libra. Facebook its own digital currency, “Libra”, towards a cheap and usable global payment method on smart devices. Libra will be officially launched next year and there are about 25 Facebook partners supporting, including non-profit organizations, financial service providers and e-commerce companies.
The Libra digital currency can also be used in Facebook’s Calibra e-wallet and other services. According to Quartz news, Libra is one of the most kept secrets in the history of digital money. Facebook’s Libra will link with many other major currencies like the dollar, and possibly the euro.
In theory, the new currency when in operation will help cross-border money transfer, as well as online payment, will cost less and also more convenient. Facebook’s partners said in the first half of next year they will shake hands with social networking company Facebook to build a Libra digital ecosystem.
It is expected that by 2020, this electronic currency will be officially traded. However, right now, the number of financial institutions supporting Facebook’s electronic currency has been huge. Supporting financial institutions include Mastercard, Visa or PayPal online payment platforms. Famous technology companies such as Uber, Lift or Spotify music.
Why does Facebook develop Libra coin?
Libra is described to make it easier for social network users to trade and exchange money with each other. In addition to simple methods such as regular messaging, transactions are also encrypted, ensuring high-security thanks to Blockchain technology. However, users do not need bank accounts like regular financial services.
To manage virtual currency Libra, Facebook also launched its own e-wallet service called Calibra. The world’s most popular social network confirms that it will not share any personal financial data with banks and third parties. This e-wallet is used to ensure safety and avoid risks for users.
Facebook is currently the world’s most-used social networking platform with more than 2.3 billion accounts, more than the population of any country in the world.
Facebook’s encrypted currency will be used on social networks, Messenger and WhatsApp messaging apps from 2020.
What is Libra coin?
Using blockchain, the Libra community must not “dig” like Bitcoin, but must ensure by real assets – the same mechanism that central banks issue paper money.
Unlike other virtual currencies that are also based on the Blockchain, Libra is not created by “digging” which is issued based on a real amount of collateral. Simply put, this digital currency is created in the same way that central banks around the world issue paper money.
Advantage of Libra coin.
Described as global financial-monetary infrastructure, Libra is affirmed by Facebook’s leader “not created for the purpose of replacing major central banks”. However, this currency is evaluated by analysts to create a global seismic in the financial industry.
With more than 2.4 billion Facebook users every month, Libra has the ability to change the face of the financial market, according to The Guardian. Bloomberg in the recent article said that if successful, Libra could turn Facebook into a ‘big player’ in the financial industry.
Compared to the rest of the money market built on blockchain technology, Libra has two distinct characteristics: how to manage and operate.
In the newly published White Paper, Facebook claims Libra is a “stable currency”, due to its value attached to real assets. Basically, there is only one way to increase the number of circulating Libra users who use other currencies, such as the US dollar, euro, yuan or yen to buy Libra and this amount is considered “property.” guarantee “the amount of Libra this person owns.
“Facebook introduced Libra at the moment as a turning point for the company’s operations and the money market,” said Mark Mahaney, an analyst at RBC Capital Markets. “In terms of size and importance, we believe this new financial platform may be similar to the time Apple introduced the IOS operating system for developers more than a decade ago.”
The amount of Libra collateral will be placed in banks or invested in low-risk lucrative assets, such as US government bonds, but the profits are not distributed to Libra owners. used for the operation of this currency management organization, such as funding for research activities or social activities.
This pre-system is also managed by an organization called Libra Association – an independent, non-profit organization based in Geneva, Switzerland. The organization has two main functions: authenticating transactions using Blockchain Libra and managing Libra volumes related to social purposes.
How does Libra coin work?
Companies that contribute at least $ 10 million are considered to be founding members of Libra Association, and there are now 27 technology companies that claim to be partners with Facebook, including some big names like Paypal, eBay, Spotify, Uber, Lyft, Visa, Mastercard …
Facebook may face many barriers if it is to bring Libra to consumers in early 2020.
However, with the influence of social networks of 2.4 billion users, Facebook may face many barriers before bringing Libra to consumers.
According to Bloomberg, the new announcement from Facebook immediately faced opposition in Europe, with a call to adopt stricter regulations.
French Finance Minister Bruno Le Maire said Libra should not be considered a replacement for traditional currencies. At the same time, the head of the French financial agency called on the group of 7 central bank governors to prepare to report on this project right in the July meeting.
“Libra has undoubtedly become a legal currency,” Le Maire said in an interview with Europe 1. “This is an impossible and impossible problem.”
Controversy about Libra coin.
In the context that Facebook is suffering from numerous criticisms of privacy violations, the new move in the financial sector also draws attention from regulators and privacy advocates worldwide. gender. According to The Guardian, the US and UK authorities have expressed concern about the plan to encroach on Facebook’s financial sector.
In May, members of the US Senate Committee on Banking, Housing and Urban Issues wrote to Facebook CEO Mark Zuckerberg asking for questions regarding privacy and regulations. finance.
“It is important to understand how large social platforms use data available in ways that affect the financial lives of consumers,” the content of the letter is written. “More importantly, understand how large social platforms use financial data to profile and select target customers.”
Immediately after Facebook’s announcement, Senator and Chairman of the House of Commons Financial Services Committee, Maxine Waters, called on the social network to stop the Libra project until Congress and managers considered it. She also called on Facebook CEO to testify before the committee.
“Facebook has data on billions of users and has repeatedly shown disdain for protecting and carefully using this data source,” Waters said in a statement. “With the recent announcement of a plan to create an electronic currency, Facebook is continuing to expand its control and access to users’ lives.”
Libra coin impacts on the digital money market.
In 24 hours when Facebook announced Libra, Bitcoin’s money prices caused previous left-hand emotions in the digital money market. On June 18, the Bitcoin price increased to 9,477 USD, an increase in the dream after 1 year of devaluation.
With this increase, anyone who owns this currency immediately sees its asset value increase by 150% since the beginning of the year.
However, on the morning of June 19, the price of Bitcoin turned down to USD 9,141, losing USD 157. A series of other currencies such as Ethereum, Ripple, Litecoin, etc. also peaked at the same price as Bitcoin but also dropped prices.
The cause of the volatile market precursor because Facebook previously announced that it will launch its own money, called Libra, boosted the prices of existing currencies.
But when Facebook officially launched electronic money and entered the money market, it brought a concern to other money investors, creating a negative reaction to pushing prices down.
The power of Facebook has made this possible. With billions of users, Facebook has created a large ecosystem and Facebook’s libra currency is easily accepted by a large number of people.
The Libra currency is also run on the blockchain with 100 servers supporting it.
Experts said that once Facebook stepped into the money market, on the one hand, brought positive signals but on the other hand raised concerns about the top position of Bitcoin being shaken.
Facebook’s Libra is expected to be used by billions of people and is also monitored by a group of reputable companies including Mastercard, Visa, Uber, and Spotify.