Libra, Facebook's new cryptocurrency: understand the pros and cons

Libra, Facebook’s new cryptocurrency: understand the pros and cons

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Facebook, the world’s largest social network, plans to launch Libra in 2020, its own cryptocurrency with which any user can make purchases and send money. Know the pros and cons of the initiative.

  • How does Libra work?

  • Advantages of Libra

  • Disadvantages of Libra

Living in a turbulent time, with data privacy and political influence scandals, Facebook recently announced its plan to create its own cryptocurrency, the Lb. With the launch scheduled for 2020, the virtual currency will have use released beyond the platforms of the company of Mark Zuckerberg and will have the seal of major banks and companies from other sectors.

How does Libra work?

Libra is a cryptocurrency based on blockchain technology, a system that guarantees almost absolute security. This virtual currency will allow any type of transaction to be made through the Libra Network platform, in which stores and establishments of any size will be able to register.

Facebook is in charge of developing the entire infrastructure of Libra. However, currency management will be in the hands of Libra Association, an independent institution formed by several companies – among them Paypal, Mastercard and Visa – and non-governmental organizations from different countries.

To use Libra, users must create a Calibra Wallet, virtual wallet that Facebook will make available to anyone and will be connected in real time with WhatsApp and Messenger, both services of the company.

Advantages of Libra

According to information from Facebook, one of the main advantages of Libra will be its velocity when making payments, as it will be faster than Bitcoin and other virtual currencies. In addition, its creators ensure that its use will be safe, easy and comfortable and, therefore, it could become a reference in the sector.

Among the points in favor of Libra is also the expectation that its value will be more stable that Bitcoin, the most popular cryptocurrency in the world which, like other electronic currencies, is constantly exposed to high volatility, with major changes in value over short periods of time.

Finally, Facebook guarantees that Libra will enable users to make purchases online or send money for a lower cost, sometimes free, when compared to that charged by traditional banks.

Disadvantages of Libra

Although it is a secure cryptocurrency, its stability it will depend on the companies and organizations that make up the Libra Association, whose power and leeway to influence the direction of the currency are greatly reduced in relation to a country’s central bank.

Another aspect that awakens distrust in the user community is that Facebook could access and use private data of Libra users. Mark Zuckerberg’s company has more than once guaranteed that it will not share the information of anyone who has a Calibra Wallet. However, the latest controversies involving the social network point out that Facebook has not always told the truth about the way in which it has the data of its 2.4 billion users.

Another thorny issue related to Libra is the legal part. As it is a cryptocurrency that is beyond the control of central banks, some countries could approve laws that limit or prohibit the use of virtual currency, as has already happened with other similar experiences.

For example, the president of the Central Bank of the United States, Jerome Powell, has already been concerned about the possibility of Libra facilitating illegal activities such as drug and arms trafficking, which could be a reason for nations to impose currency barriers.

Photo: © Dmitry Demidko – Unsplash.

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