What is Facebook's virtual currency, what technology is it developed, what is its security?
According to the new official information shared by Facebook CEO Mark Zuckerberg, Facebook's virtual currency will be named Libra. This currency is run by an association of investment businesses and non-profit members. The currency is expected to be released in the first half of 2020. So what is Facebook's release of Libra and what makes it different from virtual currencies using today's blockchain?
What is Libra?
Reuters said Libra is a digital currency supported by real-world asset reserves, including short-term bank deposits and securities and held by a monitoring network. This structure aims to promote trust and stabilize prices.
Libra is a digital currency that is backed by real-world asset reserves
Although the Libra price may not always suit basic assets, the owner has a "high degree of assurance" that they can convert Libra into traditional money based on the exchange rate. This currency is being supported by investment from large payment companies like Mastercard, Visa and PayPal, as well as technology giants include Uber and Spotify.
Libra will not be "mining" or "digging money" as virtual currencies based on the current blockchain, but it will be based on the very basic mechanism of issuing money, the foundation of every fine paper currency today. (Fiat Money). The Libra will be issued based on "security assets".
There will be no increase or decrease in chaotic value as well as the risk of money being manipulated by the "money". This will be the most stable virtual currency in terms of value. For every released Libra currency, an equivalent asset value used to guarantee the value will be put into a central bank account for bail.
What is Libra's purpose?
Basically, Facebook wants to make money transfers around the world as easy as sending text messages.
The company has released the White Book to explain in detail. They do not consider virtual money an attempt to replace the current financial system, as Bitcoin's goal. Instead, they intend to expand an electronic payment method for a certain population of people without access to traditional financial services.
Around the world, nearly 2 billion people still cannot access the traditional banking and financial system, although 1 billion of them have mobile phones and half a billion have access to the internet. Libra was born for the purpose of filling that void.
Mark Zuckerberg in his new virtual currency sharing article said: "Everything is built on blockchain technology. The system is decentralized – meaning it is run by many different organizations instead of just one, thereby making the system more fair. This system is available for anyone with an internet connection and is low cost. The system is also secured by a password to help your money secure.
Reuters said the software will be open source, meaning companies outside the Libra association can build applications on this platform.
Libra is not only controlled by Facebook
Facebook has established an independent "Libra Association" to govern currency. Facebook / Calibra is one of 28 "founding members" along with payment companies including MasterCard, Uber and Andreessen Horowitz. These companies must pay at least 10 million USD to participate.
Libra will be accessible via Facebook Messenger, WhatsApp and a standalone application
Facebook says the e-wallet Libra will help users store electronic money, accessible via Messenger, WhatsApp and the app called Calibra. Facebook says users can download these apps through the App Store and Google Play store.
The picture above comes from a Facebook press release showing Libra's interface. Of course, in the future, they will become a fully functional consumer service.
Individuals and companies can use Calibra e-wallets to store, send and receive virtual Libra money. Facebook wants Calibra user accounts for transactions across its entire app, such as making payments on Instagram.
Libra is not only used for money transfer, but also for payment
So far, Facebook has only boasted about Libra's ability to transfer money. However, this virtual money will not only be for personal money transfers. The Calibra website said the first version of the app would "support peer payment and some other ways to pay as a QR code to accept payments with Libra."
Over time, Libra will support in-store payments, integrated into point of sale systems, etc. Currently, sales systems often still use cash or card readers.
Facebook's vicechain for product blockchain – Kevin Weil told reporters of technology site Business Insider, in the future, Libra can be integrated into Calibra's partners' systems like Uber. .
How is this different from credit card?
One of Libra's goals is to serve people who do not currently have access to traditional financial and banking tools. Currently virtual money can be used as credit cards to buy goods online.
But theoretically Libra will go far beyond that. Consumers will be able to buy currency and use it in virtual money service systems.
Transaction fees will also be lower than traditional forms of payment.
About privacy and security
On this very interesting issue, Mark Zuckerberg asserts: Privacy and safety will be built into every step. For example, Calibra will have a team of risk management experts focused on preventing users from using Calibra for fraudulent purposes.
“We will provide anti-fraud services so if you lose Libra, we will refund you. We also believe that it is important for people to be free to choose so you can optionally use a third-party e-wallet on the Libra network, ”Mark said.
Libra's default installation will not share any information with Facebook and the company asserts that financial data will not be used to bring ads to users.