On Tuesday, Facebook revealed its plans for a new cryptocurrency named Libra. Through Libra, Facebook pledges to give a stable virtual currency which is based on smartphones and can bring more than a billion people who are currently not in the financial system. The Libra plan is funded by various financial partners and it represents a very ambitious plan as it is initiated by the biggest social network in the world and has the potential to bring cryptocurrency to the masses. An open source code for Libra has been released for developers by Facebook and its partners so that creators can build several apps and services before its global release next year.
Libra will be monitored by the nonprofit Libra Association situated in Geneva. Its value will be kept stable by a real-world asset reserve. Dante Disparte of the Libra Association said that the service could provide online financial services at a very affordable cost to more than a billion people who do not have bank accounts or avail facilities such as loans for meeting their necessities. He also added that if people are provided money and opportunity at a very low cost similar to the access of internet for information then a lot more stability can be created than now.
Facebook will be one among many associations in this initiative, but it is also creating its own digital wallet, Calibra. Calibra’s VP of Operations, Tomer Barel said that Calibra is seen as a complement to Facebook’s mission in providing people the way to exchange value just as Facebook allows people to connect to each other. In many places of the world, people use Facebook but they do not have access to banking facilities.
However, financial regulators and politicians are worried about how a new money can be regulated. Maxine Waters, head of financial services committee in House of Representatives in United States said that due to the troubled past of Facebook, it should agree to pause on creating its cryptocurrency until the Congress check all the issues and other related details. Finance Minister of France, Bruno Le Maire said that sovereign currencies can never be replaced by digital ones. He added that sovereignty must lie in the hands of countries and not with the private companies with other interests.
Calibra will be built into Messenger and WhatsApp so that Libra can be exchanged by users in the way they send text messages. Libra has learned from other cryptocurrencies like bitcoin and is designed to prevent any random changes in its valuation.
Its creators told that it will be backed by real world currencies such as US Dollars and Euro so as to provide it stability. With this, Facebook wants to clean its damaged image of misusing privacy and data protection which affected it in the past.