According to a report published by Reuters, Facebook has been silently setting up a financial technology firm in Switzerland. The platform’s fintech firm is called Libra Networks, and it will solely focus on payments, investing, financing and other financial technology solutions. Details concerning the cryptocurrency platform have been released a few days ago. We will pinpoint the highlights for you.
How it all started
It was near the end of 2017 when David Marcus, Facebook executive, was thinking of ways to build the internet of money: a global digital currency for everyone. Especially for people that have mobile phones but no access to banking. That’s when Marcus came to his idea: why not let Facebook develop a platform with a global reach and massive user base? That’s how Libra, an open-sourced blockchain system, was born.
Breaking down Libra
Libra Networks or simply ‘’Libra’’ is an open sourced digital currency that is going to be launched in the first half of 2020. Libra is said to allow billions of users around the globe to make financial transactions online. According to Facebook, Libra is a ‘’global currency and financial infrastructure’’, meaning that it is built by a Facebook-created version of blockchain which also holds the technology encrypted bitcoins and cryptocurrencies.
Who owns Libra?
The maintenance of the Libra platform will be carried out by a collective of companies called the Libra Association. Companies that are part of the association include Mastercard, PayPal and crypto exchange companies such as Coinbase and eBay but also financial and venture capital firms such as Thrive Capital and Andreessen Horowitz and startups Lyft and Uber. The described parties have contributed a minimum of $10m (£8m) to be part of the association. The foundation will be headquartered in Geneva and Facebook claims it will be independent from governments and the company itself.
How does Libra work?
Facebook is not fully enclosing details about the currency. What we do know, is that traditional payment providers such as Visa and MasterCard will play a key role in providing users with the necessary means to buy the currency.
The fact that startup firms Uber and Lyft are early investors could imply or suggest that consumers will be able to pay for services using the Libra cryptocurrency.
Once a consumer is able to get Libra, they can use it by downloading the digital wallet Calibra. Calibra will be available in Messenger, WhatsApp and as a standalone app. With Libra, users will be able to send money to each other. Apart from consumer-to-consumer transactions, Facebook also initiated that they want Libra to be used as a means of day-to-day transactions.
Is Libra safe?
There are a couple of concerns regarding the crypotcurrency and the fact that the app will be run by Facebook. The platform has said to implement necessary technologies to prevent fraud and money laundering the same way banks and credit card companies use verification and anti-fraud processes.