Facebook launches a cryptocurrency called Libra

By Yair Oded

Updated May 19, 2020 at 03:29 PM

Reading time: 3 minutes

2210

It’s now official. Facebook will launch a global, digitally-native cryptocurrency in mid-2020. In a white paper published by the social-media giant earlier this week, Facebook introduces its future digital currency, Libra, as an easy-to-use replacement for cash, which it claims will grant access to financial services for people across the globe (particularly to the 1.7 billion ones who do not have a bank account). Yet, alongside promise and entrepreneurial zeal, the impending interference of the company in the world banking system evokes a great deal of doubt and concern.

You gotta give it to Facebook. Venturing to develop a monetary system that will replace cash is a massive undertaking, particularly since it involves exploring largely uncharted territory. With cryptocurrencies such as Bitcoin failing to gain the trust of the masses and others like Q simply disappearing into the ether, it would take an enormous amount of creativity, financial acumen, and technological ingenuity to formulate a system that would seem appealing for investors to back and people to contemplate as legitimate. And that’s precisely what Facebook has managed to do, long before the actual launching of its product.

Libra is being developed as a blockchain-powered cryptocurrency. Unlike other digitally-native currencies, however, Libra will be fully-backed by a reserve of real assets, which will be locally regulated in each country. Each Libra issued will be backed by a currency or asset stored in the Libra Reserve in order to ensure the cryptocurrency’s stability and guarantee its intrinsic value. Facebook announced that Libra could be exchanged by anyone who has an iPhone and an Android at rates approximately ten-times lower than it costs to wire money electronically or internationally through the regular banking system. The company predicts that this will enable people in developing countries to obtain financial security and access services that currently are not available to them.

While the initial intent for Libra is to serve primarily as a money transferring tool, Facebook’s ultimate goal is to turn it into a mainstream currency, used to make every-day purchases and even serve as a loan and credit system.

Libra’s most unique characteristic, however, is the decentralisation of its governing body. Although Facebook is the one developing the currency, the company claims it has no intention to control it. To that end, it established the independent nonprofit Libra Association, presently comprised of 27 partners entrusted with monitoring the development and management of Libra. Among the members are major financial and technological corporations and service providers, including Mastercard, Visa, eBay, PayPal, Spotify, Uber, and Lyft, as well as nonprofit organizations, such as Mercy Corps.

So how does Facebook fit into this global financial ecosystem? The answer is simple: through its subsidiary—Calibra, a Switzerland-based company tasked with developing, launching, and bringing Libra to the masses. Calibra intends to do so by developing a digital wallet designated to send, receive, and use the Libra currency. Calibra will be implanted into Facebook-owed platforms such as Messenger and WhatsApp, and eventually launch a standalone Calibra app. Calibra (AKA Facebook) will, at least initially, possess one seat on the Libra Association board panel.

While Calibra will be the world’s first introduction to Libra, the company stated it will welcome any competition by another group seeking to establish a platform to exchange in Libra, and avoid any aspirations to monopolise the cryptocurrencies. In an interview for The Verge, Calibra Vice President of Product Kevin Weil stated, “Calibra can only be successful when the Libra ecosystem is successful.”

https://www.youtube.com/watch?time_continue=1&v=4zw-jpVFKMY

As great as this utopian virtual ecosystem appears, it also raises several red flags. One of the greatest risks about the Calibra enterprise is fraud and identity theft. And while Facebook vows to install the strictest technologies to ensure the safety of both users and the financial system as a whole, it remains to be seen whether it can keep this promise. This could particularly be an issue in countries where government-issued identification is unavailable or easy to forge.

In the U.S., numerous lawmakers and politicians have expressed grave concerns about the prospect of allowing a company notorious for data leaks and mismanagement to spearhead a global market revolution. The Senate Banking Committee has therefore announced this week that it will hold a hearing to examine Facebook’s cryptocurrency proposal on July 16.

Yet the most troubling aspect about the whole Libra/Calibra initiative is that we still don’t know how Facebook stands to gain from it. Currently, the company has only one vote on the multi-member board, and has declared in its white paper that data from Calibra will not be shared with other Facebook apps or platforms for ad-targeting purposes. It also stated that the very minimal fees Calibra will charge per-transfer will only be used to maintain the network’s security system. And so, we know there is money to be made—otherwise why would leviathans such as Visa and Mastercard be down to join the party—we just don’t know where exactly it will be coming from.  

As the scandal surrounding Facebook churns, and calls to break up the company intensify, the social media network volunteers to introduce a brand-new global market, which it will supposedly not dominate, for no other purpose than to facilitate the transfer of money and welcome the world’s most underprivileged into this virtual financial oasis. In a world where Zuckerberg is, ultimately, only about Zuckerberg, one must ask: where is the catch?

Keep On Reading

By Fatou Ferraro Mboup

Strava mule reveals shocking reason why Strava users are paying him to run for them

By Abby Amoakuh

What does 304 mean? We explain the secret code that’s breaking TikTok

By Fatou Ferraro Mboup

Victoria’s Secret Fashion Show 2024 has haters and fans alike losing their mind, here’s why

By Fatou Ferraro Mboup

TikToker reveals Molly-Mae Hague’s new brand, Maebe, is secretly using Couture Club creations

By Abby Amoakuh

What is auramaxxing? Everything you need to know about the toxic self-improvement TikTok trend

By Charlie Sawyer

Performers like Grace Campbell and Sophie Duker are boycotting Latitude Festival 2024, here’s why

By Abby Amoakuh

Misogynists are using AI to both sexualise tradwives and turn normal women into domestic servants

By Charlie Sawyer

Valentina Gomez calls basketball player Brittney Griner an unpatriotic lesbian in new video

By Abby Amoakuh

Deathly drug mixed with human bones causes national emergency over rampant spread

By Charlie Sawyer

American Airlines blames 9-year-old girl for not detecting flight attendant’s hidden bathroom camera

By Fatou Ferraro Mboup

Nationwide strike in Israel amid public outcry over Gaza hostage deaths puts pressure on Netanyahu

By Abby Amoakuh

Harris Dickinson and Nicole Kidman’s horny Babygirl trailer bound to divide viewers

By Abby Amoakuh

Move over manosphere, TikTok girlies are embracing the carnivore diet and becoming meatfluencers

By Fatou Ferraro Mboup

Lingerie brand Honey Birdette under fire for incredibly tone-deaf campaign tied to Israel-Gaza war

By Abby Amoakuh

Gen Z are now bringing their parents to job interviews, proving helicopter parenting has gone too far

By Charlie Sawyer

Greta Thunberg is no longer the poster girl for the fight against climate change. Why?

By Abby Amoakuh

Move over rat girl summer, TikTok celebrates the hot rodent boyfriend trend

By Abby Amoakuh

Jacob Elordi and Margot Robbie to star in Emerald Fennell’s white-washed Wuthering Heights

By Abby Amoakuh

The Menendez brothers star in new documentary to hit back at Ryan Murphy’s Monsters

By Charlie Sawyer

Rats in New York City officially have greater access to birth control than US citizens do