On Tuesday 18th of June, Facebook revealed details of its cryptocurrency called Libra. Libra enables users to send the currency on Messenger and Instagram, as well as carry out transactions on Spotify, Uber and other merchants.
The company also announced a new digital wallet called Calibra. This would be operated by Facebook as a separate entity to provide users with a store and spend with Libra. Calibra will have its own app, and will also be built into WhatsApp and Messenger.
An Image of Calibra was shared by Facebook. Its identity consists of a three-wave symbol that serves as Libra’s equivalent of a dollar sign.
Facebook’s Calibra digital wallet app. Photo courtesy of Facebook
If you’ve been wondering where the name Libra was gotten from, it is from the word for a Roman unit of weight measure. The term “Lib” means free.
According to David Marcus, a former PayPal executive who is leading Project Libra for Facebook, one of the initiative’s main goals is to reach 1.7 billion people worldwide who lack access to the banking system.
In Marcus’ words “it’s an anomaly that the Internet has no protocol for money.” He also pointed out that the Project Libra will also provide more competition in financial services, along with increasing access to capital
Currently, Facebook is trying to set up Libra, the evolution of Paypal. Facebook hopes that Libra will be simple to set up, be more accessible to the unbanked, make transactions easier and very flexible.
For Libra, “Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee”
This would improve our daily lives, when you’re stuck paying rent in insecure checks while exploitative remittance services charge an average of 7% to send money abroad, taking $50 billion from users annually.
Libra is also bent on powering tiny microtransactions worth just a few cents that are infeasible with credit card fees attached or replace your pre-paid transit pass
How does Libra work?
By now you know the basics of Libra. Cash in a local currency, get Libra, spend them like dollars without big transaction fees or your real name attached, cash them out whenever you want.
Libra’s New Association
Facebook recruited the founding members of Libra Association, a non-profit which oversees the development of the token, the reserve of real-world assets that give it value and the governance rules of the blockchain. Marcus further stated that “If we were controlling it, very few people would want to jump on and make it theirs”. This will build the trust of people and will spur adoption
Each founding member paid a minimum of $10 million to join and optionally become a validator node operator (more on that later), gain one vote in the Libra Association council and be entitled to a share (proportionate to their investment) of the dividends from interest earned on the Libra reserve into which users pay fiat currency to receive Libra.
According to The Block’s Frank Chaparro, the association of 28 members and industries include :
Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
Telecommunications: Iliad, Vodafone Group
Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
Before the launch of Libra Facebook intends to reach 100 founding members and it’s already ready to receive anyone that meets the requirements, including direct competitors like Google or Twitter.
The Libra association is based in Geneva, Switzerland and will meet biannually.
This country was selected because of its neutral status and strong support for financial innovation including blockchain technology