Facebook’s Libra cryptocurrency is already making waves: Here’s what you need to know
Take a deep breath: It’s another story with the words “Facebook” and “Libra” in it.
We probably won’t be the first to tell you, but Facebook released a white paper about its new cryptocurrency, Libra.
But don’t worry: We’re here to tell you everything you need to know about it… without making you puke up your morning smoothie.
It was written in the stars: ‘Facebook will reinvent money’
Libra is a cryptocurrency designed to be sent instantly across the world. Here’s how it works: Libra will be a stablecoin, meaning that, unlike Bitcoin, it’s backed by hard currencies like the dollar and yen.
Once the coin is operational — sometime in 2020, if Facebook’s being straight with us — the social network’s 2.7B users will theoretically be able to use the coin to pay for anything from an Uber ride to a cup of joe.
Whoa. Is Facebook the world’s bank now?
Not exactly. A team at Facebook created Libra, but Libra will be run by a Switzerland-based non-profit consortium called “The Libra Association.” Facebook will get 1 vote, like all the other members.
The Libra Association will start with 27 “Founding Members” — each of whom paid $10m to process Libra transactions — but Facebook plans to expand that list to 100 before going live.
By ceding operational control to a non-profit, the Big ’Book hopes it will be able to avoid past privacy concerns that have plagued its platform.
But if Facebook isn’t in control, what’s in it for Zuck?
Ohhh, don’t you worry about Marky Mark and the Facebook Bunch…
Facebook, like all other founding members of the consortium, will earn interest on all the transactions its processes.
But Facebook has a more important goal in mind: It launched a new company called Calibra that will serve as the crypto wallet that enables users to buy, store, and spend Libra coins.
Down the road, Facebook could use Calibra to offer financial services like lending or investing, diversifying its revenue beyond advertising.
Tight, tight, tight. So… is it a win for consumers?
No surprises here… This one’s up for debate.
Facebook claims Libra will make it easier and cheaper to transfer money, helping unbanked users avoid fees. But some critics are already saying Libra will have little impact on the unbanked other than pulling them deeper into FB-world.
Many bankers — and businessman-turned-Presidential-hopeful Andrew Yang — praised Libra’s potential. Regulators, on the other hand, have already demanded that Facebook pump the brakes on the project.
One thing’s for sure: This crypto party ain’t over
Libra is the biggest, boldest move yet to move mainstream money in the direction of blockchain-based digital currency.
Libra will live or die based on whether users — who’ve been bamboozled by Facebook before — can find it in their hearts to trust a Facebook-founded platform to manage most of their money.
But, given the growing number of partnerships between cool-kid crypto companies and old-school money-managing machines, it seems inevitable that crypto will make it to the mainstream.
Now, the real question is: Will Facebook wear crypto’s crown? (Because… you know… Google would probably look good in it, too).