In 2020, the world is going to witness the launch of Libra. It is a cryptocurrency, which aims to bring under its fold more than 2 billion of the Earth’s unbanked population.
As you all know by now, Libra is Facebook’s boldest endeavour to rock the global and financial systems forever. Being backed by billions of dollars and a 3 billion-plus user base, do not be surprised if Libra changes the way we transact.
The aim of Facebook through Libra is to create a single unified global payment currency. Through this Facebook aims to empower billions of people all over the world. It also seeks to reduce commissions and fees that are currently charged by operators like Western Union and PayPal.
In this article, we are going to look at the top five things that you need to know about Libra.
5 Important Things About Libra: The List
1. Facebook is not as decentralized as other cryptocurrencies-
Unlike other cryptocurrencies like Bitcoin or Ethereum, Libra is not completely decentralized. Meaning, all transactions are governed by the consent on the 27 Members of the Libra Association. However, the important thing to note is that Facebook just has one vote like all the 27 members. It does not enjoy any special privilege.
2. Libra is not as volatile as other cryptocurrencies-
The Libra Association of 27 members aims to create Libra as a ‘stablecoin’. This means that like traditional currencies, it is going to be backed by real physical assets that control its valuation. One major criticism against Bitcoin is that the speculative nature of the valuation keeps the driving process up and down. Facebook has sought to nip that problem comfortably.
- Facebook and Libra are not going to share Personal Data-
One of the most serious concerns that people had with regard to Libra was data sharing between Facebook, Instagram, WhatsApp, and Libra. Facebook has confirmed in their White Paper on Libra that no such exchange or sharing is going to happen. They have taken data privacy very seriously on the new Libra project. This is a welcome change according to many.
3. The Libra Association-
Facebook has called for a collaboration of the biggest 27 tech and finance companies in the world for Libra. We are talking about everyone from Uber to Visa, Lyft to Spotify, Coinbase to venture firms like Andressen Horowitz. This means you have some of the greatest companies ever as Founding Members of Libra. This is sure to bring in the expertise, financial prowess, and experience into the picture.
4. Libra is exchangeable with traditional fiat currency-
It means you will be able to buy, sell and exchange with Libra. It also means that you can exchange Libra for dollars and euro and vice versa. This advantage of Libra comes from it being backed by real assets. These assets continue to determine the value and check volatility in prices. Facebook says that Libra will fluctuate as much as the dollar does!
Many people have argued that Libra is closer to platforms like Western Union or PayPal than it is to cryptocurrencies like Bitcoin or Ethereum. It is not completely decentralized or centralized. It is somewhere in between. The libra method is something that needs to be taken note of very early. It is a true game-changer!
Likewise, it does not use a pure Blockchain technology framework. Facebook have devised their own Blockchain technology, which might be similar to existing models or even different. We will only know once we experience it.
Perhaps the biggest change that Libra is going to bring is making cryptocurrencies go mainstream. Do not be surprised if Facebook uses all the power, money and resources at its disposal to create a new disruptive global financial order.