Analyzing Libra: Facebook Currency

You may have heard all of the buzz around what people are calling Facebook Currency, Libra, the blockchain digital currency proposed by the American social media giant, does not yet exist, though there has been a lot of speculation surrounding its future. The project began in 2017 but has just started to get a lot of attention from the media. 

What Is Libra?

Libra isn’t actually Facebook’s cryptocurrency, though the social media company did co-found the project. The Libra Association attempts to serve as a monetary authority for crypto. The goal is to empower the billions of individuals who could get involved with this form of money.

The first reports that Facebook was planning a move to crypto was released in 2018. Within the next year, there would be more than 50 engineers working on the project. The first version is expected to be released in 2020. 

In a meeting with Senate leaders on September 18, 2019, CEO Mark Zuckerberg told the lawmakers that he wouldn’t launch the product before receiving approval. 

The idea is that the Libra token will be backed by financial assets, including the US Treasury securities. The Facebook company announced that all partners would offer an initial $10 million for the project. 

The Libra currency tokens will be created based on demand and retired when they’re redeemed for traditional currency. 

What’s the Difference Between Libra & Bitcoin?

Like Bitcoin and other cryptocurrencies, Libra exists solely in digital form. The transactions will be recorded on a software ledger, known as the blockchain. Initially, the founding members will manage the Libra blockchain, but eventually, it will evolve into a fully open system. 

Unlike other cryptocurrencies, Libra will be backed by real assets. Bitcoin, Etherum, and other popular cryptocurrencies are currently not backed by anything, which causes them to swing widely in response to speculation. 

Backing currency isn’t a new practice, in fact, it used to be commonplace. The US dollar was backed by gold until the year 1971. Many foreign currencies are backed by the US dollar today. 

Why Is Facebook Getting Involved in Cryptocurrency?

Before the Libra, Facebook ran a digital currency that was called Credits. This was used to make payments for games played on the social media platform. Zuckerberg wanted to make sending money as simple as posting photos. 

Facebook will benefit from Libra because it will make it easier for people to transfer money online. This could potentially attract more people to the social network. The CEO acknowledged that the cryptocurrency would likely drive up the cost of Facebook Ads, which means more profit for the company.

What This Means for You 

So will Facebook now be able to get its hands on your financial data? The company says no and that you shouldn’t worry. 

Well, Facebook doesn’t necessarily have the best reputation for protecting user privacy and data rights. Apparently, customer data won’t be used for ad targeting. We guess that the future will reveal the truth. 

The Consensus

Cryptocurrencies undoubtedly make it easier to send money directly to someone. Despite the hype, there aren’t that many people who are involved with crypto at this time. The value of these currencies are volatile, and they often rise or fall more than 5% a day. 

It’s unclear what the future holds for Libra, the so-called Facebook Currency. All we know is that the social media giant has made it a significant project.