“In a lot of ways Facebook is more like a government than a traditional company. We have this large community of people, and more than other technology companies we’re really setting policies.”
– Mark Zuckerberg, Co-Founder and CEO of Facebook
In keeping with its paternalistic “Daddy knows best” attitude toward customers policies and aspirations to achieve the powerful status of a government, Facebook is poised to roll out its new cyber currency. After all, every regime needs its own means of exchange.
Investors are ga-ga over the new Libra digital coin which will give Facebook complete control over international ecommerce transactions. The social media giant is touting their offering as “a simple global currency and financial infrastructure that empowers billions of people.”
Libra was announced in June and is projected to launch in early 2020.
The very name is symbolic, of course. Libra is the seventh sign of the zodiac, represented by a set of scales or balances. But did you know that, in ancient Rome, the libra was a unit of weight, equivalent to 12 ounces? True story. It was the forerunner of the pound weight (16 ounces). Its ‘L’ symbol is still used in British countries to stand for the monetary unit of a pound weight.
Facebook is forming a new group called the Libra Association which will be in charge of commercial transactions, including buying and selling of goods and services and other types of money transfers:
“The Libra Association is made up of a group of diverse organizations from around the world. The Founding Members of the association each run one of the validator nodes that form the network that operates the Libra Blockchain. One of the association’s directives will be to work with the community to research and implement the transition to a permissionless network over time.”
With world headquarters in Geneva, Switzerland, the Libra Association is promising an open source, scalable, and stable financial platform. The financial group’s main task is to keep the Libra network secure from hackers.
Cryptocurrency is a type of digital currency that uses a very secure form of cryptography to verify transactions. Cryptocurrencies are built on blockchain technology. The value of a cryptocurrency depends on the type of blockchain it is built on.
Blockchain is a technology that can safely store transaction records on a peer-to-peer network instead of storing them in a single location. Independent servers around the world, called nodes, make up the network that operates the blockchain.
Libra is a new cryptocurrency designed to have a stable and reliable value and be widely accepted around the world. Developers who want to try out the open-source testnet (an early version of the Libra Blockchain), available for macOS and Linux, are welcome to do so.
Facebook’s Libra digital coin will be exchanged just like any other currency. Libra can be converted into a local currency based on the prevailing exchange rate, just like exchanging one currency for another when traveling.
And just like its main rival Bitcoin, Libra is a global currency that can be used across international borders. It is designed to be used by people and businesses around the world.
Facebook claims that Libra is backed by a reserve of assets which distinguishes it from other cyber currencies whose value changes based on investor speculation. Libra won’t be backed with gold; instead, it will be backed by a collection of established financial assets:
“To drive widespread adoption, Libra is designed to be a currency where any user will know that the value of a Libra today will be close to its value tomorrow and in the future. Just as consumers in Europe know the number of Euros it takes them to buy a coffee today will be similar to the number of Euros it will take them tomorrow, holders of Libra, too, can be confident the value of their coins today will be relatively stable across time.”
Libra will be traded through exchanges that list it or through the applications that will be built on the Libra Blockchain, including digital wallets and other financial products and services.
Among Libra’s reported 28 backing partners are Mastercard, Visa, Paypal, Uber, and Spotify. The cyber currency will be a “stablecoin,” indexed to the U.S. dollar. Facebook plans to integrate Libra payments on its popular messaging apps WhatsApp and Messenger, as well as Instagram, its photo-sharing app.
Even as Facebook pays large lawsuit damages to parents of swindled game-playing kids, the European Union (over WhatsApp), and victims of their numerous third-party data breaches and unauthorized use, the heavy-hitting company envisions ruling the world on a par with any other global government:
“We are developing a range of new technologies — including high-altitude aircraft, satellites, free-space optics, and terrestrial solutions — to help accelerate the process of bringing connectivity to the unserved and underserved.”
Libra will target developing countries when it launches.
Five months away from the debut of Facebook’s new digicoin, “a dozen accounts, pages, and groups across Facebook and Instagram which misleadingly claim to be official hubs for Libra,” have been identified by investigators for the Washington Post. The fact that “Facebook doesn’t seem to have been prepared for the influx of tricksters on its own service,” does not lend assurance to corporate assurances that its proposed new monetary system will be a safe haven for online financial transactions.