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Facebook is unveiling a digital currency called Libra as the company seeks to make its ads more valuable by enabling smoother transactions and payments online, particularly among those without credit cards or bank accounts.More in News
- Libra will use the same security and record-keeping principles as Bitcoin, the most popular digital currency system today.
- But unlike Bitcoin, Libra is backed by several traditional financial companies, including PayPal, Visa, and Mastercard, and will base its value on multiple real-world currencies such as the US dollar and the euro.
- Libra is scheduled to launch publicly in the first half of next year.
Cryptocurrency
- It’s a form of digital cash that uses encryption technology to make it secure.
- Cryptocurrencies exist not as physical bills or coins but rather as lines of digitally signed computer code.
- Records are typically kept on ledgers known as the blockchain.
- People can store their cryptocurrency stashes in virtual wallets that resemble online bank accounts.
- Although it’s possible to trace bitcoins and some other cryptocurrencies as they are spent, owners of accounts behind the transactions aren’t necessarily known. That makes such currencies a favorite among certain cybercriminals.
- But it is sometimes possible to tie cryptocurrency transactions to a real person who has cashed out digital coinage into a traditional currency.
Facebook’s Cryptocurrency
Though Libra could be a way for Facebook to drive spending when people interact with Facebook ads, the company says the currency will be independent and won’t require a Facebook account to use. Source Read More Articles: Salaries and Allowances of Members of Parliament One India, One Election – Simultaneous Elections
- Facebook is developing a wallet app for Libra.
- As with other cryptocurrencies, people will be able to buy and sell libras on exchanges for traditional currencies.
- It’s not clear what fees, if any, consumers will have to pay for such transfers, although Facebook says they should be low.
- Facebook is hoping to keep the libra’s value stable by tying it closely to established currencies.
- Because of high fluctuation in value of Bitcoins, only a handful of merchants accept bitcoins as payments.
- But unlike bitcoins, the Libra will be backed by real-world bank deposits and government securities in a number of leading currencies.
- Facebook is also recruiting partners ahead of time.
- Lyft, Uber and Spotify already have joined the Libra group.
- They will likely accept libras when the system launches.
- They’ll also help fund, build and govern the system.
- That’ll make Libra less of a free-for-all than Bitcoin.
- Facebook says Libra will embrace regulation, but it isn’t providing many details on how.
- With Libra, the verifications will initially be managed by its founding companies, such as Facebook and PayPal. Facebook believes the closed approach will mean better security.
- Most cryptocurrencies, including Bitcoin, anyone can lend computing power to verify transactions and to prevent anyone spending the same digital coin twice.
- Facebook says it won’t use Libra data to target ads, but may share data “to keep people safe, comply with the law, and provide basic functionality.”
- Facebook is creating a subsidiary, Calibra, to try to keep the operations separate.
