Mon. Nov 11th, 2019

How will the digital currency of Facebook be? – The province


Libra will arrive in 2020with intentions to stay.Facebookhas created its own cryptocurrency with the objective, according to its creators, of being a global, simple currency that is capable of facilitating access to basic financial services to millions of people.

It is a new digital currency whose operation is based on the blockchain, which provides (in theory) the most secure transactions. The launch of Libra is designed for the first half of 2020 and by then, Facebook expects that 100 companies already support the currency, among which are already for exampleMastercard, Paypal, Visa, Ebay, Uber, Spotifyor Vodafone among others.

The objective of Facebook is for this currency to be stable, with low volatility, since it understands that this is one of the main problems of the rest of cryptocurrencies and that they cause that its use is not majority.

How will it work?

The currency will be supported, as announced by Facebook in the presentation document of Libra, bya reserve of real assets(the so-called Libra Reserve) and a network of exchange platforms that will buy and sell Libra. These assets will be of low volatility, so that, although one unit of Libra will not have a fixed resemblance to another currency, it is intended to minimize the risk and that the value of the Pound can be maintained over time.

This is one of the biggest characteristics that differentiatePoundothercryptocurrencies, since they do not have that so-called reserve that would appease, as far as possible, the variation of the exchange rate of the currency.

WithPoundIt will be possible, mainly, to store, send money and pay for the purchase of products and services. In addition, Libra will be the digital currency on which therest of the payment services of Facebook,Messenger and Whatsapp. Of course, its use do not forget that also contemplate commissions, although from Facebook point that will be small and always transparent (especially in the face of sending money abroad).

What is this new currency?

If it is a success, and considering thatFacebook has around 2.300 million users, would mean an economic revolution worldwide. I would assume that anyone with an Internet connection could have access tobasic financial services.

But not only that, all this leads to think of a clear consequence: it would be necessary thatCalibra(the subsidiary entity ofFacebookthat will provide the financial services to Libra) would be subject to the same supervision to which the rest of the banks are subject. Or at least that is what the financial sector would ask for since they consider that everyone has to play with the same rules and under the same regulation.

Another important aspect is what many question:the security of operations.From the company of Mark Zuckerberg, the message has been sent that every operation with Libra will be private, but there will be exceptions for the prevention of money laundering and fraud. Plan the idea that Facebook, like the rest of the companies, is not exempt from attacks against security and user data as soon as Libra becomes a reality, so it will take hard work on the part ofFacebookto prevent fraudulent access by third parties.

We will have to wait and see if this new digital currency really consolidates and differs from the more than 3,000 cryptocurrencies that already exist around the world and if, therefore, marks a before and after in the financial sector.

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