Facebook’s Digital Coin Libra Will Let Users Make Financial Transactions Globally

Posted: Jun 18 2019, 9:25am CDT | by , in Technology News

 

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Facebook’s digital coin Libra will let users make financial transactions globally
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The move is expected to make cryptocurrencies and mobile banking mainstream.

After much anticipation, social media giant Facebook officially unveiled its first-ever global cryptocurrency called Libra that will roll out in the first half of 2020.

In a press release announcing the move, Facebook said Libra is specifically targeted at billions of people, providing them access to the global financial ecosystem, including the approximately 1.7 billion adults in the world who don’t have access to a traditional bank despite having mobile phones.

The move is expected to make mobile banking, blockchain and cryptocurrencies mainstream, with Facebook aiming to capitalize on its massive user base and global reach. “Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability,” Facebook said.

Facebook added that the goal of Libra is to establish a “stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association.” It added that it aims to provide access to more affordable and open financial services to people globally.

The company made the announcement after securing big-name backers including Mastercard, PayPal, Visa, Vodafone, eBay, Spotify, Booking Holdings, Lyft and Uber. These companies are among the “founding members” of the Libra Association, which will be tasked with facilitating, among other things, payments, technology and marketplaces, telecommunications and blockchain transactions.

Facebook’s partnerships with Libra’s founding members could also pave the way for paying via Facebook when booking a ride with Uber or Lyft, or when reserving accommodations through Booking’s platforms like Agoda, Priceline and Rentalcars.

In a white paper filed the same day, Facebook said the Libra Reserve, or the digital bank itself, will have a well of funds, backed by a reserve of real assets and supported by a network of exchanges buying and selling Libra coin. The company also ensured that users can exchange their digital coin into local flat currency according to an exchange rate. It likened the conversion to when a person travels overseas and exchanges their cash into another currency.

However, Facebook said “Libra will not always be able to convert into the same amount of a given local currency,” but as the value of inherent assets moves. The company stressed that the value of one Libra in any local currency may fluctuate from time to time.

Before the roll-out in 2020, the company said it will work on a prototype for the Libra Blockchain, collaborating with the Libra Association to construct systems to make users interact with the Libra Blockchain. The association will also work to establish “global custodians” for the Libra Reserve, or the bank, in a bid to ensure high transparency and auditability.

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<a href="/latest_stories/all/all/81" rel="author">Mandy Jean</a>
Mandy covers the latest news in Tech and Business.

 

 

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