Cyber Week Sale! 50% Off All Access

5 Things to Know About Facebook's Cryptocurrency Libra The virtual currency will be launched next year in 2020

By Vanita D'souza

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

libra.org

Cryptocurrency has always been a fascinating topic and even Mark Zuckerberg couldn't resist the virtual currency industry. Yesterday, Facebook along with more than 25 organisations, which included Uber, Visa, eBay, Master, etc announced the launch of a new cryptocurrency called the Libra.

In a Facebook post, Zuckerberg said that Libra's mission is to create a simple global financial infrastructure that empowers millions of people around the world. It's powered by blockchain technology and the plan is to launch it in 2020.

"We aspire to make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos. To enable this, Facebook is also launching an independent subsidiary called Calibra that will build services that let you send, spend and save Libra," he added.

The announcement has created a lot of noise, both among the people who have the cryptocurrency community and those who don't. It is likely to create a major cryptocurrency adoption drive among smartphone users.

Here are the five things you need to know about Facebook's cryptocurrency Libra:

Calibra – Facebook's Digital Wallet

Calibra, Facebook's new subsidiary will allow users to participate in the Libra network. The wallet will be integrated with Messenger, Whatsapp, and a standalone app.

The digital app, which will be launched next year, will allow users to send Libra instantly to any smartphone user with an active internet connection. Facebook on its company blog said that in time the technology company hopes to offer additional services for people and businesses, which includes services paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass.

The Libra Association

As we all know, Libra is built on a decentralised platform powered by blockchain technology. This means the platform will be managed by many organisations, as against only Facebook. This consortium is called the Libra Association.

The cofounding members of the association include payment service providers Paypal, Visa, Mastercard, Stripe and PayU. Apart from Facebook, technology and marketplaces - Booking Holdings, E-bay, Farfetch, Lyft, Uber, Mercado Pago and Spotify are also a part of this initiative. Telecommunication players Illiad and Vodafone along with blockchain companies – Coinbase, BisonTrails, Xapo and Anchorage have also been looped in.

Lastly, the Libra Association also includes investment firms - Andreessen Horowitz, Union Square Ventures, Creative Destruction, Ribbit Capital and Thrive Capital with a non-profit organisation such as Women's World Banking, Kiva – 501 and Mercy Corps.

Zuckerberg is hoping that the association will have at least 100 more organisations by the time the cryptocurrency is introduced next year.

Built on a Reserve

Unlike most of the cryptocurrencies, including Bitcoin and Ethereum, Libra is backed by a reserve of real asset which would allow its users to trust the currency.

According to libra.org, a white paper discussing the details of cryptocurrency, "A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value." This, in return, will avoid speculation and price fluctuation as users will be able to predict its value or its other words, the reserve will help Libra with value preservation.

The reserve will be built from two source - investors and users of Libra. Additionally, in order to encourage adoption among its users, the association will pay out incentives in Libra coin to its founding members.

On the other hand, the reserve will be invested in low-risk assets, such as bank deposits and government securities that will yield interest over time.

Data Privacy

In recent time, data privacy has been a key issue among the Facebook user and Libra and Calibra are no doubt under the scanner.

To clear the air around this, Zuckerberg in its post shared privacy and safety will be built into every step and Calibra will have a dedicated team of experts in risk management to avoid frauds.

"We'll provide fraud protection so if you lose your Libra coins, we'll offer refunds. We also believe it's important for people to have choices, so you'll have the option to use many other third-party wallets on the Libra network," he added.

Can you use it in India?

The currency is yet to be launched. Having said, hypothetically, if the virtual currency was launched or will be launched in the next few months, you still wouldn't be in a position to use it as the RBI has ring-fenced the banks in order stop cryptocurrency trade in the country.

According to several news websites, Subhash Chandra Garg-led committee has recommended a jail term for cryptocurrencies users, including miners, exchanges, traders, etc. But there is no official word on this.

So, what's next? Let's hope the new finance minister Nirmala Sitharaman has a different viewpoint from the former FM Arun Jaitley so that there is regulation which would ensure fair trade in the Indian cryptocurrency market, instead of a blanket ban.

Keeping our fingers crossed!

Vanita D'souza

Former Senior Correspondent, Entrepreneur India

I am a Mumbai-based journalist and have worked with media companies like The Dollar Business Magazine, Business Standard, etc.While on the other side, I am an avid reader who is a travel freak and has accepted foodism as my religion.

News and Trends

Digital Fear: How Stock Trading Scams, Investment Frauds, Digital Arrest and Threats From Foreign Lands are Crippling

Since 2021, CFCFRMS has recorded a staggering 30.05 lakh complaints, resulting in losses of INR 27,914 crore

Entrepreneurs

Doyens of D2C: How these Founders are Reshaping the Space

Our current issue is one dedicated to the doyens of D2C. One clear theme, which emerged out of our conversations with entrepreneurs featured in this edition, is their newfound focus towards quick commerce, which is driving sales to a new high

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Technology

"We Are Known for Bringing World-Class Technology at Indian Doorsteps": Rajoo Engineers

While all segments contribute to its success, flexible packaging stands out as the highest revenue generator, accounting for 60-63 per cent of the company's total revenue.

Growing a Business

How to Eliminate Unnecessary Tasks and Focus on What Really Matters

Hack away at the unessential and reclaim your time.