Cryptocurrency Libra - everything you wanted to know about stable coin from Facebook
Cryptocurrency Libra was announce not long ago, but has already managed to make some noise in the crypto-community. We tried to answer all the questions about Libra that you may have.
What is Libra cryptocurrency and who is behind its creation?
Libra is a cryptocurrency that is fully secured by a currencies basket and is protected from volatility, which makes its
exchange rate stable. The rate is planned to be determined on the basis of the dollar, euro, pounds and yen. The project was initiated by Mark Zuckerberg and was previously called Facebook Coin.
Why Facebook needs Libra - the main purpose of cryptocurrency and its meaning
Initial goal of Libra stable coin is to provide users with an easy and effective way to make payments and transactions via WhatsApp and Facebook messengers. Zuckerberg stressed that banking systems complicate the process of online shopping, and the transfer fees are quite high. With the help of Libra, users can easily convert their currency into stable coin without having to open bank accounts.
“Money transfers should be as simple and cheap as sending text messages,” says the main cryptocurrency website.
Who supported the new stable coin
Libra's partners include large fintech and
blockchain companies. Techno giants such as Visa, Master Card, Ebay, Uber, Booking and Ribbit Capital have already joined the Libra association. If talking about the blockchain companies, Xapo, which issued the eponymous cryptocurrency wallet, and Coinbase, were among others. Facebook is working with partners on development of the project, later on they will become the cofounders of Libra.
What type of blockchain will be used in Libra and how will it affect users?
The Libra blockchain is designed entirely from scratch using a fail-safe consensus approach (Libra BFT) based on the Move programming language, on the basis of which the transaction logic and smart contracts are implemented. Blockchain protects the users privacy and allows you to store addresses that are not related to the real person.
The decentralised database is built with a large number of users and meets the necessary requirements of financial and personal security. Scalable to billions of accounts and flexible to develop.
Libra emission - emission and circulation of Facebook stable coin
The size of the reserve is determined by the number of coins that users store in the Libra ecosystem. Based on that, the emission of cryptocurrency is not limited and can both decrease and increase, depending on demand.
Users will be able to convert cryptocurrency to fiat and back at market value with minimal spread. At the same time, it does not matter how many coins remain in circulation. The cost of cryptocurrency is regulated by algorithms, that choose moments when to bought or sold in order to maintain the stability of the rate.
The main advantages of Libra
Apart from cryptocurrency’s mobility, security and its stability of the exchange rate, Libra has some other advantages:
- high transaction processing speed regardless of geographic location. Cryptocurrency is designed for billions of users. At the initial stage, the speed will reach 1000 transactions per second;
- worldwide availability;
- scalability. Libra plans to expand the list of products and services so that users can use them freely and in a convenient way in everyday life.
By the way, Facebook said it would compensate the coin losses to the victims of frauds.
Can Libra replace Bitcoin
It is important to understand the differences between Bitcoin and Libra. If we are talking about a payment instrument, Libra, of course, is way ahead of Bitcoin, since it can scale and maintain a high network speed even under heavy loads. Libra, however, does not carry value as an asset, unlike Bitcoin. The prime cryptocurrency emission is limited, and as demand increases, its value will increase.
The Libra Ecosystem is supported by a large association, and if you have any questions, users can ask for help from proxies.
Legalisation and regulation: how governments and the SEC reacted to Libra’s emergence
Government authorities initially prevented the arrival of Facebook into the crypto industry. The policy makers called the problems with the security of users data as the main reasons for that. So, in 2018, hackers stole data from more than 80,000 accounts. Then, the same year, more than 500 million private information units were made public: messages, photos, videos, etc.
Given these problems, governments worry about the security of individuals who will use the social network to send payments and transfers. Legal issues will not affect Facebook users who will be able to use Libra cryptocurrency under the supervision of SEC and similar regulators.
The reaction of banks to the new stable coin
Banks have reacted negatively to Facebook’s decision to create their own cryptocurrency. According to S&P, Zuckerberg’s cryptocurrency will not replace fiat money, and the president of the Australian Reserve Bank believes that the cryptocurrency will not become popular.
Cryptocurrencies are serious competitors for classical financial institutions. When digital money is to be widely used, fewer and fewer people will need bank services. Facebook project does not plan to compete with banks and aims to provide services to users who do not use banking services.
How much will Libra cryptocurrency cost, and where and when can it be purchased?
The launch of the main network is scheduled for 2020. After that happens, Libra will be available for purchase and exchange in Facebook mobile applications, as well as through special payment gateways and ATMs at a cost close to the dollar, taking into account the spread. It is assumed that partners, PayPal in particular, will add the possibility of buying Libra for their products.
The future of Libra in Russia
About 35% of the population use Facebook products in Russia. But the problem is integration. The main currency for settlements in Russia is the Russian ruble. If users do not have the opportunity to buy cryptocurrency for rubles without intermediaries, this will complicate the process of mass adoption of Libra. Libra has a main competitor - stable coin GRAM from the project of Pavel Durov TON. The messenger is famous for security, which is likely to attract many users to use its cryptocurrency.
The policy of the government and the Central Bank regarding cryptocurrency and the blockchain in Russia as a whole is fundamental. In their opinion, you need to focus on creating a national digital currency, which will be under the total control of regulators, while the rest of cryptocurrencies are recognised as a money surrogates. Government could potentially block Facebook products and wallets supporting Libra.
Legalization of stable coin in Ukraine
Despite the relatively more loyal attitude to cryptocurrencies in Ukraine, the future of Libra is rather vague. Experts believe that Libra may pose a threat to the Ukrainian economy, but there is no direct ban on exchange. Since the launch, Ukrainian users will not be able to exchange Libra for hryvnias, but cross-border payments will be more profitable and faster.
Where to store Libra
You can store your stable Libra in a special digital wallet Calibra, developed by the same company. The wallet is integrated into messengers - WhatsApp and Messenger. A separate version of the wallet for mobile platforms will allow users to keep cryptocurrency without Facebook accounts.