Facebook says its cryptocurrency will help people who don’t have a bank account or can’t afford to send money overseas
Facebook’s cryptocurrency network will be governed by Facebook and more than two dozen founding partners.
Facebook Inc. just disclosed the first details of its long-anticipated cryptocurrency. Here are some early takeaways:
What is Libra?
Libra is a new cryptocurrency—a digital currency that uses cryptography, a method of protecting information, to verify transactions—that Facebook will launch next year.
People who use Facebook’s Messenger service, WhatsApp, or who download a stand-alone app will be able to access it through a digital wallet. It is an alternative to bitcoin that is powered by blockchain. However, Facebook hopes it will be used by a much wider base.
In ancient Rome, the libra was a unit of weight.
Wait, what’s blockchain again?
Blockchain is a type of digital ledger that is distributed across a large network of computers, run by powerful mathematical computations. It is like a giant spreadsheet that is shared widely. Every time someone updates the spreadsheet, for instance by logging a financial transaction, every other user can see the change. That theoretically provides transparency and prevents any single central source from controlling the flow of information—or money.ADVERTISEMENT
So Libra is like bitcoin?
Yes and no. Both are essentially digital versions of cash designed to allow users to directly exchange value online, but there are major differences.
Facebook is looking to build a payments network by creating an online ecosystem on which users can buy things and pay each other. Bitcoin was conceived as a payment mechanism, but its network has had trouble processing a large number of transactions quickly. Instead, bitcoin has evolved into a kind of digital gold used to store value rather than exchange it.
Why is Facebook getting into this?
Facebook says its currency will make it possible to provide basic financial services to millions of people around the world who don’t have a bank account, or who can’t afford to send money overseas. It could help small businesses that can’t get access to credit, too.
Will my data be safe?
Facebook is setting up a regulated subsidiary, called Calibra, that will provide access to the new currency and will separate financial data from other “social” data that Facebook uses on its platforms.