Libra is to be launched publicly in the first half of 2020. Libra is a cryptocurrency in development by Facebook that will come with its very own blockchain. But Libra is very different from bitcoin for multiple reasons in several different areas. Let’s take a closer look at them here.
What is Libra?
Libra, unlike bitcoin, is meant to be the world’s first truly digital currency. Where Libra’s financial backing makes it a more stable digital currency, bitcoin is prone to high risks and scarcity (which gives it its value). Bitcoin also needs to be mined and is still not a widespread form of online transactions; whereas Libra can be bought and will follow global currency standards.
So, while Libra is in effect a cryptocurrency, it fundamentally differs from bitcoin, and its need to exist on a blockchain is questionable at best.
Who’s behind it?
The project is backed by Facebook’s Libra Association, a collection of big companies tied to the project that give real-world value to Libra. Some of these names include Visa, Mastercard, eBay, PayPal, Spotify, Uber, Lyft, and Union Square Ventures, to give you just a sneak peek. And with some of these companies paying a whopping $10 million as a joining fee, Libra certainly has strong financial backing.
With the value being guaranteed by real assets, it is a lot less risky to invest in than other cryptocurrencies. Facebook also has a new subsidiary called Calibra, which will contain the digital wallet and plugins for Libra. Facebook is looking to create a voting board of at least 100 financial contributors in the Libra Association and run the venture as a not-for-profit organization. Facebook will get one vote as itself and one vote as Calibra as part of the governing body.
Do we really need Libra?
According to Facebook, Libra is targeted at the developing world and parts of the world with limited bank access. What Libra is meant to do is to level the playing field so that low-income individuals can have access to financial assets without needing to pay costly fees for financial services. All someone needs to use Libra is a smartphone or computer and access to the internet. While parts of the globe still don’t have these resources, it is estimated that over five billion of the world’s seven billion population do have them.
Libra will work like any other cryptocurrency, being monitored by nodes on its blockchain, facilitating peer to peer transactions, and removing the need for financial transaction fees that are charged by banks and other financial companies. If Libra can marry the stability of real-world currency with the freedom of cryptocurrency, the system could very well find plenty of takers.
The launch of Libra in 2020 could also mean a big upsurge in engagement with other cryptocurrencies and blockchain projects. While they are already finding more widespread use, the concept is still quite alien to most internet users. Libra could open up new avenues in this respect because it appears to be a safe and reliable way to engage with an emerging technology.