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Cryptocurrencies

Facebook announces Libra, a digital currency for online financial transactions

Tuesday 18 June 2019 | 12:35 PM CET

Facebook has announced a digital currency called Libra that will roll out for use in 2020 and allow the platform’s users across the world to make financial transactions online.

Libra is a “global currency and financial infrastructure” powered by a new Facebook-created version of blockchain. Facebook’s Libra blockchain will be built on open source code that allows the developer and research community to monitor it for design and security flaws.

The newly created digital currency will function as a stablecoin, pegged to existing assets like the dollar or euro, in the aim of making it less subject to volatility.

The currency will be serviced by a group of companies called the “Libra Association”. The Libra Association is an independent, not-for-profit organisation based in Switzerland. It serves two main functions: to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes.

The companies who contributed a minimum of USD 10 million to be listed as founding members of the Libra Association include tech companies such as PayPal, Ebay, Spotify, Uber and Lyft, as well as financial and venture capital companies such as Andreessen Horowitz, Thrive Capital, Visa and Mastercard.

When the cryptocurrency launches, users can download Calibra, a digital wallet, which will allow them to send it to anyone with a smartphone. It will be available in Messenger, WhatsApp, and as a standalone app. The social media company claims it wants to reach the 1.7 billion people around the world who do not have access to a bank account. Nevertheless, Facebook claims it will keep financial data from transactions on Libra separate from user ad profiles.

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