The digital currency craze has pushed past bitcoin recently, and now it’s reached the big-time with Facebook’s announcement of Libra. The social media giant plans to launch its own version of crypto-cash next year with the goal of simplifying payments across borders and currencies.
In other words, Facebook wants to be your new bank. Not content with being the interface between you and everyone you’ve ever known, the company is set to roll out its universal payment platform in the first half of 2020.
Libra, which takes its name from the Latin word for pound or balance, represents the most ambitious foray into digital currency by a major corporate brand to date. Facebook introduced the idea in a whitepaper that begins by explaining, “Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.”
Translation: The company wants ‘Facebook money’ to become the financial force that drives global economics by creating “a new decentralized blockchain, a low-volatility cryptocurrency, and a smart contract platform that together aim to create a new opportunity for responsible financial services innovation.”
Libra will incorporate aspects of the blockchain technology behind bitcoin in addition to characteristics of more traditional currencies like U.S. dollars and Japanese yen. Facebook describes Libra’s blended nature in three points, saying:
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
The Libra Association is composed of 28 founding member organizations that include major credit cards, young tech giants like Lyft and Uber, Vodafone Group, eBay and other well-known names from the technology, payment, capital and nonprofit sectors. Facebook intends to add others in coming months, with a goal of reaching 100 Libra Association members prior to the official launch date.
Libra is designed to bridge the gap between traditional currencies and existing digitally native currencies by incorporating stability, global acceptance and a value tied to real assets, the Libra Reserve. While the reserve aspect should limit volatility in price fluctuations, the fact that the currency is tied to Facebook will allow users in locations across the globe to make and receive payments without worrying about differing exchange rates.
That means you can send your uncle in Iran 50 bucks and rest assured that he’ll be getting approximately the same value as what you’re paying. Your daughter studying in China or Argentina can ask for money without wondering whether the $300 you send will translate in to the $300 she needs. In theory, paying bills while traveling and making purchases from sellers in other countries would become simpler and less risky.
Facebook reports that the currency will be built using Move programming language and be completely open-source. Its plans include full documentation that is accessible to all users, with “well-documented APIs and libraries to enable users to interact with the Libra Blockchain.” There’s lots to unpack still about Libra and how it will work – and indeed, if it will work as its creators intend. Clearly, there’s a lot of room for change and even failure with a project of this scope, but it’s also reason to hold high hopes that Libra might come to fruition more or less in line with current expectations. The project is unquestionably an ambitious one that holds the potential to transform the way humans use money both locally and across international borders. Depending on your perspective, that prospect could be thrilling or horrifying– or a bit of both.