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What is Facebook Libra?
Facebook Libra is a global currency and financial infrastructure built by Facebook as part of their digital assets. Libra will allow its users to send and receive money without any fees. It is a technology powered by a modernized version of blockchain created by Facebook.
The name Libra sees its derivation from the essential Roman measurement of weight. The creators of Libra did so intending to make spending one’s money online less expensive and also faster. It is created in such a way to be able to compensate for the lack of an individual’s experience with banking and to improve the public’s access to financial services online.
Who runs Libra?
The digital currency will be run and handled by a group of companies dubbed as the “Libra Association.” The Libra Association is an organization that consists of a council made up of one representative each from the companies that have invested in this Switzerland based, non-profit organisation.
The representative is responsible for voting on policy and for making operating decisions on behalf of their company.
The Association functions as a “stablecoin.” It means being attached to stable currency assets like the pound or the dollar; to avoid being the victim of the volatility that most cryptocurrencies experience.
The Libra Association consists of two primary functions;
- To validate the transactions made on the Libra blockchain
- To allocate funds and manage the reserve Libra is tied to
The Libra Association consists of several big-shot companies from different markets and businesses that have invested a minimum of 10 million dollars in the company’s operation to revolutionize digital wallets and cryptocurrencies. Some of the companies include; Mastercard, Visa, eBay, Lyft, Spotify, Uber, Andreessen Horowitz, Bison Trails, etc.
How does Libra work?
Libra allows its users to spend their local currency without all the hefty transaction fees involved in standard transactions. A Libra is a unit of the cryptocurrency which is meant to stay stable to be able to act as an obedient medium of exchange. Every time a user cashes in some money of their respective currency, the funds will be transferred to the Libra Reserve, and the equivalent is given to the person.
How to use Libra?
As the cryptocurrency by Facebook is launched, interested individuals can download Calibra, a digital wallet. Calibra will allow the individual to send it to anyone with the help of their smartphone. The digital wallet will be available as an individual application but is also available on Messenger and WhatsApp.
Apart from being able to make transactions on the application, the creators want their clients to be able to use the digital wallet for their day-to-day operations also. Their aim to do so has made ride-sharing companies such as Lyft and Uber their early investors.
How is Libra similar to other cryptocurrencies?
- Libra, like any other cryptocurrency, exists in the digital form only; you will not be able to get a physical note or a coin.
- All transactions are taken count of on blockchain, which acts as a software ledger.
- It will be managed by the founders initially before handing all reins to a fully open system.
How is Libra different from other cryptocurrencies?
- The founders plan on pegging Libra to real assets such as the dollar or the euro to ensure that Libra will not fall victim to the volatility of the cryptocurrency market
- It shall include bank deposits and security from reputable banks
- The Association shall buy more assets when people want to buy Libra
- Libra could take on multiple denominations
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Is Libra safe to use?
Safety, when it comes to finances, is the first question on anyone’s mind. Facebook has declared the placement of different safety technologies to prevent any form of fraud or money laundering. In its aim of creating a global digital currency that also promotes the inclusion of the financially unbanked, Libra has a lot of privacy ad decentralized involved than one would expect.
Precautions take by the creators of Libra to ensure safety include;
- They plan on using the same kind of anti-fraud and verification processes that are out to use by banks
- The positioning of automated systems for monitoring activity
- “Live support” to help users gain access to their lost accounts
- Refunds for users who have lost money through fraud
- Building Libra on an open-source code
- “bug bounty” program to incentivize security experts
Final Words
In the initial stages of planning on creating a revolutionary digital wallet to add to the cryptocurrency market, Facebook saw an opportunity that could be soiled by several risks. Libra, as a digital currency, is a competitor for several other ones, such as PayPal. Hence, here is all you need to know about Libra by Facebook, a new digital currency that aims to change the way things are bought, and money is spent by eliminating transaction fees.
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