If you come here looking for the astrological sign named Libra, this is not the place. We are talking about the cryptocurrency called Libra. It was long rumored that Facebook is working on a cryptocurrency of its own. They finally announced it on June 18th, 2019. Before that, it was called as GlobalCoin and Facebook Coin.
Even though Facebook is the primary developer of Libra, a non-profit organization named The Libra Association, manages it. Facebook is one of the founding members of the organization. The Libra Association is incorporated in Switzerland, mainly because of the progressive laws towards cryptocurrency and finance. Due to recent controversies regarding Facebook, it is wise to move the currency away from direct control from Facebook and its core business so that it could grow without resistance from regulators and the general public.
Other than Facebook, there are 27 founding members in the associating, and each of them has an equal vote in the association. These are:
- Visa Inc
- Booking Holdings
- Iliad SA
- Bison Trails
- Andreessen Horowitz
- Breakthrough Initiatives
- Ribbit Capital
- Thrive Capital
- Union Square Ventures
- Creative Destruction Lab
- Mercy Corps
- Women’s World Banking
Each of the 28 partners is to inject USD 10 million so that enough assets are backing the currency during launch.
The main goal of the Libra project is to create a cryptocurrency that people and trust and stable. This is so that people can transfer money from one person to another instantly and spend it. This could be between two people in two different countries across the globe. In theory, this is possible with Libra. However, unlike most cryptocurrencies, Libra is not purely decentralized. The transactions are only verified at each service partner who holds a copy of the blockchains distributed ledger. Anyone outside of the Libra Association does not have access to the distributed ledger. The association functions more like global central back for Libra, and a private blockchain verifies the transactions.
Libra will have more liquidity than any cryptocurrency. To buy and sell a Bitcoin, you need to have a buyer who bids to buy at a price and a seller who is willing to sell at that price. If there is no seller, the transaction will not take place. At the moment Libra can only be exchanged to fiat currency. There is a fiat currency reserve managed by The Libra Association. Therefore, the exchange will even take place without a seller for the currency. When a Libra is exchanged to a fiat currency, it is retired from the blockchain. This will keep the price stable.
Calibra is a wholly owned subsidiary of Facebook that manages a Libra wallet of the same name. Calibra functions similar to other cryptocurrency wallets, but the main difference is that it acts as an exchange between Libra and fiat currency. A user can buy Libra through Calibra using USD. Users would use their Facebook account to sign into Calibra, and they can even send money to other Facebook users similar to Venmo.
Libra is to be officially launched in 2020.