Facebook has a grandiose plan - to create its own digital currency and name it Libra (i.e. Freedom). If even if a third of the entire 2 billion army of social network users starts using this coin, it will quickly outstrip the American dollar in popularity.
On the other hand, the project may bea failure if it will be a little more useful than in the current payment services. Or maybe there will be no Libra at all if the project gets bogged down in disputes with regulators, shocked by the possibility of losing control over cash flows.
What is Libra
This is a digital coin with whichusers will be able to send or receive money, as well as pay for goods and services within the social network, as well as outside it. All transactions will be carried out on the blockchain. Initially, Facebook planned to launch the project in 2020 in conjunction with partners such as Mastercard Inc., PayPal Holdings Inc. and Uber Technologies Inc. However, Paypal has already announced that it does not want to participate in this event and prefers to concentrate on its own financial services.
How can I use Libra
Facebook creates an electronic "wallet" underCalibra, through which you can buy Libra for fiat money. Some projects are already developing alternative solutions. The exchange rate will fluctuate, but not much. It is assumed that Libra will be a stable coin - stablecoin. Such cryptocurrencies are not prone to sharp price changes, significantly limiting the practical use of bitcoin and many other digital assets.
What will ensure the stability of Libra?
Stablecoin cost is usually tied tothe value of another non-volatile asset. Many projects maintain the value of their coins by securing reserves - similar to how governments provided their money with gold before this system collapsed. The most popular stable coin at the moment, Tether, is pegged to the US dollar; its price in dollars, as a rule, changes by only a few cents.
What will be different Libra
Details on the project are still few, howeverFacebook has promised to tie Libra to an asset basket, which will include the dollar, euro, pound and yen, Singapore dollar, as well as low-risk securities such as US Treasury bonds. All of them tend to move in narrow ranges, and often in opposite directions.
What is the interest for users?
Facebook formulates its USP (uniquetrade offer) as the ability to send money as easily and quickly as a text message. However, such services have long been invented and implemented by other companies. It is possible that blockchain would allow Facebook to process transactions for 1.7 billion adults on the planet who do not have access to banking services. In high inflation countries such as Venezuela, buying Libra can be a way to save savings from impairment.
Why do you need Facebook
The company is going through hard times: revenue growth rates are falling, and Libra may open up new opportunities in the field of payment services and trade. Facebook partners have their own motives: if Libra revolutionizes the payment business, Mastercard will probably want to participate. However, potential partners have to consider increased bias on the part of politicians and regulators.
What is the importance of stablecoins
Stablecoins are considered a bridge between cryptocurrencypeace and traditional money because it makes conversion easier. JPMorgan Chase & Co. Develops a stable coin (JPM Coin) for its customers. The Bank intends to use it for making internal payments; He believes that stable coins and blockchains will eventually replace traditional payment systems. Libra takes this concept to a new level.
What are regulators dissatisfied with
For starters, they are afraid of using Libra formoney laundering. In addition, Facebook came out with its initiative in the midst of a scandal over the misuse of social network users. presidential campaign. However, they are most afraid of the possibility of losing control of their own currencies if Libra begins to gain popularity. Meanwhile, the decision of the US Securities and Exchange Commission to equate Libra with securities - that is, define it not as a currency, but as a traded financial asset - will complicate and complicate the project and, possibly, will become a death sentence for it.
What central banks say
Many central banks, including the Bank of China,decided to focus on how far they have come in creating digital currencies. And Mark Carney, the head of the Bank of England, mentioned Libra discussing the problems associated with the use of the US dollar as a world reserve currency and the most common tool in international trade and finance. These factors support the dollar and put users of other currencies at a disadvantage. According to Carney, the solution could be to create a new reserve asset, which he called "an international stable coin, fully secured by reserve assets in a basket of currencies." This is very similar to Libra, only it will not be controlled by Facebook, but by the Central Banks.
How do you feel like Libra. Do you consider this project promising?