Copy-paste | Why everyone hates Libra - facts and a little educational program

Facebook has a grand plan to create its own digital currency and call it Libra (i.e. Freedom).Ifeven 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.

С другой стороны, проект может оказаться It will be a failure if it offers little more value than current payment services. Or maybe there won’t be any 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 together 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 you use Libra?

Facebook creates an electronic “wallet” forcalled Calibra, through which it will be possible to buy Libra for fiat money. Some projects are already developing alternative solutions. The exchange rate will fluctuate, but not much. Libra is supposed to be a stablecoin. Such cryptocurrencies are not prone to sudden price changes, which significantly limit the practical use of Bitcoin and many other digital assets.

What will ensure the stability of Libra?

The value of a stablecoin is usually peggedto the value of another non-volatile asset. Many projects maintain the value of their coins by backing up reserves, similar to how governments backed their money with gold until that system collapsed. The most popular stablecoin at the moment, Tether, is pegged to the US dollar; its price in dollars usually changes by only a few cents.

What will be different Libra

There are few details on the project yet, howeverFacebook has promised to link Libra to what it calls a basket of assets that will include the dollar, euro, pound and yen, the Singapore dollar, as well as low-risk securities such as US Treasuries. They all tend to move in narrow ranges, and often in opposite directions.

What is of interest to users?

Facebook formulates its USP (uniqueselling proposition) as the ability to send money as quickly and easily as a text message. However, similar services have long been invented and implemented by other companies. It's entirely possible that blockchain would allow Facebook to process transactions for the world's 1.7 billion unbanked adults. In countries with high inflation, such as Venezuela, buying Libra could be a way to save savings from depreciation.

Why do you need Facebook

The company is going through hard times:Revenue growth rates are falling, and Libra could open up new opportunities in the field of payment services and commerce. Facebook's partners have their own motives: if Libra revolutionizes the payments business, Mastercard will likely want to get involved. However, potential partners must take into account increased bias on the part of politicians and regulators.

Why are stablecoins important?

Stablecoins are considered a bridge between cryptocurrencyworld and traditional money because they make conversion easier. JPMorgan Chase & Co. is developing a stable coin (JPM Coin) for its clients. The bank intends to use it to make domestic 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 up with its initiative in the midst of a scandal about the abuse of data from users of the social network. presidential campaign. However, what worries them most is the possibility of losing control of their own currencies if Libra begins to gain popularity. Meanwhile, the US Securities and Exchange Commission's decision to classify Libra as a security - that is, to define it not as a currency, but as a tradable financial asset - will complicate and burden the project and may be a death sentence for it.

What central banks say

Many central banks, including the Bank of China,decided to focus on how far they themselves have come in the creation of digital currencies. And Mark Carney, head of the Bank of England, mentioned Libra when discussing the problems associated with using the US dollar as the world's reserve currency and the most common instrument 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 stablecoin fully backed by reserve assets in a basket of currencies.” This is very similar to Libra, only it will be controlled not by Facebook, but by central banks.

How do you feel like Libra. Do you consider this project promising?