FB unveils global digital currency

San Francisco, June 18

Facebook announced on Tuesday it is launching its own cryptocurrency called “Libra”, in a move aimed at creating a low-cost global payment system available through smart devices. The launch is expected in the first half of 2020.

Libra, described as “a new global currency” and set to roll out next year, is being backed by about 25 partners.

The new currency is to be supported by real assets and regulated. It will be available through Facebook’s own digital wallet called Calibra and other services. Libra will be a digital currency backed by a reserve of real-world assets, including bank deposits and short-term government securities, and held by a network of custodians.

Although Libra prices may not always align with the underlying assets, holders should have a “high degree of assurance” that they can convert coins into traditional currency based on an exchange rate. Libra will trade on a network of exchanges, which Facebook did not identify. Executives envision users purchasing Libra through the app either by linking a bank account or, for people without banks, at physical locations like cash transfer businesses and convenience stores. — Agencies

BLOCKCHAIN TECHNOLOGY

• Libra transactions will be powered and recorded by a blockchain, which is a shared ledger of transactions maintained by a computer network
• Only entities authorised by the governing association will be able to run the computers
• Its governance differs from bitcoin, which does not have an entity in charge
• Software will be ‘open source’, meaning firms outside the association can build applications on top of it

THE ASSOCIATION

• The Libra Association is a 28-member independent non-profit based in Geneva, Switzerland. It will oversee major decisions about the digital coin
• Members include Mastercard Inc, Visa Inc, Spotify Technology SA, PayPal Holdings Inc, eBay Inc, Uber Technologies Inc and Vodafone Group Plc
• There is a minimum $10 million investment to join, except for non-profit members like financial inclusion group Kiva. Association aims to have 100 members by launch

THE WALLET

• Individuals and merchants will be able to use Calibra to store, send and receive Libras
• It will be available as a standalone app on smartphones, as well as a button within Facebook’s Messenger and WhatsApp products
• Facebook eventually wants to make Calibra available for transactions across its family of apps, such as digital checkouts for purchases on Instagram

PRIVACY & SECURITY

• Every person who uses Calibra will have to go through a “know your customer” process
• Businesses will see the same information about customers who pay with Libra as they do about customers who pay with credit cards