Facebook, others float new blockchain technology, Libra
Unveiled in the USA, yesterday, the take-off, according to the social network founded by Mark Zuckerberg is to hold by 2020.
The American firm is reported to have ploughed up to $1 billion (£800 million) on the project, with more spending envisaged.
Facebook’s cryptocurrency push is being overseen by a consortium known as Calibra, which is expected to have its own management structure because Facebook wants to bolster trust among users.
Calibra is formed by dozens of companies such as Visa, Mastercard, PayPal and Uber. In all, about 28 global companies partnered Facebook on the project.
Libra is a digital wallet, and will be available in Messenger, WhatsApp, and as a standalone app, by 2020.
The scheme represents a boost for the cryptocurrency industry, which has been hampered by wild price swings in recent years and criticism that digital coins are used to launder money.
Cryptocurrencies are a type of digital currency that allows payments to be made without transactions having to go through a centralised authority such as a bank. The payments are made through the use of a technology known as the blockchain, a decentralised peer-to-peer system that keeps a record of all payments made through a network of connected computers.
According to Facebook, Libra will be built on the Libra Blockchain a “secure, stable, and reliable blockchain” and backed by Libra Reserve, “a reserve of real assets” that will provide the cryptocurrency with “stability, low inflation, global acceptance, and fungibility.” The Libra Blockchain will be open-sourced under an Apache 2.0 License.
Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.
According to its White Paper, with the Libra currency built on the “Libra Blockchain,” it is intended to address a global audience. The software that implements the Libra Blockchain is open source — designed so that anyone can build on it, and billions of people can depend on it for their financial needs.
According to some founding members, it is an interoperable ecosystem of financial services that developers and organisations will build to help people and businesses hold and transfer for everyday use.
Head of Calibra, Facebook, David Marcus, said Libra holds the potential to provide billions of people around the world with access to a more inclusive, more open financial ecosystem.
Marcus said the firm looks forward to participating in the Libra network as a founding member, as well as through providing the community with access to Libra through Calibra. “We know the journey is just beginning, but together we can achieve Libra’s mission to create a simple global currency and financial infrastructure that will empower billions of people,” he stressed.
Executive Vice President, Digital Solutions, Mastercard, Jorn Lambert, said: “Tomorrow’s innovation may just be an idea today. We are committed to ensure that the Internet of Everything comes with the inclusion of everyone. By activating partnerships to explore, co-create, and test new ideas, we can cultivate ideas to make inclusion a reality sooner than some may think. This effort embraces that spirit.”
Co-Founder and CEO, Luno, Marcus Swanepoel, said: “We’ve always believed that cryptocurrencies will play a key role in addressing the acute financial needs of potentially billions of people around the world, in particular in developing economies.
This addresses some of the key shortcomings of traditional cryptocurrencies, and this initiative is uniquely positioned to unlock an enormous amount of value to consumers in these markets. It represents a highly disruptive step change not just for the cryptocurrency industry, but also for the broader financial system.”
Other Facebook Executives noted that Libra will need to be accepted in many places and easy to access for those who want to use it.
“In other words, people need to have confidence that they can use Libra and that its value will remain relatively stable over time. Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value. The Libra Reserve will be administered with the objective of preserving the value of Libra over time.”
The Libra Association is an independent, not-for-profit membership organization headquartered in Geneva.
According to the Libra Association, the existing blockchain systems have yet to reach mainstream adoption. The body noted that mass-market usage of existing blockchains and cryptocurrencies have been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.
Libra Association stressed that some projects have also aimed to disrupt the existing system and bypass regulation as opposed to innovating on compliance and regulatory fronts to improve the effectiveness of anti-money laundering.
“We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure, and trusted framework underpins this new system. And this approach can deliver a giant leap forward toward a lower-cost, more accessible, and more connected global financial system.
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