Facebook just disclosed the first details of its long-anticipated cryptocurrency, called Libra, according to a Dow Jones Newswires report made available to EFE on Wednesday. Here are some early takeaways:
What is Libra?
Libra is a new cryptocurrency - a digital currency that uses cryptography, a method of protecting information, to verify transactions - that Facebook will launch next year.
People who use Facebook's Messenger service, WhatsApp, or who download a stand-alone app will be able to access it through a digital wallet. It is an alternative to bitcoin that is powered by blockchain. However, Facebook hopes it will be used by a much wider base.
In ancient Rome, the libra was a unit of weight.
Wait, what's blockchain again?
Blockchain is a type of digital ledger that is distributed across a large network of computers, run by powerful mathematical computations. It is like a giant spreadsheet that is shared widely. Every time someone updates the spreadsheet, for instance by logging a financial transaction, every other user can see the change. That theoretically provides transparency and prevents any single central source from controlling the flow of information - or money.
So Libra is like bitcoin?
Yes and no. Both are essentially digital versions of cash designed to allow users to directly exchange value online, but there are major differences.
Facebook is looking to build a payments network by creating an online ecosystem on which users can buy things and pay each other. Bitcoin was conceived as a payment mechanism, but its network has had trouble processing a large number of transactions quickly. Instead, bitcoin has evolved into a kind of digital gold used to store value rather than exchange it.
Why is Facebook getting into this?
Facebook says its currency will make it possible to provide basic financial services to millions of people around the world who don't have a bank account, or who can't afford to send money overseas. It could help small businesses that can't get access to credit, too.
Will my data be safe?
Facebook is setting up a regulated subsidiary, called Calibra, that will provide access to the new currency and will separate financial data from other "social" data that Facebook uses on its platforms.
Will the currency gyrate like bitcoin?
Facebook says that because Libra will be backed by hard assets, things like real bank accounts and short-term government securities - similar to a real currency - it won't be as volatile.
Does Facebook control the currency?
The cryptocurrency network will be governed by Facebook and more than two dozen founding partners as part of a consortium the company hopes to grow further. Facebook will lead Calibra through 2019, but eventually the consortium will take over.
Isn't blockchain meant to have no central authority?
Facebook says the network will "move toward increasing decentralization over time," but hasn't elaborated on how.
Who are Facebook's partners?
Tech and payment giants like Mastercard Inc., PayPal Holdings Inc., Uber Technologies Inc. and Spotify Technology S.A. have already signed up to the consortium that will govern Libra. Facebook wants it to eventually have 100 members.
When can I buy a cup of coffee with Libra?
Facebook says as early as next year, but that will depend on where you live. Libra will probably only be available in a few places to start. And initially, it will only support 1,000 payment transactions per second. Compare that to Visa, whose network can handle around 24,000 transactions per second. And Alibaba Group Holding Ltd.'s Alipay processed more than 250,000 transactions per second on a busy shopping day in 2017.
Bitcoin can only process up to seven transactions per second.-