Libra, the facebook currency will be launched soon
A little like Bitcoin and a little like PayPal, Libra will be a new digital currency, one available to people without bank accounts or credit cards, but that could potentially be a major force for the rest of us, too. But first you have to trust Facebook with yet more personal data. Here’s what you need to know.
How does Facebook Libra work?
Libra is an upcoming digital currency that users can access through apps and use to pay for things or to send money to each other. In that way it’s a lot like PayPal.
But unlike PayPal, Libra is largely aimed at people without bank accounts.
To keep and exchange Libra, you’ll need to use a ‘wallet’: an app that might be integrated into existing apps, the way PayPal or Apple Pay is integrated into other apps. The current plan is to let many developers make their own wallets.
That’s one of several ways that Libra will try to avoid the weird, scam-my, gambling vibe of Bitcoin and other cryptocurrencies. This isn’t a coin that you buy because you think it will grow 100 times as valuable. It’s more like exchanging a dollar for a Euro.
You don’t need to know this next part, but it has some consequences that we’ll explain later. On the backend, Libra handles transactions with a blockchain, kind of like Bitcoin.
A blockchain is a distributed record of transactions that records who owns how much of a coin, and who transferred what coin to whom.
But while Bitcoin’s blockchain is distributed among everyone who uses it, Libra’s blockchain is managed by the Libra Association.
When is Facebook Libra coming?
The Libra plans to launch the coin some time in 2020. It will immediately be available on WhatsApp and Facebook Messenger, and through several other Libra partners.
Who made Facebook Libra?
The new coin and its underlying code are controlled by the Libra Association, a 28-partner consortium of companies and foundations, but Facebook is the driving force.
Founding partners include eBay, PayPal, Vodafone, Spotify, several investment firms and cryptocurrency companies, and a few non-profits.
Each partner gets a vote on group decisions. Each partner investat lest 15million, partly to build a reserve of fiat currency (that is, regular dollars) to exchange for Libra.
Facebook is one partner. Calibra, its wholly owned spinoff company, is another. The association hopes to add more partners over time, to further decentralize the currency and lower their own control over it—while also building faith in the currency as something bigger and “realer” than Flooz or airline miles or Disney Dollars.
Why would a company want me to use Facebook Libra?
To keep you as a customer
First, companies like Spotify say they want to get customers who currently can’t pay because they don’t have a credit card. Second, they can win your loyalty by encouraging you to keep your money in Libra, and use partnered promotions to swap customers, until every Uber customer joins Spotify and vice versa.
To save money
Keeping you in Libra could save these companies a lot of money. If they want to get your money via credit card, they have to pay a transaction fee. (That’s why so many local stores offer a “cash discount” or a minimum purchase, even though it’s against the credit card issuer’s rules. They hate sending so much of their money to Visa and Mastercard.)
To track your purchases
The biggest reason might be customer data. Libra transactions will be pseudonymous, you’ll be able to have an account that’s not linked to your real-world identity, but there will still be plenty of user behaviour to track.
Even aggregate data will give Libra’s members a valuable insight into customer behaviour, so they can better target advertising, and get you to spend more of your money. And while Libra and Facebook promise to keep a wall between your individual financial data and social data…
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