Facebook is poised to launch a cryptocurrency that offers a “faster, cheaper and more secure” alternative to traditional ways of making payments on the internet, according to reports.
The Daily Telegraph says the Libra virtual coin is designed to streamline the process of transferring money over the company’s social media platforms. The upcoming digital currency is expected to launch in the first half of 2020 and is being backed by 27 other firms and organisations, including Uber, Spotify, Mastercard, eBay and Vodafone.
Like bitcoin, Libra will be based on blockchain technology. However, Facebook says that a number of key differences will set its virtual coin apart from the world’s first cryptocurrency.
What is Libra?
The cryptocurrency will be used to transfer money between users on the social media giant’s messaging platforms and is based on a Facebook-created new version of the blockchain – “the encrypted technology used by bitcoin and other cryptocurrencies”, explains The Guardian.
This tech is powered by a series of computers, which means it is not controlled by one central authority and therefore offers users more privacy.
Facebook says that the virtual currency is aimed in particular at the the 1.7 billion people worldwide don’t have access to a bank account, such as women in developing nations, the BBC reports.
What does “Libra” mean?
According to The Guardian, the Libra name comes directly from “the basic Roman measurement of weight”.
“The abbreviation lb for pound is derived from Libra, and the £ symbol originally comes from an ornate L in Libra”, the newspaper says.
How is it different to bitcoin?
Although Libra and bitcoin both fall under the cryptocurrency umbrella, they serve different purposes in the wider market.
Facebook plans to develop Libra into a “global coin”, pegging it to “well-known currencies” such as the US dollar and British pound in a bid to prevent the “wild swings” of conventional cryptocurrencies such as bitcoin and Ethereum, says the BBC.
Initially, the virtual currency will be available only through Facebook’s chat apps, including WhatsApp and Facebook Messenger, but the other companies backing the digital coin may also begin accepting Libra payments shortly after its release next year.
The Verge reports that Facebook is also planning to install physical cashpoints for people to manage their Libra coins while out and about. And shopping outlets that accept the company’s cryptocurrency as payment may be offered “sign-up bonuses”.
By contrast, bitcoin was designed so that people could store and manage their money without going through a bank or larger corporation. As the cryptocurrency isn’t pegged to a real-world currency, its value is far more volatile than traditional money.
Although a limited selection of outlets accept bitcoin as a form of payment, the cryptocurrency is primarily used as a digital asset in which to invest.
Can anyone buy Libra?
Sort of. Facebook users will be able to swap their real-world money for Libra digital coins, in a similar manner to exchanging money for foreign currency.
As the Libra is pegged to a real-world currency, it doesn’t offer the same level of investment opportunity – or risk – as a more conventional cryptocurrency such as bitcoin or Ethereum.
Where can you store and spend Libra coins?
Although Facebook won’t be distributing any physical Libra coins, users will still need somewhere to store their virtual currency.
To that end, the company has developed a virtual wallet called Calibra. Not only will Calibra store Libra coins, but it will also be the app that people use to transfer money to other Facebook users, Calibra executive Kevin Weil told The Verge.
Elements of Calibra will also be embedded into Facebook Messenger and WhatsApp, which should further streamline the payment process.