Facebook’s latest plan is to develop a new and simple global currency to compete with the likes of decade-old Bitcoin and it is called Libra.
Their vision in their own words is that “Libra is a global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology. People will be able to send, receive, spend, and secure their money, enabling a more inclusive global financial system.” The social giant, led by CEO, Mark Zuckerberg, finally released a pre-anticipated white paper outlining the technicalities of the new cryptocurrency and suggesting a target launch of early 2020.
The company already has backing from other large organisations that will, according to the white paper, form the “Founding Members”. Some of the companies include eBay, Spotify, Booking.com, VISA, MasterCard and PayPal and they are suspected to have paid £8 million each to join the independent body which is known as the Libra Association.
Libra will be simple to use and accessible to anyone with an entry-level smartphone and data connectivity and enables users to make fast transactions wherever they are sending or spending their money.
A key part in their “Problem Statement” discusses the issues with Global banking and also highlights the 1.7 billion adults who do not have access to a traditional bank. “All over the world, people with less money pay more for financial services. Hard-earned income is eroded by fees, from remittances and wire costs to overdraft and ATM charges. Payday loans can charge annualized interest rates of 400 percent or more, and finance charges can be as high as $30 just to borrow $100. When people are asked why they remain on the fringe of the existing financial system, those who remain “unbanked” point to not having sufficient funds, high and unpredictable fees, banks being too far away, and lacking the necessary documentation.”
Facebook have also created the company Calibra which will act as a wallet for Libra coins and it has the potential to become the biggest cryptocurrency wallet worldwide.
The currency has received mixed views as Facebook isn’t exactly known to be the most secure of companies and it may be hard to build trust for people to start banking with them, however, with the backing of multiple global brands it looks set to have a good go at changing their minds.