What is Facebook’s cryptocurrency Libra and how does it work?
FACEBOOK is launching its own cryptocurrency next year with plans of allowing people to move money from their smartphone. But what is cryptocurrency, and how will Libra work? Here’s what you need to know. What is Facebook’s cryptocurrency Libra? Facebook is launching the cryptocurrency next year that will allow people to move money from their […]
FACEBOOK is launching its own cryptocurrency next year with plans of allowing people to move money from their smartphone.
But what is cryptocurrency, and how will Libra work? Here’s what you need to know.
What is Facebook’s cryptocurrency Libra?
Facebook is launching the cryptocurrency next year that will allow people to move money from their smartphone.
The currency is known as Libra, which the social network says it has “no special role” in governing and will manage the reserve equally with a group of big companies.
Experts have branded the move a dangerous power grab that marks Facebook’s “most invasive and dangerous” form of surveillance yet.
So far, Facebook has enlisted 28 firms, including Spotify and Uber, who each had to invest a minimum of £8million to be a founding member of the Libra Association, an independent not-for-profit membership organisation.
It wants to attract 100 businesses in time for launch, which it is aiming for the first half of 2020.
Libra is supported by a reserve of the world’s best assets and the world’s most trusted central banks, who gave the cryptocurrency “general cautious support”, according to David Marcus, who started exploring blockchain at Facebook a year ago.
How does it work?
The social network is hoping that its collaborative approach can ease volatility concerns of existing blockchains and cryptocurrencies.
Facebook will operate its own digital wallet for people to spend Libra, known as the Calibra Wallet, which will be available in WhatsApp, Facebook Messenger and as a standalone app.
Users will be able to send money to each other initially, at low to no cost, the social network said.
Eventually, it intends to open the Calibra Wallet up to additional services, so that people can pay bills, buy goods by scanning a code or accessing public transport.
Account information from Calibra will not be shared with Facebook to improve things like ad targeting, except for “limited cases” where this data may be shared “to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra”, the social network added.
Libra is open source, meaning anyone will be able to launch their own digital wallet and include the currency.
What is a cryptocurrency?
Bitcoin got you baffled? Here's what you really need to know
- A cryptocurrency is a virtual currency
- Examples include Bitcoin and the new Facebook-led coin “Libra”
- It’s traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or ‘blockchain’
- Crypto cash is created by mining
- Mining involves solving difficult maths problems using computer processors
- Coins can be traded anonymously, which makes them a popular way of funding illegal activities
- A single Bitcoin is worth over £7,000 today, but the value fluctuates wildly
What are other popular cryptocurrencies?
Bitcoin
Bitcoin is a virtual currency that was created in 2009 by an unknown computer whizz using the alias Satoshi Nakamoto.
Individual Bitcoins are created by computer code.
The total value of all Bitcoin in existence is now more than £112billion.
Transactions are made without middlemen, so there are no transaction fees and no need to give your real name.
More businesses are beginning to accept them and in some parts of the world, you can even buy pizza with Bitcoins.
You can set up a virtual wallet website like Blockchain to store, keep track and spend your digital money.
You are also able to purchase Bitcoin through an online exchange or Bitcoin ATM.
To find merchants that accept Bitcoin in the UK click here.
Bitcoins aren’t printed, like pounds, dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world.
It’s the first example of a growing category of money known as cryptocurrency.
MOST READ IN TECH
QuadrigaCX
Quadriga is a Canadian cryptocurrency exchange that has suspended all trading after its 30-year-old founder, Gerald Cotten, suddenly died.
It is estimated that around C$180million (£105million) in cryptocurrency is currently unaccounted for at the firm, which was granted temporary bankruptcy protection in a Canadian court.
Since Cotten died, the company said it is desperately trying to “locate and secure our very significant cryptocurrency reserves”, the BBC reports.
Court documents show Quadriga owes up to 115,000 users around C$250million – around C$70million in hard currency and a between C$180 and C$190 in cryptocurrency, depending on market values.