All you need to know about Facebook upcoming Libra Cryptocurrency and Calibra Wallet
Since 2018, Facebook had shown much interest in cryptocurrency. Concerning its creation, CEO Mark Zuckerberg said he wants to make sending money as easy as sending a photo: digital, immediate, free and secure. On Tuesday 18th of June 2019, Facebook formally unveiled its highly-anticipated digital currency project called Libra. The aim of this cryptocurrency is to create a low-cost cost global payment available through high and low smart devices.
|Libra Association||Governing body|
|Integration||Facebook Messenger, WhatsApp etc|
What is Facebook Libra Cryptocurrency?
The name Libra comes from the word for a Roman unit of weight measure. The unit of currency is called “Libra.” This means; A Libra is a unit of the Libra cryptocurrency that’s represented by a three wavy horizontal line Unicode character ≋ like the dollar is represented by $. The value of a Libra is meant to stay largely stable, so it’s a good medium of exchange, as merchants can be confident they won’t be paid a Libra today that’s then worth less tomorrow.
Libra is made up of three parts that will work together to create a more inclusive financial system:
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
The Libra’s coin value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies, including the dollar, pound, euro, Swiss franc and yen. The Libra Association maintains this basket of assets and can change the balance of its composition if necessary to offset major price fluctuations in any one foreign currency so that the value of a Libra stays consistent.
Although The Libra Association is still hammering out the exact start value for the Libra, however, it’s meant to be somewhere close to the value of a dollar, euro or pound so it’s easy to conceptualize. The idea is that you’ll cash in some money and keep a balance of Libra that you can spend at accepting merchants and online services.
You’ll be able to trade in your local currency for Libra coin and vice versa through certain wallet apps, including Facebook’s Calibra, third-party wallet apps and local resellers like convenience or grocery stores where people already go to top-up their mobile data plan.
Each time someone cashes in a dollar or their respective local currency, that money goes into the Libra Reserve and an equivalent value of Libra is minted and doled out to that person. If someone cashes out from the Libra Association, the Libra they give back are destroyed/burned and they receive the equivalent value in their local currency back.
That means there’s always 100% of the value of the Libra in circulation, collateralized with real-world assets in the Libra Reserve. It never runs fractionally. And unlike “pegged” stable coins that are tied to a single currency like the USD, Libra maintains its own value — but that should cash out to roughly the same amount of a given currency over time.
Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra. That means anyone with Libra has a high degree of assurance they can convert their digital currency into local fiat currency based on an exchange rate, just like exchanging one currency for another when travelling.
What is Facebook Calibra Wallet?
Calibra, a new digital wallet that you’ll be able to use to save, send and spend Libra. Calibra wallet will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost. And, in time, hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a barcode or riding your local public transit without needing to carry cash or a metro pass.
According to Facebook, when it launches, Calibra wallet will have strong protections in place to keep your money and your information safe. Calibra will use the same verification and anti-fraud processes that banks and credit cards use and will have automated systems that will proactively monitor activity to detect and prevent fraudulent behaviour.
Unlike Facebook without live support, Calibra wallet will have dedicated live support to help if you lose your phone or your password — and if someone fraudulently gains access to your account and you lose some Libra as a result, Calibra will offer you a refund.
According to Facebook, your privacy is protected. Aside from limited cases, Calibra wallet will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products.
The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity. You can read more about our commitments to privacy and consumer protection here.
Calibra is still in its early stage of development. Facebook will be consulting with a wide range of experts to make sure they deliver a product that is safe, private and easy to use for everyone.
Purpose of Facebook Libra coin and Calibra Wallet
The purpose of Facebook Libra currency can be found in its problem of statements which states that; 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access.
For too many, parts of the financial system look like telecommunication networks pre-internet. Twenty years ago, the average price to send a text message in Europe was 16 cents per message. Now everyone with a smartphone can communicate across the world for free with a basic data plan. Back then, telecommunications prices were high but uniform; whereas today, access to financial services is limited or restricted for those who need it most — those impacted by cost, reliability, and the ability to seamlessly send money.
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% 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.
Blockchains and cryptocurrencies have a number of unique properties that can potentially address some of the problems of accessibility and trustworthiness. These include distributed governance, which ensures that no single entity controls the network; open access, which allows anybody with an internet connection to participate; and security through cryptography, which protects the integrity of funds.
But the existing blockchain systems have yet to reach mainstream adoption. Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange. Some projects have also aimed to disrupt the existing system and bypass regulation as opposed to innovating on compliance and regulatory fronts to improve the effectiveness of anti-money laundering.
Facebook believes that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure and trusted framework underpins this new system. And this approach can deliver a giant leap forward toward a lower-cost, more accessible, more connected global financial system.
Facebook asserted that with Libra,
- Many more people should have access to financial services and to cheap capital.
- People will have an inherent right to control the fruit of their legal labour.
- Global, open, instant, and low-cost movement of money will create immense economic opportunity and more commerce across the world.
- People will increasingly trust decentralized forms of governance.
Privacy structure of Libra coin currency and Calibra:
With two years of near-endless privacy and governance scandals, including the Cambridge Analytica data breach, playing a prominent role in electoral disinformation, and the exposure of its data-sharing agreements with Chinese phone makers, the public are not convinced about how privacy data is control.
Facebook’s tendency to hoover up and use user data in unexpected ways raises questions about whether people’s transaction history on Calibra will be truly kept separate from Facebook’s other services, namely the core blue app, Instagram, and WhatsApp.
Facebook assured the general public that Libra currency is indeed decentralized — meaning it’s run by many different organizations instead of just one, making the system fairer overall. Calibra will be regulated just like any other payment provider and that any information you share with Calibra will be kept separate from information you share on Facebook.
Zuckerberg in a post added that Libra and Calibra were an important plank in Facebook’s move towards being a privacy-focused social network. He wrote:
“This is an important part of our vision for a privacy-focused social platform where you can interact in all the ways you’d want privately, from messaging to secure payments. “Privacy and safety will be built into every step. For example, Calibra will have a dedicated team of experts in risk management focused on preventing people from using Calibra for fraudulent purposes. We’ll provide fraud protection so if you lose your Libra coins, we’ll offer refunds. We also believe it’s important for people to have choices so you’ll have the options to use many other third-party wallets on the Libra network.”
Facebook CEO Mark Zuckerberg has promised that Calibra will not put peoples’ money or privacy at risk, and that transaction data would not be shared with Facebook.
How does Libra coin work:
Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app.
Also, Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.
What are Libra transaction fees?
For now, Calibra won’t make money. Calibra’s head of product Kevin Weil explains that transaction fees aren’t the primary business model, “We want to reduce fees for everyone. We’re not planning to charge fees for peer-to-peer [payments]. There may be low fees for merchant payments, but that’s just to cover the cost of the risk and fraud and chargebacks,” he says. “We imagine that those fees will be an order of magnitude lower, like 10 times lower, than what they are today.”
The real goal, Weil says, is to boost adoption to the point where Libra can have a vibrant financial services economy built on top of it, not just by Facebook but by any other company in the world. Libra will be more accessible to the unbanked, more flexible thanks to developers and more long-lasting through decentralization.
Who or what is Libra Association
The Libra Association is made up of a group of diverse organizations from around the world. The Founding Members of the association each run one of the validator nodes that form the network that operates the Libra Blockchain. One of the association’s directives will be to work with the community to research and implement the transition to a permissionless network over time.
The Libra Association works to evolve and scale the network and reserve and leads a social impact grant-making program that supports financial inclusion efforts worldwide. The association collaborates with the global community and partners with policymakers to help further the Libra mission.
The Libra Association will be responsible for recruiting more founding members to act as validator nodes for the blockchain, fundraising to jump-start the ecosystem, designing incentive programs to reward early adopters and doling out social impact grants. A council with a representative from each member will help choose the association’s managing director, who will appoint an executive team and elect a board of five to 19 top representatives.
Each founding member paid a minimum of $10 million to join and optionally become a validator node operator (more on that later), gain one vote in the Libra Association council and be entitled to a share (proportionate to their investment) of the dividends from interest earned on the Libra reserve into which users pay fiat currency to receive Libra.
This initial group of organizations will work together to finalize the Libra Association’s charter and will become the association’s Founding Members upon its completion.
- Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
- Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
- Telecommunications: Iliad, Vodafone Group
- Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
- Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
- Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
Facebook says it hopes to reach 100 founding members before the official Libra launch and it’s open to anyone that meets the requirements, including direct competitors like Google or Twitter. The Libra Association is based in Geneva, Switzerland and will meet biannually. The country was chosen for its neutral status and strong support for financial innovation including blockchain technology.
Contact Libra Association
How to join the Libra Association
To join the association, members must have a half rack of server space, a 100Mbps or above-dedicated internet connection, a full-time site reliability engineer and enterprise-grade security. Businesses must hit two of three thresholds of a $1 billion USD market value or $500 million in customer balances, reach 20 million people a year and/or be recognized as a top 100 industry leader by a group like Interbrand Global or the S&P.
User Sign-up requirements for Facebook Libra currency
Calibra will require you sign up with a government-issued ID, and Facebook’s digital wallet will also provide fraud protection and a public commitment to never share your financial details or transaction history with the social network’s advertising divisions. In other words, your Facebook account data will largely be kept separate from your Calibra account.
Like I mentioned earlier, Calibra is still in the early stage of development. I will continue to share updates along the way. In the meantime, if you’d like to be among the first to know when Calibra is available for sign up, follow Fatherprada on Facebook.
Facebook’s Calibra digital wallet will not be available in some of the social network’s largest markets, including India where there are over 260 million Facebook users, according to a TechCrunch report on June 19.
A spokesperson told the website:
“The libra blockchain will be global, but it will be up to custodial wallet providers to determine where they will and will not operate. Calibra won’t be available in U.S.-sanctioned countries or countries that ban cryptocurrencies.”
Earlier this month, Indian lawmakers proposed tough new regulations that could see citizens face a 10-year jail term if they deal in cryptocurrencies
Facebook Libra Features
- Mobile: Libra will be accessible to anyone with an entry-level smartphone and data connectivity.
- Stable: Libra is backed by a reserve made to keep its value stable.
- Fast: Libra transactions are quick and easy, no matter where you are sending, or spending, your money.
- For the world: Libra is a global cryptocurrency that will be available around the world.
- Scalable: Libra will foster an ecosystem of products and services made to help people use Libra in their everyday lives.
- Secure: Libra is a cryptocurrency, built on a blockchain designed with security in mind.