Doubts and certainties about facebook’s new currency
Facebook’s new cryptocurrency Libra, has put the global financial sector in a debate whether it could revolutionize the economy of today. We asked some experts to understand what might happen to Libra?
Mark Zuckerberg’s company has created the Libra Association with more than 28 companies to develop the currency, but this week the U.S. Federal Reserve has expressed concern about this payment method. We talked to experts to draw the map of cryptocurrencies, blockchain and the future of the Libra.
Libra is the cryptocurrency of a consortium consisted of Facebook and some other famous companies. The aim of the Libra is to provide safer and faster transactions with the minimum fees possible. As the small companies getto increase their sales and transactions with the minimum costs they will be tending to place more ads on Facebook and Facebook will earn more. This is win-win situation for Facebook and small companies suffering from high transaction fees and difficulties.
The most important aspect of launching Libra for the facebook is that it will put a clear discrimination between the payments and personal security. At the end of the day you will not be forced to share your personal privacy during the payment if you chose the Libra of course as a payment method.
What is a cryptocurrency?
It’s the digital representation of a value. The best known is Bitcoin, which began circulating in 2013 and peaked in 2021 when a Bitcoin value reached more than 61,000 dollars.
It is not issued by any bank, any company or any State and just be transmitted between personal wallets or exchange company wallets. Basically it is a currency that works only on the internet and by using the blockchain.
What is blockchain?
As the name implies in English, it is a blockchain. Each block would be, in this case, one page in an ledger, and each page has a number that is chained to the next. So when it comes to blockchain, it’s a logbook. This ledger writes down the transactions that are made on the Bitcoin network and this ledger is hosted on as many computers as there are on the network.
What is the role of the miners here? A Bitcoin miner is a computer capable of generating a new page for this ledger. “The bitcoin network generates a page in every 10 minutes where all the transactions that are being carried out in the world continue to be recorded,” explains an expert in blockchain and cybersecurity.
Bitcoin is different from regular currencies
Two different assets must be understood as cryptocurrencies. Cryptocurrency is usually spoken of as Bitcoin. And yes, bitcoin is one of them, but not the only one.
Bitcoin fluctuates in the market, i.e. its value changes with speculation and is freely regulated in the market. Instead, behind Libra there will be a consortium of companies. The Libra Association has 28 founding members – including PayPal, Visa and even Uber – will monitor Facebook’s currency value and thus will regulate its price and marketcap.
What can you buy with Libra?
Technically you can buy almost anything you want using cryptocoins like Bitcoin. But for Libra you can exchange it only for what the company has allowed to. In the case of Facebook you can use it as Facebook credit and that serves to be able to make purchases in applications in the social network and namely in games. In order to make a purchase within the app, Facebook has two options: option A is to pay with euro, option B is to use Facebook credit and use them only within the apps.
Why has he been paralyzed?
States are afraid of losing control of the world. With the entry of a currency that controlled by a company, the world borders and the economies are suddenly becomes vulnerable as it is understood so far.
“What if the European Central Bank lost control over its currencies and Facebook and its consortium friends could use the their coin in every country in the world? What is being debated is whether it is worth giving the power of monetary control to a company which may be resulted in loosing the control over the economy.
“Facebook is not only Facebook, it also includes Whatsapp. If this virtual currencies prevail in all over the world that means in the news system there will be no needs to the banks. Making payments in social network had just started with-weChat a Huge Chinese Social Network- which gives the innovation medal to Chinese company not to Facebook.
Is it safer than having money in a bank?
It really depends. The bank has strong control, audits and insurance over its ledgers, while in the case of blockchain everything is stored in a book hosted on the computer network. “The difference is that the bank, being the only owner of its ledger, you can make changes and corrections and even historical corrections may be possible. However, in the blockchain once you type something you can no longer delete or modify it.