Libra is the cryptocurrency created by Facebook, the purpose of which is to allow even those without a bank account or credit card to be able to access an electronic payment method in order to make purchases online.
Why was Libra created and what is its aim?
Libra is part of a revolutionary change. At present there are over one billion, 700 million people worldwide who have no dealings of any kind with banks and they are the Libra Association’s main target.
This new virtual currency is designed to simplify financial transactions as much as possible, making them available for use via the most widely used social networks. The main device used for these exchanges will be the smartphone, thanks to specially designed apps. Similar functionalities are also expected to be added to Facebook-owned apps (including Messenger and WhatsApp).
The user base is potentially enormous. Let us not forget that there are approximately 2.4 billion subscribers to the social network founded by Mark Zuckerberg total approximately worldwide. In addition, there are those who use the platforms of the 29 partners of the Libra Association (among which we can find the leading financial sector brands, telecommunications giants and others).
Libra is a stablecoin
What distinguishes Libra from the other cryptocurrencies currently in circulation is the fact that it is a stablecoin. In other words, its value is set to remain almost constant over time, as it is calculated according to the value of the American dollar.
In contrast with what happens to other virtual currencies then, its values will remain constant in the long term, so that investors will be protected from sudden market fluctuations. This is a considerable advantage, which makes Libra accessible and reliable from many viewpoints, leading to its status as the ‘people’s currency’ of social networks.
Although no official sources are available yet, it seems that recently leaked information positions the value of 1 Libra at 1.0493 Dollars which, if converted into Euros, is approximately 0.94 cent. Price stability is guaranteed by low volatility assets, which include bank deposits and government bonds.
How secure is Libra?
The security of transactions which will be made using Libra, is supported by a system of permissioned blockchains. This means that every exchange of virtual money must pass through a number of controlled hubs, before it can be approved.
The aim of the creators of this innovative cryptocurrency is to make transactions immediate, just like sending a message on social networks. It is expected that, once a strong and reliable system has been established, a permissionless blockchain will be used (as already used by other cryptocurrencies), which will enable faster exchanges among users.
Requirements for Libra use
The introduction of Libra is expected in 2020, only after all the control systems have been tested and are operational, so that total security can be guaranteed. In order to use it, it will be sufficient to create a digital portfolio, which will be added to the apps owned by the Facebook group and which may be accessed through the dedicated apps.
Credit cards will not be needed and neither will a bank account. All that will be required is that a user confirms their personal details with a valid ID document. Once their profile has been verified, it will be possible to carry out any electronic transaction immediately.
Translated by Joanne Beckwith