Head of Policy and Communications for the Libra Association Dante Disparte discusses the new cryptocurrency, Libra, that will be used with Facebook's cryptocurrency project called Calibra.
Facebook (FB) on Tuesday announced the details of its widely-rumored cryptocurrency project: a financial services offering called Calibra.
Calibra is a “newly formed Facebook subsidiary” and its first product, launching in 2020, will be a digital wallet to store and send Libra, a new cryptocurrency.
The digital wallet will initially be available inside WhatsApp and Facebook Messenger, and eventually as a standalone app for iOS and Android.
Calibra will enable users to send Libra to each other “as easily and instantly as you might send a text message, and at low to no cost.” Eventually, Facebook says, “we hope to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code, or riding your local public transit without needing to carry cash or a metro pass.”
The differences between Calibra and Libra
Libra, the cryptocurrency, will run on its own Libra blockchain, which today launches an open-source testnet. The blockchain and cryptocurrency will all be overseen by the Libra Association, a not-for-profit that is separate from Facebook and headquartered in Geneva.
The Libra Association posted its announcement at the same time as Facebook’s Calibra announcement, and says it is targeting the first half of 2020 to launch the cryptocurrency.
The cryptocurrency will be backed by the Libra Reserve, a “collection of low-volatility assets like bank deposits and government securities, in currencies from stable and reputable central banks,” a Libra Association spokesperson tells Yahoo Finance.
Libra Association says Libra is not a stablecoin, because it is not pegged to a single currency and does not have a fixed value in any fiat currency. Rather, a spokesperson says, it will be “a blend of multiple currencies,” so its value “will fluctuate in any given local currency, and exchanges will charge a spread above or below the value of the reserve.”
Libra Association’s “founding members” include: Facebook; Coinbase; Visa; MasterCard; PayPal; Stripe; Uber; Lyft; eBay; and Spotify. Every founding member has committed to a minimum investment of $10 million, Libra Association says.
These companies will “work together on finalizing the association’s charter” but the Libra Association is not yet saying whether being a founding member means that all of these organizations will accept Libra as payment when it launches.
The announcement stresses that the Libra Association is “independent.” But considering the co-orchestrated launch and simultaneous announcements, critics may scoff at the idea that Libra is truly separate from Facebook.
There will also surely be widespread debate over whether Libra is truly a decentralized cryptocurrency.
Promises about security
In a companion document to its announcement, Calibra stresses repeatedly that it will prioritize security. Calibra will be a regulated entity, and will keep customers’ financial data separate from Facebook social data. (Facebook has long had ambitions of offering financial services.)
[Facebook hasn't told us: why launch a cryptocurrency?]
The security guidelines continue, in boldface type: “Calibra will not share account information or financial data with Facebook, Inc or any third party without customer consent. For example, Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook, Inc family of products.”
For the rest of this story by Yahoo Finance's Dan Roberts click:
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