Rumors of a “Facebook Bitcoin” have been floating the web for weeks now, if not longer. Well, the company finally took the wraps off its new cryptocurrency, and it’s not a Bitcoin at all. Nor does it belong to Facebook.
We usually recommend you steer clear of all cryptocurrency coins (Bitcoin or otherwise). It’s volatile, generally unsecured, and it’s not uncommon to lose most your value or just have your currency stolen.
Bitcoin really isn’t a currency at all, but the idea behind the blockchain, the technology that powers cryptocurrency, is sound. If a cryptocurrency was implemented correctly, in many ways, it could be essentially a digital equivalent to cash. You can spend it anonymously, unlike a credit or debit card, and each transaction is verified, like marking a $20 bill to check that it’s real. The analogy breaks down when you get into how most digital coins act though. They usually aren’t stable, fees for transactions are high, and depending on resources transactions can be slow to process.
The new Libra coin seeks to solve those underlying issues. It’s designed to be stable, low in fees, and quick to use. You might be worried about Facebook having control and hooks into the digital coin, but the company gave up majority control to get both people and other companies on board.
To start, founding members include Visa, Mastercard, Stripe, eBay, Spotify, and more. Many of the companies listed specialize in payment processing (like Visa and Mastercard). And each, along with Facebook, has an equal say in the governing board.
And you’ll have privacy, especially from Facebook. What you won’t do is make money. Again, Libra is designed to be stable. Your cash value shouldn’t go up (or down). And you won’t earn interest either. Instead, the founding members (who have to invest heavily in the entire system) will earn interest on the cash stored in the system.
But the entire system could be beneficial to those who can’t or won’t use banks. If Libra is adopted widely, and it’s already on track for that out of the gate, then someone without a bank could theoretically go to a currency exchange, trade in cash for Libra, and then spend that Libra somewhere else, on the internet or otherwise. Or send it to a friend through a digital wallet.
Libra won’t be available until sometime in 2020, and it’s too early to recommend jumping in the deep end of this crypto pool yet. But it’s a solid entry that shows a lot of promise. [TechCrunch]
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