What is Facebook Libra Digital Currency?
Recently, Facebook announced that it is launching a global digital currency by the beginning of 2020. The global Facebook digital currency has been named as Libra. It will be executed by a Geneva-based organization that consists of over 30 founding partners, including Facebook, Mastercard, Visa, Uber, and the Vodafone group. Soon after the declaration, the lawmakers, commentators, and co-founder of Facebook raised immediate concerns.
Why does World need Facebook Digital currency?
The Libra association proclaims their mission is to authorize a facebook digital currency and a solid financial infrastructure that emancipates billions of people. We are living in a world, where we are utilizing cheap data and smartphones. In such a hard slapping scenario, more than a billion adults are still falling out of a feasible financial system in the world. Despite this, a billion users are having mobile phones and the same ratio of people is having Internet access.
The major reasons behind this are excess fees, minimal access, and lack of documentation. Facebook Digital Currency has been taken into existence as a solution to this. The global currency assures financial incorporation at a global level.
The white paper issued by the Libra association says Operating money around globally must be flexible, safe and secure so that one can send a text message or share a photo, no matter where they are, what they are doing and how much they are earning.
How similar is Facebook Digital Currency to Bitcoin?
The Facebook digital Currency Help is being built on the blockchain technology. Bitcoin and Facebook both are built on blockchain technology. A blockchain is a form of the distributed ledger. It is a decentralized transfer of transactions. Both are created by complex math functions that make them almost unscrupulous. On the contrary, there is hardly any similarity between Bitcoin and Facebook Digital Currency.
Facebook Digital Currency is originated of by authoritative corporate entities. While Bitcoin first came into existence in 2008. It is seen as a product of libertarian values. What would happen if Bitcoin becomes a preference at a global level? What happens is, the ability for a government to fund itself through the manipulation of money will vanish. Inflation becomes transparent through Bitcoin. Central banks and private banks can’t create Bitcoins as it is a decentralized form of currency without the involvement of intermediaries. When the government is not involved in the process, one doesn’t need to pay for the prices of the government’s mistakes.
The Facebook Digital Currency is nothing like Bitcoin. The white paper association believes that conjoining and innovating with the financial sector is the only way to assure that a safe and secure framework promotes this new system.
How is facebook digital Currencies’ fate different from that of Bitcoin
Bitcoin had to face a lot of challenges as far as its regulation across the world is concerned. The Indian government has been suspicious of its functioning outside the field of systematic finance. With so many disadvantages, it is one of the most unstable currencies. Libra, on the other hand, has few things in its favor. It’s important that this Facebook global currency must be acceptable by the people. Facebook and its users must also accept the Facebook digital currency as the Libra Association is assuring to work according to the regulatory rule book. In addition, to make it a stable currency, the creators of Libra are supporting this with an accumulation of real assets. Still, it’s being opposed by the government.
Speed of transaction through Libra
Facebook Digital Currency can process around a thousand transactions per second as compared to Bitcoin’s seven per second. Bitcoin keeps its value stable by tight controls as compared to Bitcoin’s fluctuating values. The Facebook digital currency is targeting for mass adoption. Although Libra has not innovated on the blockchain, Facebook libra introduced by Bitcoin. It inspired focuses on competitive transaction fees and stable values for mass adoption.
Why the government is killing facebook digital currency
If Facebook is establishing Libra as a global medium of exchange, its potential to hamper not just banking systems but central banks too would be far more disturbing.
The Bank for International Settlements commented that cryptocurrencies issued by the big companies could effectively mark a dominant position in global finance. It will definitely pose a threat to competition and stability.
As compared to other cryptocurrencies which have less intrinsic value and volatile in nature. Hence, the Facebook digital currency would be sponsored by a basket of securities in a range of legal currencies. As individuals buy Libra, they will acquire a matching amount of securities. The process will be reversed, once the currencies are being redeemed. This means the value of Libras will be comparatively stable because they will be backed by assets denominated in a small number of major currencies. They might fluctuate significantly relatively to individual fiat currencies.
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