Facebook Set to Shakeup Cryptocurrency Market With the Launch of its Own Crypto Named ‘Libra’ in 2020

The currency is known as Libra. The social network says it has “no special role” in governing the cryptocurrency and will manage the reserve equally with a group of big companies.

According to Facebook CEO, Mark Zuckerberg in a post; “Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world. It’s powered by blockchain technology and the plan is to launch it in 2020.”

The currency is designed not to be a speculative asset, like Bitcoin, but a form of digital money backed by a reserve of assets. You will one day be able to use Libra as payment for online and offline services, Facebook executives say.

In the beginning, the company imagines Libra will be used mainly to transfer money between individuals in developing countries who lack access to traditional banks. Eventually, the goal is to create the first truly mainstream cryptocurrency: a decentralized global form of payment that is as stable as the dollar, can be used to buy almost anything, and can support an entire range of financial products — from banking to loans to credit.

Although Facebook is building Libra and plans to run the project through the end of this year, eventually it plans to cede the project to a larger community.

The company has formed the nonprofit Libra Association with 27 other partners to oversee Libra and its development. The partnership includes venture capital firms, nonprofit organizations, crypto firms, and massive corporate finance, telecommunications, and technology service providers, including Coinbase, Mastercard, Visa, eBay, PayPal, Stripe, Spotify, Uber, Lyft, and Vodafone. Those organizations will also contribute to what is known as the Libra Reserve, the asset pool that will ensure every unit of Libra currency is backed by something of intrinsic value rather than by simple scarcity, as Bitcoin is.

Founding members had to meet strict guidelines as per its Evaluation Criteria. For instance, crypto hedge funds had to have an Asset Under Management (AUM) above $1 billion while digital asset-focused custodians had to store at least $100 million. Non-crypto firms needed to have a market cap of more than $1 billion or boast customer balances equaling more than $500 million. A source familiar with Facebook’s ambitions said it was originally looking to involve Wall Street institutions such as Goldman Sachs and JPMorgan, but it was unable to secure their interest.

Facebook hopes to have over 100 cofounding members of the Libra Association by the time the network launches next year.

Facebook is also launching an independent subsidiary called Calibra that will build services that let you send, spend and save Libra — starting with a digital wallet that will be available in WhatsApp and Messenger and as a standalone app next year.

Facebook says “Calibra will be regulated like other payment service providers. Any information you share with Calibra will be kept separate from information you share on Facebook. From the beginning, Calibra will let you send Libra to almost anyone with a smartphone at low to no cost. Over time, we hope to offer more services for people and businesses — like paying bills with the push of a button, buying coffee with the scan of a code, or riding local public transit without needing to carry cash or a metro pass.”