Facebook has established a new subsidiary called Calibra to create financial services for Libra
Facebook has unveiled its proposed new global cryptocurrency, called Libra, which will be launched in the first half of 2020.
Libra has been put together by Facebook with with 27 different organisations from around the world. Facebook has also established a new subsidiary called Calibra, which will create financial services for Libra and provide a digital wallet for users to save and spend the digital currency.
Calibra's digital wallet will be connected with WhatsApp and Facebook Messenger, and will also be available as a standalone app.
Libra will not be a speculative asset, like Bitcoin. Instead, it will be a digital currency backed by a reserve of assets.
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"The Libra Blockchain is a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world," reveals Libra website.
Facebook believes the new currency will not only enable transactions between businesses and consumers across the globe, but will also provide unbanked consumers in developing countries access to financial services.
The goal is to eventually create a mainstream cryptocurrency that anyone can use to buy almost anything, and which can also support the complete range of financial products, from loans to credit to banking.
To achieve that goal, Facebook has created the nonprofit Libra Association with 27 other organisations, to be based in Geneva, to manage Libra.
Facebook's partners in this project include non-profit organisations, venture capital firms, crypto companies, technology and telecoms firms and financial service providers. Prominent names backing Libra include Mastercard, PayPal, Coinbase, Visa, eBay, Spotify, Vodafone, Uber and Lyft.
According to Facebook, the new currency will be independently managed and backed by real assets. Each member of the Libra Association will contribute a minimum of $10 million to the joint venture, giving it more than $1 billion backing the new digital currency. This asset pool, dubbed the Libra Reserve, will ensure that the Libra currency is backed by conventional assets.
Sending Libra to other users would be as easy as sending a "text message", according to Facebook.
"In time, 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 company claimed in a blog posting.
Libra payments ought to be accepted by all members of the Libra Association, initially. Facebook also expects the new digital currency to be bought and sold on currency markets in the future.
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