The aim of this article is to trigger better understanding and awareness about the new FB global fintech instrument and tool, Libra and Calibra ..
The world is getting ready for the 2020 Facebook crypto currency Libra and digital wallet Calibra launch pegged on the US dollar or EU Euro ..
The world is getting ready for the 2020 Facebook crypto currency Libra and digital wallet Calibra launch pegged on the US dollar or EU Euro ..
With enough safety measures set to prevent laundering and frauds as claimed, will the Libra Blockchain enabled Libra cryptocurrency be a global hit ? This could seriously disrupt banks and economies across the world.
Will the countries of the world take to this development wholeheartedly or ban it straightaway?? What will be the countermeasures taken by sovereign countries and their national and private banks to counter Libra ?
To know more about Libra, read the white paper (click here)
The Libra Association is described by Facebook as an independent, not-for-profit organisation based in Switzerland. It serves two main functions: to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes. - Guardian.com
Click here for a Guardian report ..
Facebook claims that although it created the Libra Association and the Libra Blockchain, once the currency is launched in 2020 the company will withdraw from a leadership role and all members of the association will have equal votes in governance of Libra. The companies who contributed a minimum of $10m(£8m) to be listed as founding members of the Libra Association include tech companies such as PayPal, Ebay, Spotify, Uber and Lyft, as well as financial and venture capital firms such as Andreessen Horowitz, Thrive Capital, Visa and Mastercard. - Guardian.com
Libra's operational control will not be with Facebook but with Libra Association, which is a list of the initial 28 members who contributed $10 million to the Libra corpus. This is to allay any fears with the global community that Facebook would besides having control over their social media data, would also have a grip over their monetary transactions data.
The 28 Founding partners of the Libra Association are as follows - payments (5), technology and market place companies (8), telecommunication companies (2), Blockchain companies (4), venture capital firms (5) and non-profit multilateral organisations (4).
Market value for crypto-currencies (cc) globally now stands at between $100 billion - 136 billion. The best way to understand the dynamics of a system is to discuss the strengths, weaknesses and challenges of the system. Similarly in the crypto-currency system, it is indeed a good step to try to understand what are the challenges facing the system ..
INSEAD Finance Professor Antonio Fatas writes in this 2018 article in HBR (click here), how banks can be severely inconvenienced or otherwise with the launch of crytocurriencies in general.
From an educational and awareness perspective what are the other challenges the new cryptocurrency is likely to encounter ? Do you think Libra will succeed or be just like any other global national currency ? Do you think FB should transition from social media and communication world to the Fintech world too ?
George..
Facebook claims that although it created the Libra Association and the Libra Blockchain, once the currency is launched in 2020 the company will withdraw from a leadership role and all members of the association will have equal votes in governance of Libra. The companies who contributed a minimum of $10m(£8m) to be listed as founding members of the Libra Association include tech companies such as PayPal, Ebay, Spotify, Uber and Lyft, as well as financial and venture capital firms such as Andreessen Horowitz, Thrive Capital, Visa and Mastercard. - Guardian.com
Libra's operational control will not be with Facebook but with Libra Association, which is a list of the initial 28 members who contributed $10 million to the Libra corpus. This is to allay any fears with the global community that Facebook would besides having control over their social media data, would also have a grip over their monetary transactions data.
The 28 Founding partners of the Libra Association are as follows - payments (5), technology and market place companies (8), telecommunication companies (2), Blockchain companies (4), venture capital firms (5) and non-profit multilateral organisations (4).
- MasterCard;
- PayPal;
- Payu;
- Stripe;
- Visa.
- Booking Holdings;
- eBay;
- Facebook Calibra;
- Farfetch;
- Lyft;
- Mercado Pago;
- Spotify;
- Uber.
- iliad;
- Vodafone.
- Anchorage;
- BisonTrails;
- Coinbase;
- Xapo.
- Andreessen Horowitz;
- Breakthrough Initiatives;
- Ribbit Capital;
- Thrive Capital;
- Union Square Ventures.
- Creative Destruction Lab;
- Kiva;
- Mercy Corps;
- Women’s World Banking.
Market value for crypto-currencies (cc) globally now stands at between $100 billion - 136 billion. The best way to understand the dynamics of a system is to discuss the strengths, weaknesses and challenges of the system. Similarly in the crypto-currency system, it is indeed a good step to try to understand what are the challenges facing the system ..
Some of the challenges with crypto-currencies are given below (click here for an interesting link)
1. Too volatile and unsustainable - The big holders of cc (whales) make frequent buy and sell walls on crypto-trading platforms by coming up with a selling proposition. This usually dampens the prices on the platform leading to high volatility. Smaller traders dispose of their stocks, enabling the whales to acquire more stock at low rates. The extreme volatility is observed when the prices fluctuate by as much as 49% in a time span of 24 hours.
2. Unregulated markets - Governments have not yet entered this market with the result that more ccs are introduced with high volatility in their prices. Unfair practices cannot be prevented by law. People are hesitant to enter the market out of fear who is responsible if data is hacked, ccs are stolen, governments bring in regulations to stall growth etc.. No rules to prevent laundering of money or black marketing or funds being diverted for paying for drugs, smuggling, kidnappings etc, can only increase the distrust in the minds of the people.
3. Technical limitation - On the present blockchain network only about 10-100 transactions are possible to be finalised per second, while actually transactions many times that number do happen, leading to frustration and slow transactions
4. Limited areas accepting cryptocurrency - Due to lesser stores and establishments accepting ccs, customer dissatisfaction is high leading to distrust and finally low usage
5. Limited functionality - presently cc trading happens by just sending cc across the network. Actually we need to enable different types of accounts, built-in payment systems, mobile top-up, encrypted messaging, a more unified open platform etc ..
6. Costly for the time being - Due to low penetration, the customer now pays heavily for the transactions, which needs to be reduced to a uniform rate.
7. A disruptive tool : Bitcoin trade could disrupt banks present intermediary role in financial transactions in a big way and could greatly undermine their current influence on societies.
8. Visibility across media - Will my social media friends see my financial transaction data ?How will Libra overcome these challenges ? Libra can provide a fast and reliable blockchain platform for faster transactions. It can bring in valuable and interesting functionality than just trading in cc, due to the wide clientele FB has, the usage can spread very fast, if initially some free credit could be given to each customer (an airdrop to kickstart activities in the system).
INSEAD Finance Professor Antonio Fatas writes in this 2018 article in HBR (click here), how banks can be severely inconvenienced or otherwise with the launch of crytocurriencies in general.
From an educational and awareness perspective what are the other challenges the new cryptocurrency is likely to encounter ? Do you think Libra will succeed or be just like any other global national currency ? Do you think FB should transition from social media and communication world to the Fintech world too ?
George..
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