In astrology, Libra is the seventh sign of the zodiac, the fourth of positive nature and the third of cardinal quality. It symbolizes balance and harmony and its symbol represents the balance.
Facebook will present this week its own cryptocurrency that has been baptized with the name of Libra. At first, its use will be limited to buying through its platform, but Zuckerberg’s idea is to spread its use throughout the whole internet.
The social networking company revolutionized the way people communicate. Now Facebook wants to revolutionize the financial sector. One of the major differences with other cryptocurrencies such as Bitcoin or Ethereum is that it can be exchanged with non-virtual or traditional currencies at a stable exchange rate.
Taking Libra, users can send and receive money through Facebook, Messenger and WhatsApp, for free or at a low cost, but with a user experience of a modern bank.
The launch, for the 2020.
It shall not fund by its own, but Facebook wants to raise nothing less than the figure of 1 billion dollars. Libra is backing by 28 companies: Visa, MasterCard, PayPal, Spotify, Booking and Uber will be, among others, its key partners.
In previous years cryptocurrencies have suffered great volatility, partly fueled by partisan statements. Despite the allies discussed above, the great challenge of the technology company is to get Libra stable and maintain the value of the currency. Maybe name it with that name is the message and goal that Facebook wants to transmit.
Barriers to entry
In 2017, great interest in virtual currencies contributed to the creation of new cryptocurrencies and a large increase in prices. But despite thinking that the market is huge, they found two barriers to entry: the rate of adoption that was low and the regulation that does not contemplate its operation.
In this case, the first barrier to entry can be overcome by the large user base of the social networking company, which today has reached 2,271 million users. 30% of the world population. This can be as a shuttle ramp and have a viable adoption rate and Libra could get a widespread use for users.
The legal framework challenge in the United States remains to be checked. The persistent concern about the use of cryptocurrencies for money laundering and the financing of terrorist organizations remains latent. But Libra will be linked to a basket of fiat currencies issued by the US government (Libra reserve), a formula that can easy its way and that is tied by quality assets such as bank deposits and government bonds (with its risks of depreciation and therefore cause instability to the virtual currency).
Due to its reputational problems with data protection and security, the social networking company has created a financial subsidiary to handle the project, called Calibra.
At the head of the virtual currency will be the Libra Association, based in Geneva, which will oversee of the currency. Its members (28), nothing less than MasterCard, Visa, PayPal, Spotify, Booking, Uber, Lyft, Vodafone, Stripe …
Facebook does not want to miss the boat of the financial revolution that it is coming, just as it lost its fight of smartphones with its failed Facebook Phone that nowadays tries to palliate with the Oculus VR glasses, creating Libra not as a refuge of value but a true currency.