Definition
Libra Cryptocurrency, also known as Diem, is a proposed global digital currency initiated by Facebook, Inc. It is an initiative to create a stable cryptocurrency tied to a basket of international currencies to enhance financial inclusion and reduce transaction costs. The project is overseen by a Switzerland-based non-profit organization, the Diem Association.
Key Takeaways
- Libra Cryptocurrency is a digital currency developed by Facebook in an effort to create a universal, stable digital currency. It aims to bring financial services to unbanked or underbanked populations and simplify international money transfers.
- Unlike other cryptocurrencies such as Bitcoin, Libra is a stablecoin, it’s designed to have a stable value to prevent drastic fluctuations. Its value is backed by real-world assets, including bank deposits and government securities in currencies from stable and reputable central banks.
- The governance and management of Libra is carried out by the Libra Association, a group of member organizations including Facebook. Each member organization has a vote in the management of the cryptocurrency.
Importance
Libra cryptocurrency is significant in the finance world for several reasons. Launched by the social media giant Facebook, it represents a big step towards making digital currencies mainstream.
Libra aims to provide a stable, low-inflation digital currency, backed by a reserve of real assets, making it potentially more reliable than other cryptocurrencies. It also seeks to reduce the costs and time required for cross-border transfers and provide financial inclusion to people lacking access to traditional banking systems.
Its vast reach, given Facebook’s enormous user base, could conceivably transform global finance. However, it has been faced with regulatory scrutiny and concerns over privacy, security, and Facebook’s market power.
Explanation
Launched by Facebook in 2019, Libra cryptocurrency was developed with the purpose of creating a stable digital currency that could be used in everyday transactions across Facebook’s suite of apps and beyond. It is aimed to provide a viable alternative to national currencies for people without access to traditional banking systems, particularly in developing and underprivileged societies.
Primarily, Libra’s goal is to promote financial inclusion and provide a decentralized form of monetary exchange. On the practical side, Libra cryptocurrency can be used for various purposes.
Users will be able to make transactions online, such as buying goods or transferring money globally at nearly zero fees. Moreover, it can facilitate small businesses to grow and expand by offering them a cheaper and faster payment system.
By integrating with Facebook’s ecosystem including WhatsApp and Messenger, Libra allows for seamless digital payments, peer-to-peer transfers, and other financial transactions. Additionally, Libra Blockchain also offers a programmable platform for developers to build on, which can potentially lead to a wide array of financial products and services.
Examples of Libra Cryptocurrency
Facebook’s Calibra Wallet: In June 2019, Facebook announced that they are developing a digital wallet called Calibra, where users can store and exchange the Libra cryptocurrency. The aim was to make financial transactions more accessible and affordable for people around the world, particularly those who don’t have access to traditional banking.
Shopify’s Association with Libra: In February 2020, e-commerce giant Shopify announced that it has joined the Libra Association, a group of companies supporting Facebook’s Libra cryptocurrency. By joining this project, Shopify expressed its intent to work collectively to build a payment network that makes money easier to access and supports merchants and consumers everywhere.
Brex’s Backing of the Libra Cryptocurrency: In October 2020, the credit card startup Brex announced it was joining the Libra Association. Brex’s CEO, Henrique Dubugras, said that the company saw value in the digital currency and believed it has the potential to promote financial inclusion worldwide. This highlights how businesses are interested in tapping into the potential of the Libra cryptocurrency to lower transaction costs and foster more accessible financial services.
FAQ Section: Libra Cryptocurrency
What is Libra Cryptocurrency?
Libra Cryptocurrency, now known as Diem, is a type of digital or virtual currency that was initially planned to be introduced by the social media company, Facebook. This cryptocurrency project aims to offer a stable, secure, and low-cost way of making financial transactions, regardless of their location.
Who controls Libra Cryptocurrency?
Libra Cryptocurrency is governed by the Libra Association (now the Diem Association), a collective group of companies that includes Facebook, Uber, Spotify, and many more. Each member has one vote in decision making, making it decentralised.
What makes Libra Cryptocurrency different from Bitcoin?
Unlike Bitcoin, which is an unbacked asset, Libra is a ‘stablecoin’ which is backed by a reserve of assets including bank deposits and government securities in currencies from stable and reputable central banks.
Is Libra Cryptocurrency available for anyone to buy?
Libra was expected to launch in 2020, but faced a lot of regulation and control issues. It is now being rebranded as “Diem” with an unknown release date.
Is it safe to invest in Libra Cryptocurrency?
As with any investment, investing in cryptocurrencies comes with its own set of risks. It’s important to understand these risks and the volatility of the market before proceeding. As of now, Diem (formerly Libra) is not available for investment.
Related Entrepreneurship Terms
- Blockchain Technology
- Digital Wallet
- Cryptocurrency Regulation
- Facebook’s Libra Association
- Stablecoin
Sources for More Information
- Libra Official Website: The official website of Libra Cryptocurrency offers comprehensive information about its specifications, use-cases, and developments.
- Investopedia: Investopedia provides insightful articles about what Libra Cryptocurrency is, its history, and how it compares to other cryptocurrencies.
- Coindesk: CoinDesk is a leading digital media, events and information services company for the crypto asset and blockchain technology community. They provide up-to-date news about Libra and other cryptocurrencies.
- Coin Telegraph: Cointelegraph provides the latest news about Libra in their news section dedicated to this cryptocurrency, along with analysis from experts in the field.
