Last month, Facebook announced plans to launch the Libra network. If you haven’t heard of it, well … we really don’t blame you. Since its launch, Libra has received a surprisingly small amount of coverage and we find this a bit strange. Simply put, Facebook’s Libra network is very ambitious. As the first serious commitment to the digital economy by a company as large and with as much gravitas as Facebook, Libra builds upon the foundations laid by cryptocurrencies such as Bitcoin and Ethereum.
Facebook’s mission is simple – Libra is intended to be the first global currency and financial infrastructure that empowers billions of people. Note the operative word: billions. Founded as an organisation (not-for-profit), Libra could be considered a ploy by Facebook to reinsert themselves in the global good books after the Cambridge Analytica fiasco. Whether their intentions are as nefarious as many think, there’s no doubt that this is a brilliant opportunity to tap into those around the world who don’t have access to secure financial and banking institutions. The idea is that Libra is a cryptocurrency for everyone, not just the Fin-Tech trader sitting in a dark room in downtown New York.
Often when the words finance and cryptocurrency find their way into the same paragraph, most people’s eyes glaze over, but the fact is that this could very well be the future of our money.
With that in mind, we thought we’d go ahead and breakdown all those big words. We’ll explain what crypto is, how it works and how the bloody hell Libra will be used.
What is Cryptocurrency?
Unless you’ve been living under a rock, you might have heard the term cryptocurrency (or crypto) bandied around over the last couple years. For most of us, even the idea of crypto or Bitcoin elicits visions of raining green code straight out of The Matrix. But the truth is it’s actually not that complicated.
Created by the presumably pseudonymous Satoshi Nakamoto, Bitcoin was developed as a digitally transferrable asset that was untraceable and independent from any central authority. In its early years, it found popularity in the tech-savvy community that came to inhabit the dark web. Almost overnight, Bitcoin became the most reliable means of paying for the sort of shady shit you’ll find on the dark web (drugs, porn, hitmen), and what’s more – it was completely untraceable.
By mid-2010, Bitcoin had well and truly entered the mainstream, but it wasn’t until a couple of years later where we really started to see phenomenal growth. Long story short, Bitcoin paved the way for an onslaught of other cryptocurrencies that are now easily tradable through platforms such as Coinspot and Plus500.
Today, Bitcoin’s market cap fluctuates around the USD$200 million mark.
So, with that in mind, where does Libra come into the picture?
What is Libra?
Simply put, Libra is a digital currency, just like Bitcoin. Unlike those lobsters currently burning a hole in your back pocket, this money will sit in what Facebook has dubbed the ‘digital wallet’, but in all other senses of the word money, that’s exactly what it is. You can use it to buy a schnitty, a pair of sneakers or your groceries.
So what makes Libra so special?
Well, where Libra really finds its feet is in its ability to be sent instantly anywhere in the world at the click of a button. Whether you’re in Marrakesh or Maroubra, you can have money transferred to you instantaneously through the Libra Network.
This is achieved through Libra’s commitment to low transaction costs across currencies. For us sitting pretty in countries such as Australia and the United States, this might not mean so much; big banks have been making it smooth and simple to transfer your currencies for years. But with 31 per cent of the world’s population unbanked, Facebook is using the power of their already established platform to connect the world and their money.
One thing to note is that Libra, unlike other cryptocurrencies, establishes value on government bonds purchased by the organisation.
So… What’s all the fuss about?
Since ancient Rome, the modern concept of currency had involved a certain degree of oversight from the governing bodies. However, the advent of Libra could indicate a move from the traditional nationalised currency systems toward a new global monetary system that is overseen by large corporations such as Facebook and Uber.
So the real question is – who do you trust more? We don’t have to look far back to see that often, our governing bodies get it really wrong when it comes to our money. It’s been nearly a decade since the 2008 Global Financial Crisis, but the big banks and financial institutions that make the world go ‘round have very short memories.
One of the best benefits of Libra is that in times of uncertainty, the value of the currency could be shielded from fluctuations. Exactly how, it’s tough to say, but, at least you can go to bed at night knowing your money isn’t going anywhere.
What does this mean for the everyman?
Now, we’re by no means telling you to pull all our money out of the bank and leave it in the hands of Facebook and the Libra network. Hopefully, we all learned a lesson from the Bitcoin bubble. But there are a couple of ways that the Libra Network can enrich the everyman’s life.
Backed by the big tech companies, rest assured that the user interface will be schmick and simple to use. Libra’s integration into Facebook means you’ll probably encounter it whether you like it or not, but a big concern of many is privacy. Now, Facebook doesn’t have the best track record with privacy, however, Libra is being treated as an opportunity for Facebook to redeem itself, whilst at the same time giving the bird to government bodies across the world.
Wrap it up.
We’re still a long way off from Libra revolutionising the global economy, but it’s definitely something to keep in mind. You’re probably not going to benefit initially from the Libra network, but it has the potential to do some real good. For far too long the global gap between rich and poor has been expanding, and Libra offers an easy and approachable solution to families and individuals fighting poverty and the greedy bureaucracy ingrained into modern financial institutions.
If you made it this far, well done. The world of crypto is full of the same jargon and hullabaloo commonly found on the trader’s floor on Wall Street. But the fact is it’s not that difficult, and when it comes to your money, the more you know often means the more you have.