All you need to know about Facebook's Libra
Social network is one of the consortium's founder, which works under developing a global digital currency
Disclaimer: This article is not intended to be a source of advice or credit analysis with respect to the material presented, and the information does not constitute investment advice.
Facebook and partners created an organization under name "Libra" for managing with technical aspects of project and for working with a regulator to keep all things in a right order. In general Libra is a stablecoin, which will be provided by several national currencies and same time by different financial assets, all of this will make it possible to create a currency with stable price.

Nothing from this did not dispel the concern, linked to Facebook's reputation and fake of the most crypto startups. For this reason, David Markus, head of Facebook's blockchain-section wrote a small FAQ in post, where technical part of Libra was described (https://www.facebook.com/notes/david-marcus/libra-2-weeks-in/10158616513819148/). For example, such question like "Does Libra currency work by principle of blockchain's register, which tracks the transaction?". In this post David Markus admits, that Libra project starts not from full cryptocurrency on blockchain, but from something less, and in future it can outgrow to something more global in order to go over full-opened system (analogy of world well known currency system).

Whether project will be successful or will fail - nobody knows. Huge amount of Facebook's users (1.7 bn), especially in well-developed countries, will promote Libra's success, mainly using mobile services, which are high appreciated among publicity. Libra's representatives announced officially, that a new cryptocurrency will help to people in low income such as migrants, those, who have no banking account, to become a part of financial system, using smartphone with low commission's payment.

Project must start at the first part in next year. Till that moment it has a difficult path through the thorns of legislative rules. Almost after Libra's announcement, representatives of financial world (EU and USA) expressed their doubts, probably that Facebook's cryptocurrency can destroy the balance inside financial world.

Title of hearing: learning the questions, that are offered by Facebook, concerning a digital currency and confidentiality ". This political show will be held on 16-17 July.

Until it did not take place, you must know.
Why does Facebook need its own currency?

In fact, Libra is not a Facebook's cryptocurrency, it's a project of the Libra-Association, which's one founder is Facebook. Association, that will be a monetary body for the cryptocurrency, declares that aim of Libra is to expand the opportunities' billions of people, linking to 1.7 bn of adults, who have no banking account, so they can use cryptocurrency Libra.

But Facebook already has its own interest to a digital money. In past time, social network managed by currency, named «Credits». During almost 4 years, it accepted the payments in online games, that were integrated from Facebook. In May, 2019, Mark Zuckerberg on annual developers' meeting announced, that money transferring online can be as simple as sending pictures (https://www.economist.com/finance-and-economics/2019/05/30/facebooks-planned-new-currency-may-be-based-on-a-blockchain).

Libra is created to simplify money transferring online and to make this operation cheap, that can attract new users to a social network.

Facebook didn't stop just on Libra, in frames of integration, it created a new branch, named Calibra, it will control wallet with the same title. "Facebook created Calibra, regulated branch, to provide the separation between social and financial data, and in order to make and to exploit the services on its own behalf, above Libra. "– it is a phrase from the document of RBC Capital Markets, analytics departure. In document it is also mentioned, that services, probably, will include payment for games and commerce.
Will Facebook have a direct control above a new cryptocurrency?

The answer is "no". Facebook is only one member-founder of the Libra-Association, uncommercial organization, which will be de facto monetary authority (Libra's regulator). Membership to Facebook will be produced via Calibra.

Other members-founders include MasterCard, Visa, PayPal, Uber, eBay, Vodafone and Mercy Corps.

In the future the Libra-Association intends to grow up to 100 members, most of them will spend 10 million of dollars for the project's realization. Every member has same vote inside the association, its head office is in Switzerland.

To cut a long story short, Facebook will not have too much rights of voting according the solutions of the association than any other participators.

However, Facebook will play a huge role at the begining of Libra's project. In addition to wallet's management of Calibra, Facebook plans "to maintain the leading role until 2019". After launch of Libra in 2020, Facebook announced, that its role and duties will be same as a right of any other member-founder.
What is the difference between Libra and other currencies?

To figure that thing out, it is needed to make an analogy with other cryptocurrencies, such as Bitcoin and Ethereum. Like them, Libra exists fully in a digital form, Libra's transactions are written down to a programme register (well known blockchain), which approves every transfer. On the early stages Libra's register will be under attention of members-founders, but in the future system must turn into opened and autonomous system.

As known, classical cryptocurrencies, such as Bitcoin and Ethereum, are not supported by something stable, so they strongly vary from speculation. Libra is a stable currency, which will be tied to basket of assets, anchor to stabilize the rate. The Libra-Association pointed about including "bank deposits and governmental shares in currencies from stable and respectful central banks". It means, that the main world known currencies, such as euro and dollars, will be in that basket too.

Real providing of Libra will grow or decrease in accordance with its popularity. If people want to use Libra coins, that time association will buy more basic assets and will create an additional coin of Libra.
If user wants to cash Libra, association will pay for them and after all will burn an appropriate number of tokens.
How are Libra and other currencies compared to US dollar?

During last moment, USD is a measure of cost in any piece of the world. Several countries love US dollar so much, that use it instead of own national currency.
Of course, dollar has some weak points. Using USD, especially across the border, can be expensive, because banks take some measures, in order to convert dollar to a local currency. If you use digital dollars (on credit card), company-issuer of your card, probably takes some part of purchase. Thanks to Libra, the final commission of 4% can be decreased to a symbolic value.

What is about relevance in accordance with other cryptocurrencies? Despite on feeding frenzy, cryptocurrencies are still not used too widely. Of course, you can buy a cap of coffee, paying by Ethereum, but first you need to search for that type of cafe (it is possible, but not everywhere). Also, one more minus in classical cryptocurrencies is their instability – just suddenly a cost of a cap of coffee can raise up to 5% at the day, this makes difficult to understand of long-term cost of the asset.
Is it true, that Libra is just a trick to get my financial data and send me advertisements?

All people know the scandals in accordance with "privacy" of data in a social network, among them Facebook. If you have an email address and some social applications on your phone, you can become upset.

So, what is about Libra from Facebook? Calibra is a provider of a digital wallet, that you can use for Libra, it was created as a branch of Facebook. The agreement allows Calibra to be regulated by government to avoid the money laundering and other financial criminal. It also says, that all financial data of Calibra will be saved separately from the social data of Facebook.

"Calibra straightly points, that client's data won't be used for improving the targeting ads, as Facebook company actively works with money. Information about accounting records and financial client's data of Calibra will not be used for improvement targeting ads in the family of products Facebook Inc", - is reported in message.

Company admits, that it will transfer data of client only in case in accordance with law - prevention of fraud or simplification of payments. It is also said that Calibra will require client's agreement before using data from Facebook for function's improvement. It is possible to think, users, who will not check options, will get short functions as in mobile apps, as on their desktop.
What politicians and control units think about Libra?

According to the opinion of control units and politicians Libra cryptocurrency is a malignant formation, that can destroy or affect considerably on active financial system.
Following opinions according to the same situation are expressed by our analytic experts:
In Washington politics hurried to complain on cryptocurrency and reputation Facebook for protection of the users' confidentiality.

Maxine Moore Waters, democrat and the chapter of the Committee on financial services (FSC - Financial Servises Committee), recommended for Facebook's team to easy up its blockchain project.

"At present time market of cryptocurrencies has not a sharp legislation basement for supplying of reliable protection of investors, consumers and economies", - it was reported in the application of Waters company.

"Regulation units should perceive it as alarm signal, to relate seriously to problems of confidentiality and national safety, risks of cyber security and trading risks, which are presented by the cryptocurrencies".

Sherrod Brown, democratic senator from Ohio, wrote in Twitter that Facebook shouldn't be trusted to start cryptocurrency independently. "Facebook is already too big and too powerful, and company took this power for using users' data without protection of their confidentiality. We cannot allow Facebook to start new risky cryptocurrency from the account in Swiss bank without supervision".

Early in May the United States Senate Committee on Banking sent to Mark Zuckerberg a letter with 7th questions. https://www.banking.senate.gov/imo/media/doc/5.9.19%20Facebook%20Letter.pdf

The American's doubts were supported in Europe:

Bruno Le Maire, minister of the Economy and Finance in France, declared by radio "Europe 1", that there is no problem with Libra, if its use is limited by the transactions. But it is not allowed to social network to create "sovereign currency", which can be used for debts issue or for performance of other functions, connected with money, manufactured by the state. "Libra cannot and should not become a sovereign currency with all attributes of the currency. Sovereignty's aspect should remain in states hands, instead of private companies, which answer to a private interest."

Mark Carney, Governor of the Bank of England, remained about Libra project on meeting in Portugal. He said: "All things, working in our world, at once would become systemic and should appropriate to the most high standards of regulation", - is reported by Bloomberg.

Markus Ferber, German member of European parliament, declared, that Facebook by two billion users "can become a global shadow bank, and it is impossible to look indifferently to process of becoming the last one".

All declarations from representatives of the global financial centers really have a meaning, because the Libra-Association, quite strong to exchange current financial system.

One way or another, digitalization inside financial sector will come and touch absolutely every person of the world.
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