Cryptocurrency Libra made its debut this week. Although Facebook has only released a whitepaper and the project hasn't shown any public progress yet, it has already sparked global discussions. The U.S. Senate Banking Committee even urgently announced a hearing on July 16 to scrutinize this project.
Why has Libra garnered such intense attention? Is it the savior for 1.7 billion unbanked individuals or a Pandora's box filled with malice? Below, we compile interpretations from various stakeholders and regulatory perspectives.
Q1: Is Libra Just Another Blockchain Currency? What Are Calibra and Libra Association?
- Libra: Refers to both the Libra blockchain network and the cryptocurrency built on it.
- Calibra: A newly established Facebook subsidiary focused on developing financial services and products around the Libra network.
- Libra Association: An independent, nonprofit membership organization headquartered in Geneva, Switzerland.
Q2: Does Facebook Control Libra?
Libra Association is the actual governing body, responsible for coordinating the network, managing asset reserves, and promoting financial inclusion. Facebook will retain a leadership role only until the end of 2019.
👉 Explore how Libra could redefine global finance
Q3: Which Other Organizations Are Involved Besides Facebook?
The initial 27 "Founders" include:
- Payment Providers: Visa, Mastercard, PayPal
- Tech & Platforms: eBay, Spotify, Uber
- Blockchain Firms: Coinbase, Xapo Holdings
- Nonprofits: Kiva, Women's World Banking
The goal is to expand to 100 founders by early 2020.
Q4: What Does Libra Aim to Achieve?
Libra seeks to create a borderless financial infrastructure serving billions, making cross-border transactions as seamless as sending a text.
Q5: How Does Libra Differ from Bitcoin? Will It Impact Other Cryptocurrencies?
Unlike Bitcoin, Libra is backed by a basket of fiat currencies. Experts predict:
- Short-term boost for Bitcoin (BTC).
- Competition for Ethereum (ETH) and EOS due to Facebook's vast user base.
Q6: Is Libra a Public or Private Blockchain?
Currently, it operates as a consortium chain but plans to transition to a public blockchain later.
Q7: Why Is Libra Called a Stablecoin?
It’s pegged to multiple fiat currencies, similar to IMF’s Special Drawing Rights (SDR), ensuring stability.
👉 Learn how stablecoins are transforming finance
Q8: What Does Libra Mean for Stablecoins?
Libra could legitimize stablecoins by integrating them into everyday transactions, much like how Apple revolutionized apps.
Q9: How Will Libra Affect Global Currencies?
It may challenge traditional sovereign currencies, including the USD, by offering a decentralized alternative.
Q10: What’s in It for Facebook?
Beyond revenue, Facebook could establish a self-sustaining digital economy where Libra becomes the default currency.
Q11: How Will Libra Impact Internet Giants Like Alibaba or Tencent?
Libra’s financial infrastructure poses a "dimensional attack" on traditional internet payment systems (e.g., Alipay, WeChat Pay).
Q12: Industry Reactions
- Tencent’s Pony Ma: "Technologically feasible—it’s about regulatory approval."
- Meituan’s Wang Xing: Facebook is targeting weaker currencies first.
Q13: Global Regulatory Responses
- U.S.: Mixed reactions; Senate hearing scheduled.
- EU: France and Germany oppose; UK remains open.
- India: Potential ban under existing crypto laws.
FAQs About Libra
Q: Can Libra replace traditional banking?
A: Not immediately—it complements existing systems but may reduce reliance on banks for cross-border transactions.
Q: Is my Facebook data linked to Libra?
A: Calibra claims financial data will be separate, but concerns remain.
Q: How secure is Libra?
A: Uses blockchain encryption, but regulatory scrutiny will shape its safety protocols.
Q: When can I use Libra?
A: Expected launch in 2020, pending approvals.
Q: Will Libra affect cryptocurrency prices?
A: Likely to increase mainstream adoption, potentially stabilizing volatile markets.
Q: What’s the biggest risk?
A: Regulatory crackdowns or loss of trust in Facebook’s governance.