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Libra cryptocurrency: dare you trust Facebook with your money?

4 27 0

We’ve known for ages that somewhere in the bowels of Facebook people were beavering away designing a cryptocurrency. Various names were bandied about, including GlobalCoin and Facebook Coin. The latter led some people to conclude that it must be a joke. I mean to say, who would trust Facebook, of Cambridge Analytica fame, with their money?

Now it turns out that the rumours were true. Last week, Facebook unveiled its crypto plans in a white paper. It’s called Libra and it is a cryptocurrency, that is to say, “a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets”.

Like bitcoin, then? Er, not exactly. Like bitcoin, Libra does use blockchain technology, but thereafter the two currencies part company. Whereas the value of bitcoin oscillates like Boris Johnson’s promises, Libra is supposed to be a low-volatility currency that will let its users buy things or send money to people with very low fees. It will be backed by reserves managed by a nonprofit organisation,called the Libra Association, which gives the token real-world value and oversees the governance of the blockchain technology that powers it.

This organisation is made up of members who pay an entrance fee of at least $10m to join, which gives them one vote on the governing council and entitles them to a share (proportionate to their investment) of the dividends from interest on the Libra reserve into which users pay their fiat (ie traditional) currencies when buying........

© The Guardian