Thursday, 12 December 2019

Libra coin: why Facebook’s cryptocurrency is no bitcoin rival

Social media giant is about to launch its very own virtual currency - here’s everything we know about it

Facebook looks like being the next major company to release its own cryptocurrency, with reports suggesting its so-called Libra coin will launch in less than a week.

The tech giant has long been rumoured to be developing its own virtual currency, with Bloomberg reporting in December that Facebook was planning to allow users to transfer money over WhatsApp.

It appears the rumours may be true as sources told TechCrunch that the digital coin will be unveiled in a matter of days and serve as a safe way to transfer money over Facebook’s chat apps.

With Libra’s announcement seemingly on the horizon, here’s what we know about the virtual currency:

When does it come out?

A source familiar with the project told TechCrunch that the Libra coin will be announced on 18 June, along with a white paper explaining how the cryptocurrency works.

Another insider claims that the virtual coin won’t be available to the public until 2020, when a more “formal” launch will take place, the tech site says.

How is it different to bitcoin?

While Libra and bitcoin both fall under the cryptocurrency umbrella, they serve different purposes in the wider market.

Libra, which is also referred to as GlobalCoin, will be “pegged to a basket of currencies”, such as the dollar and the euro, to prevent prices from escalating to the heady heights of bitcoin and Ethereum, The Independent reports.

Initially, the virtual currency will be available only through Facebook’s chat apps, including WhatsApp, Facebook Messenger and the chat section of Instagram, the online news site says.

However, The Verge says that Facebook plans to install physical cashpoints for people to manage their Libra coins while out and about. It’s also rumoured that Facebook will offer “benefits” to shopping outlets that accept the company’s cryptocurrency as payment.

By launching a bespoke and highly secure virtual currency, Facebook is essentially creating its own shopping ecosystem where users can buy and sell products on its platforms without needing to go through web payment systems such as PayPal.

Bitcoin, on the other hand, was designed so that people could store and manage their money without the need of going through a bank or larger corporation.

As the cryptocurrency isn’t pegged to a real-world currency, it’s value is far more volatile than traditional money.

There are a limited selection of outlets that accept bitcoin as a form of payment, such as independent coffee shops and restaurants, but the cryptocurrency is primarily used as a digital asset to invest in.

Can anyone buy Libra?

Sort of. Facebook users will be able to swap their real-world money for Libra coins, in a similar fashion to exchanging money for foreign currency.

As the Libra is pegged to a real-world currency, it doesn’t offer the same level of investment opportunity - or risk - as a more conventional cryptocurrency such as bitcoin or Ethereum.

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