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Although the project still has to overcome considerable obstacles to get it working, it could allow payments through Facebook and WhatsApp
Facebook announced this week the details of its own cryptocurrency, which would receive the name of Libra and that would allow its users to make transfers and purchases without additional fees. Despite the strength of the announcement, Facebook must still fix the regulatory framework with the authorities of each country in which it operates its new currency, which could delay the estimated date of its launch in 2020.
Users can switch between their local currency and Libra to facilitate payments through the Internet or to make international transfers at no cost, according to the announcement. Operating in this way, Libra would revolutionize the remittance market, for example, which is dominated by companies that charge users an average of 7% for making international transfers, according to TechCrunch.
A joint innovation
Today's most important cryptocurrencies, such as Bitcoin and Litecoin, operate under the principles of decentralization and independence, priding themselves on their ability to operate with minimal regulation.
Libra does not share this mode of operation. Instead, Libra has a board of founding members who will make decisions about its management in the future. The company that led the project, Facebook, will receive only one vote in this meeting as well as the other co-founders. Among these are: Visa, MasterCard, Uber and venture capital firm Andreessen Horowitz.
Additionally, Facebook will introduce a new company as an independent intermediary for the management of Libra. The company carries the name Calibra, and will be responsible for coordinating, verifying and ensuring the transactions made with Libra. Additionally, Calibra will prevent the information that users use when using Libra from associating with their Facebook profile so that it can not be used to personalize the advertising that the user sees.
The currency will work on open source blockchain technology in Facebook's own programming language, Move.
A bank for all
During the presentation of Libra, Facebook placed special emphasis on Libra's ability to integrate marginalized populations into banking services. Among Latin American women, for example, only 49% have a bank account, a disturbing index that Facebook plans to correct through its new cryptocurrency.
"Success would mean that a person working abroad has a quick and easy way to send money to their family at home and that a student can pay the rent of their home as easily as they can buy a coffee," declares Facebook in the documentation that accompanied the announcement of Libra.
The regulatory barriers to overcome
In the United States, Congress is already reluctant to accept Libra without further ado. Although its launch is scheduled for the following year, it must wait to receive approval in both chambers of the Congress.
"Given the troubling part of the company, I ask that Facebook access a moratorium on any advance or development of a cryptocurrency until the Congress and regulatory bodies have had the opportunity to examine these issues and take action," said Democratic Congresswoman Maxine Waters.
Senator Sherrod Brown of the Senate Banking Committee echoed this concern: "We can not allow Facebook to operate a new and risky cryptocurrency from a Swiss bank account without supervision," he said.
The Governor of the Bank of England, Mark Carney, stated that also in the United Kingdom, Libra would have to submit to "the highest regulatory standards", which reinforces the idea that perhaps Libra is further away than it seems.
LatinAmerican Post | Pedro Bernal
Translated from "Libra: así son los planes de Facebook para introducir una criptomoneda"