Facebook’s cryptocurrency Libra: Will it work in India, what’s new and other questions answered

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There’s a new cryptocurrency called Libra, courtesy of Facebook and the entire network will be rolled out by 2020. Libra will be controlled by the Libra Association, which is a non-profit based in Geneva, Switzerland. But Facebook will have a leadership role for all of 2019, though later on it will be just one of the many members part of the association.

Facebook also announced a dedicated wallet app called Calibra, which will be built into WhatsApp and Messenger as well, to let users store and use these Libra coins.

Libra is a cryptocurrency built on a blockchain network, though Facebook was quick to insist that it will respect user privacy and transactions will in no way to be linked to the user’s real world identity. Calibra is a separate subsidiary company and the data will not be shared with Facebook. Here’s are some questions answered about Libra.

What is Libra?

Libra is like any other cryptocurrency powered by blockchain technology. Blockchain technology functions like an open ledger that gets updated in real time, and each transaction made on a blockchain network is preserved. Reversing a record is impossible on blockchain and with cryptocurrency, the idea is a decentralised network, which is not controlled by one bank or a government.

Cryptocurrency is supposed to be totally secure and anonymous, and there are several wallets which let users buy and store these. However, the coins or the currency can be stolen from a digital wallet.

Libra wants to be a ‘global currency’, one that can be used to transfer money anywhere in the world without any transaction fees. The claim is that Libra will be accessible to anyone with a smartphone, even a low-cost budget phone, and a network connection. Of course, there are several mobile payment services already offering seamless payments, though with real-money.

What will Libra be used for? What does it want to solve

Libra will be like a digital coin and the idea is to let users rely on these for virtually anything. If businesses start accepting Libra, then you could use to buy coffee to pay your taxi. Of course, it will depend on whether businesses accept Libra, and how many customers have faith in the system, given the trust issues with Facebook, though this will be separate from the social network.

Libra wants to be a global currency for everyone, and is specifically talking about how it wants to target those who are unbanked, a number that is believed to be around 1.7 billion people across the world. But exactly how and why someone who might not have access to formal banking already, is supposed to jump onto cryptocurrency is unclear.

How will someone buy Libra? When will it roll out?

That’s  the question which is not yet answered around Libra. The network is still far from ready. The Libra blockchain will be tested over the coming months. While there’s no word on exactly how someone will buy Libra, the Calibra wallet from Facebook will probably be one way. To purchase Libra, you will have to pay in your local currency, provided the laws allow it.

Will Libra work in India?

Cryptocurrency is illegal in India and the draft bill right now is recommending a maximum of 10 year punishment for those who mine, trade, buy or sell these. In India, if the bill passes, trading in cryptocurrency could result in hard punishment. So one of the biggest markets, which is India, will not be able to use Libra, which could limit its potential.

The Supreme Court of India is hearing a matter regarding regulation of Bitcoin in India and the matter will now be heard on July 23, 2019.

So what is different about Libra? What’s really new here?

Libra will also be backed by a reserve of assets designed in order to “give it intrinsic value” and ensure stability, which is not seen in typical cryptocurrencies. These assets includes securities and fiat currencies (like dollar, pound) etc as part of this reserve.

The website says Libra will be backed by “short-term government securities in currencies from stable and reputable central banks.” Still the “value of the one Libra in any local currency may fluctuate,” cautions the page.

The idea is to ensure Libra is stable to give more users confidence in this, while ensuring that currency does not fluctuate wildly like other cryptocurrencies such as Bitcoin, which had at point had reached a high of $20,000 only to fall drastically later on.

Libra is also being governed by the independent Libra Association, which is not what you see in typical cryptocurrency. A new programming language is also being built for Libra called Move, which the organisation claims is more secure and private. The Libra Blockchain will record the history of transactions and states over time, rather than the typical blockchain where each transaction is added a new block.

Is Facebook the sole company involved in Libra?

Facebook is not the only company, though it has leadership role for all of 2019, which means it will have a significant role in deciding the direction for Libra at least for this year. Facebook’s teams have also helped build the technology for the currency.

Other prominent names backing Libra are Uber, Visa, Lyft, Mastercard, Paypal, PayU from India. The association has around 27 members right now and wants to have a total of 100 founding members by the first half of 2020.

What is Calibra?

Calibra is the digital wallet from Facebook to let users store these Libra coins. Facebook says this is a separate company, and data will not be shared with them and it will respect user privacy. Zuckerberg wrote that Calibra will have a dedicated team of experts in risk management to prevent fraudulent use. Also if someone loses their Libra coins from the Calibra wallet, they will refund users. Libra will also work with other third-party wallets. Calibra will also be added to WhatsApp and Messenger.