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Yesterday Facebook released details of their new cryptocurrency, Libra. The currency is only partly Facebook's because there are other founding partners, who also have a say in how things will be run. The founder group includes Visa, Mastercard, Uber, PayPal, Vodafone, PayU (Naspers) and eBay. It's expected to launch early next year.
The new platform has huge potential. If you are a US client of ours, you will know how painful and expensive it was to send money overseas. With Libra you will be able to send money over Whatsapp, Facebook Messenger or Instagram. Practically, you will buy Libra in South Africa using Rands, probably using your credit card. Then once you have Libra coins, you can send it to anyone in the world. Once that person receives the Libra coins, they will be able to cash it into their home country or they can go onto Facebook market place and spend it.
The new currency won't need to be only used for international payments, it can also be used for domestic payments. Imagine tipping your Uber driver with Libra. I suspect it will get a big online adoption. Unlike current cryptocurrencies, the goal is to try to keep its value stable, which will enhance its value as a currency. Think of Mpesa in East Africa or WeChat Wallet in China, both systems have almost replaced cash in some places.
The new cryptocurrency will be run by the Libra Association who is based in Geneva, Switzerland. The country was chosen for its neutral status and strong support for financial innovation, including blockchain technology. Having an independent organisation control Libra is essential for its legitimacy. Facebook has assured users that their Libra transactions are not linked to their Facebook user data.
This has the potential to become a truly global online currency. The current founding companies will make money from running the network and from interest earned on money that you deposit to buy Libra coins.
Here is a more in-depth read if you want - Facebook announces Libra cryptocurrency: All you need to know