Facebook’s “seismic” virtual currency

Facebook, on June 18, said it would release the Libra virtual currency, scheduled for official trading from early 2020. Described as a global financial-monetary infrastructure, Libra was affirmed by Facebook’s leader “not created for the purpose of replacing major central banks”. However, this currency is evaluated by analysts to create a global seismic in the financial industry.

With more than 2.4 billion Facebook users every month, Libra has the ability to change the face of the financial market, according to The Guardian. Bloomberg in the recent article said that if successful, Libra could turn Facebook into a ‘big player’ in the financial industry.

Compared to the rest of the money market built on blockchain technology, Libra has two distinct characteristics: how to manage and operate.

Unlike other virtual currencies that are also based on the Blockchain, Libra is not created by “digging”, but this currency is issued based on a real amount of collateral. Simply put, this digital currency is created in the same way that central banks around the world issue paper money.

In the newly published White Paper, Facebook claims Libra is a “stable currency”, due to its value attached to real assets. Basically, the only way to increase the number of circulating Libra is that users use other currencies, such as US dollars, euros, yuan or yen to buy Libra and this amount is considered “assets.” guarantee “the amount of Libra this person owns.

“Facebook introduced Libra at the moment as a turning point for the company’s operations and the money market,” said Mark Mahaney, an analyst at RBC Capital Markets. “In terms of size and importance, we believe this new financial platform may be similar to the time Apple introduced the IOS operating system for developers more than a decade ago.”

The amount of Libra collateral will be placed in banks or invested in low-risk lucrative assets, such as US government bonds, but the profits are not distributed to Libra owners. used for the operation of this currency management organization, such as funding for research activities or social activities.

This pre-system is also managed by an organization called Libra Association – an independent, non-profit organization based in Geneva, Switzerland. The organization has two main functions: authenticating transactions using Blockchain Libra and managing Libra volumes related to social purposes.

Companies that contribute at least $ 10 million are considered to be founding members of Libra Association, and there are now 27 technology companies that claim to be partners with Facebook, including some big names like Paypal, Ebay, Spotify, Uber, Lyft, Visa, Mastercard …

However, with the influence of social networks of 2.4 billion users, Facebook may face many barriers before bringing Libra to consumers.

According to Bloomberg, the new announcement from Facebook immediately faced opposition in Europe, with a call to adopt stricter regulations.

French Finance Minister Bruno Le Maire said Libra should not be considered a replacement for traditional currencies. At the same time, the head of the French financial agency called on the group of 7 central bank governors to prepare to report on this project right in the July meeting.

“Libra has undoubtedly become a legal currency,” Le Maire said in an interview with Europe 1. “This is an impossible and impossible problem.”

In the context that Facebook is suffering from numerous criticisms of privacy violations, the new move in the financial sector also draws attention from regulators and privacy advocates worldwide. gender. According to The Guardian, the US and UK authorities have expressed concern about the plan to encroach on Facebook’s financial sector.

In May, members of the US Senate Committee on Banking, Housing and Urban Issues wrote to Facebook CEO Mark Zuckerberg asking for questions regarding privacy and regulations. finance.

“It is important to understand how large social platforms use data available in ways that affect the financial life of consumers,” the content of the letter is written. “More importantly, understand how large social platforms use financial data to profile and select target customers.”

Facebook plans to release GlobalCoin cryptocurrency in 2020

Facebook’s virtual money is expected to help users pay across borders safely and at a cheap cost without a bank account,.. .

According to BBC sources, Facebook plans to release its own cryptocurrency called GlobalCoin in the first quarter of 2020, after internal testing later this year. This cryptocurrency will be released in dozens of countries around the world, helping users to make payment transactions securely and at cheaper costs without having a bank account.

To be able to launch, this virtual money will need to overcome many technical and logical barriers. Last month, Facebook’s chief executive Mark Zuckerberg met with central bank governor Mark Carney to discuss the opportunities and risks of issuing virtual currency. Facebook also works with the US Treasury and money transfer companies like Western Union, to discuss legal and operational issues related to crypto.

Facebook plans to release cryptocurrency for the first time at the end of last year. Accordingly, Facebook will partner with banks and brokers to allow users to convert dollars and other legal currencies into virtual currency. ? Facebook is also negotiating with online providers to accept this virtual currency, in exchange for lower transaction costs.

In March, Barclays’ Internet analyst Ross Sandler forecast GlobalCoin cryptocurrency could bring in revenue of up to $ 19 billion by 2021 in Facebook.

GlobalCoin marks Facebook’s second attempt at virtual currency, nearly 10 years later, Facebook Credits – cryptocurrency allows users to buy products on the system of this social network. Facebook Credits was “killed” after only 2 years of operation due to the failure of liquidity.

However, to launch GlobalCoin, Facebook has many problems to be solved in the context of the scandal of user data and regulations from authorities in recent years. The question posed by officials is how Facebook’s cryptocurrency will work and how the company will protect its customers and their personal information.

Information about GlobalCoin helped price many cryptocurrencies on the market increased on 24/5. Bitcoin rose 5% in value, trading at about $ 7,960, Bitcoin Cash and Ethereum copper both rose 7%, and Litecoin increased 11%.