Libra, the cryptocurrency spearheaded by Facebook, arrives

The development of a new blockchain-based, global digital currency spear-headed by Facebook was announced on Tuesday, in a move that has been touted as a potential game-changer for digital payment methods.

Libra, the new digital currency, is being developed by the social media giant, with the support of a number of digital market-places, payments and telecommunications providers including the likes of Mastercard, Visa, Paypal, Vodafone, eBay and Uber. It also includes Naspers’ fintech and e-payments division, PayU.

On Tuesday, Facebook also announced Calibra — the e-wallet it will launch to transact using Libra — which is expected to go live in 2020. Calibra will be available in Facebook Messenger, WhatsApp and as a standalone app.

Facebook’s partners on the project will become the founding members of the Libra Association — a non-profit organisation, registered in Geneva Switzerland, which will be the governing entity that guides the development of the Libra blockchain and the Libra Reserve.

Unlike other digital or cryptocurrencies such as Bitcoin, the Libra is intended to be backed by real assets. These, according to a whitepaper from the association, will include a basket of bank deposits and short-term government securities that will be held for every Libra coin that is created.

The intention of what will be known as the Libra Reserve — is to ensure that the currency will remain stable over time and maintain some store of intrinsic value.

With around 2.3-billion people already using Facebook’s platforms, Libra could potentially overcome the hurdle that many digital, or crypto, currencies face which is wide scale adoption by users.

“Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange,” the white paper said.

“We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure, and trusted framework underpins this new system.”

While Libra is billed as becoming “a simple global currency and financial infrastructure that empowers billions of people” Facebook’s record of overseeing users’ personal data has been called into question. It famously earned the ire of regulators globally after advisory firm Cambridge Analytica, harvested millions of users’ for political purposes.


For the coming year, at least, Facebook will remain a key driver of Libra’s development, according to the white paper.

It notes that Facebook teams “played a key role in the creation of the Libra Association and the Libra Blockchain, working with the other Founding Members,” and that it is expected to maintain a leadership role through 2019.

It notes however that Facebook’s Calibra subsidiary has been created to ensure the separation of social and financial data

“Once the Libra network launches, Facebook, and its affiliates, will have the same commitments, privileges, and financial obligations as any other Founding Member. As one member among many, Facebook’s role in governance of the association will be equal to that of its peers,” the white paper said.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
Advertising

Two dead in new ANC KwaZulu-Natal killings

A Mtubatuba councillor and a Hammarsdale ANC Youth League leader were shot yesterday near their homes

Inside Facebook’s big bet on Africa

New undersea cables will massively increase bandwidth to the continent

No back to school for teachers just yet

Last week the basic education minister was adamant that teachers will return to school on May 25, but some provinces say not all Covid-19 measures are in place to prevent its spread

Engineering slips out of gear at varsity

Walter Sisulu University wants to reprioritise R178-million that it stands to give back to treasury after failing to spend it
Advertising

Press Releases

Coexisting with Covid-19: Saving lives and the economy in India

A staggered exit from the lockdown accompanied by stepped-up testing to cover every district is necessary for India right now

What Africa can learn from Cuba in combating the Covid-19 pandemic

Africa should abandon the neoliberal path to be able to deal with Covid-19 and other health system challenges likely to emerge in future

Road to recovery for the tourism sector: The South African perspective

The best-case scenario is that South Africa's tourism sector’s recovery will only begin in earnest towards the end of this year

Covid-19: Eased lockdown and rule of law Webinar

If you are arrested and fined in lockdown, you do get a criminal record if you pay the admission of guilt fine

Covid-19 and Frontline Workers

Who is caring for the healthcare workers? 'Working together is how we are going to get through this. It’s not just a marathon, it’s a relay'.

PPS webinar Part 2: Small business, big risk

The risks that businesses face and how they can be dealt with are something all business owners should be well acquainted with

Call for applications for the position of GCRO executive director

The Gauteng City-Region Observatory is seeking to appoint a high-calibre researcher and manager to be the executive director and to lead it

DriveRisk stays safe with high-tech thermal camera solution

Itec Evolve installed the screening device within a few days to help the driver behaviour company become compliant with health and safety regulations