The recent news of Facebook launching it’s cryptocurrency ‘Libra’ has taken over everyone’s mind. We all have heard about the word cryptocurrency before if we remember ‘Bitcoin’. But people are still confused about what is a cryptocurrency and how does it work. Let’s Understand.
What is Cryptocurrency?
Cryptocurrency is a digital currency developed using cryptographic protocols and encryption techniques to make units of digital currency securely exchangeable. Most importantly, cryptocurrency is not controlled by any central authority like a central or reserve bank. Its control is decentralized where multiple authorities control and monitor the flow & exchange of units. Since the currency is secured using cryptography, which means creating digital codes, hence it is called cryptocurrency.
In simple words, Cryptocurrency is digital money which can be used to make all types of transactions that we do with ordinary currency from your mobile phone without the need to carry and hard-cash.
Facebook’s wildly ambitious plan of launching a new form of cryptocurrency called Libra has finally come to a reality. It is all set to launch the Libra in the first half of 2020. Although, as we read above, a cryptocurrency is not controlled by anyone authority, Facebook’s Cryptocurrency is not an exception. Visa, Uber & Andreessen Horowitz (An American Private Venture Capital Firm) will hold the stakes of Libra along with facebook with at least $10 Million Investment in the venture.
What Libra & Calibra?
The digital currency which is being talked about here will be called Libra. (Just Like you got Rupees, Dollars, Pound, Lira, Yen, Euro, Francs etc). And to keep this currency, you will need a wallet, more precisely, a digital wallet which will enable sending, receiving & storing Libra money safe & securely. The wallet option will be available in WhatsApp and messenger apps of Facebook and as a separate individual app as well. This way you will be able to send and receive the currency as simply as you send a message or a photo or video to your loved ones.
Facebook is launching a subsidiary company also called Calibra that will handle its crypto dealings & protect users’ privacy. Calibra will never mingle users’ payments with their Facebook data. Users’ real identity & their publicly visible transactions will be kept separate. Calibra wallet will also comply with security checks on customers who will go on to use Libra by using commonplace verification and anti-fraud processes.
Libra is the result of an idea of a Non Profit organisation which goes by the same name. It consists of 28 different associations from around the world including Mastercard, Visa, PayPal, Spotify, eBay & Uber. The association of all the members including Facebook will be based in Switzerland and all the members of the said NPO will govern the functioning of the Cryptocurrency.
The only bad news is that facebook’s Libra & Calibra will not be available in the countries where there is a ban on digital cryptocurrency. And yes it includes India. The Apex bank of India, RBI has banned the use and performance of any transaction in digital cryptocurrency vide its notification dated 6th April stating “Entities regulated by the Reserve Bank shall not deal in VCs (virtual currencies) or provide services for facilitating any person or entity in dealing with or settling VCs”. This is the reason why Mark Zuckerburg has not approached the Indian Government yet regarding Libra’s Legalisation and circulation.
Well, whatever the case may be, we wish that the Indian government shall take decisions which are in favour of us Indian Citizens.