Facebook’s New Cryptocurrency: What You Need to Know
After much waiting and anticipation, Facebook has finally unveiled details regarding its new Libra cryptocurrency. With Libra, Facebook stands as one of the largest major corporate forces to throw its weight behind the cryptocurrency trend and offers new legitimacy to an industry which has faced many doubters over the years. The cryptocurrency Libra represents an ambitious new endeavor from Facebook, and people have long been waiting for details about the coin.
Reaching Out to New Customers
As of 2019, Facebook has more than 2.38 billion active users. This means that more than 1/3 of Earth’s population has an active Facebook account. The decision to issue the Libra coin in an attempt to tap into the cryptocurrency industry is partially a matter of simple math. More than 1.7 billion people lack a bank account and might find the Facebook Libra coin an effective way to conduct financial transactions. If the Facebook Libra experiment works out, the cryptocurrency could potentially supplant online payment platforms like PayPal, making Facebook even more ubiquitous than it already is.
The Structure of Libra
The basics of the Facebook Libra crypto are simple: you buy Libra with a currency of your choice and can spend the cryptocurrency just like normal money. To keep the currency independent from Facebook’s business model, the company also created the Libra Association. This is a not-for-profit organization designed to guide development of the Facebook Libra crypto coin. The 28 founding members each paid at least $10 million and gained a vote in the Libra Association council that allows them to guide the direction of Facebook’s Libra.
Any new cryptocurrency has to answer questions about its stability, and Facebook’s Libra cryptocurrency is no exception. Facebook is attempting to combat the threat of market volatility by tying Libra’s value to bank deposits and short-term securities provided by the currency’s stakeholders. That means that each Libra coin has a tangible value in terms of dollars, Euros, and other major fiat currencies. This helps calm potential new investors who don’t know as much about cryptocurrencies while also guaranteeing that early adopters have a solid idea of where they stand in terms of relative wealth.
Pushing Early Adoptions
Of course, the true test of Facebook’s cryptocurrency will boil down to whether vendors adopt Libra as an acceptable form of payment. The Libra Association plans to push this idea of early adoption by offering special incentives to vendors who accept Libra as a form of payment. Smaller vendors won’t make a huge dent in the market, although a large number of small businesses using Libra would certainly signal a positive trend. If Facebook can get a major online presence such as eBay or Spotify on board, then the currency stands a good chance of taking off.
Facebook’s Libra is a high-profile attempt to enter the cryptocurrency business that could have major implications for the market. Those who wish to earn on cryptocurrency or who want to start a cryptocurrency exchange platform should keep an eye on Libra’s development and consider how Merkeleon’s cryptocurrency business tools can help.