Facebook is Creating a New Cryptocurrency?
There has been a lot in the news lately regarding Facebook and their new “cryptocurrency” and there seems to be a good deal of misunderstanding. Facebook’s new currency, Libra, operates in a centralized framework. What exactly does that mean? It means Libra is backed by assets and credit worthy entities. Libra will be overseen by a non-profit organization (the Libra Assocation) which is based in Geneva, Switzerland.
Cryptocurrenices on the other hand are decentralized, ie there isn’t one person or government that is controlling them. They in a sense are crowdsourced. So it isn’t quite accurate to say Facebook book is creating a new cryptocurrency. If anything, Facebook is creating a new electronic money market fund–but without any ability to earn interest on your funds.
Why is Facebook Doing This?
In addition to its own “currency”, Facebook is also looking to create its own digital wallet–Calibra. It’s too early to tell whether it will be successful, but it looks like Facebook may be developing its own bank of sorts to take advantage of its multiple worldwide software platforms (Facebook, Instagram, WhatsApp, and Occulus). Remember, Facebook’s CEO Mark Zuckerberg continually refers to the company as a utility. The question that remains, “Is he ready for the government to regulate Facebook like a utility company?
Where Can I Learn More
Confused yet? Bitcoin, cryptocurrencies, and the blockchain are very hot right now. There are still a lot of questions out there such as:
- What’s Bitcoin?
- What’s a blockchain?
- Should I invest?
Find these answers and more in our latest infographic,
What are Cryptocurrencies and Why Should I Care?