Facebook, that giant controlling the field of social media (he owns Instagram, WhatsApp and Messenger) will enter the world of money and currencies, as it launches its digital currency Libra in early 2020.
So what is Libra? What is its mechanism of action? How will it be traded? What is the reason behind launching it so quickly? What is its impact on the global market?
And this is not all. Facebook has recently faced a lot of criticism, lawsuits and fines for violating the privacy of users, so how does Facebook expect people to accept this new currency?
Everyone knows that Facebook has all the information about any user of its services, his interests, activities, knowledge, and places in which he is located, and everything is done on his computer or phone even after closing or even removing the Facebook application.
Now that Facebook launched the Libra currency, Facebook will also get users' financial data, the types of services they subscribe to and the products they prefer.
Facebook may sell this information to those interested, or may use it in the advertising platform that it owns, to help marketers to target users with ads very accurately based on their spending and financial habits.
So, how did Facebook respond to these questions? How were the reactions from the various economic and political organizations and bodies in the world? All this and more you will know in this article.
What is Libra? What is its mechanism of action?
Libra is a digital currency based on blockchain technology, used to make the process of transferring money and buy products easily, but in a different way from traditional digital currencies.
The Libra currency depends on the real currencies, so in order for anyone to get this currency, he must buy it for money, and this is unlike the regular digital currencies that anyone can obtain through the mining process.
When you want to top up your balance in the currency of Libra, you can use your credit cards, or you can buy them from service providers in the market - just as you recharge your mobile phone balance or pay internet bills.
In the same way, you can convert the Libra currency that you have into regular currencies in your country so that you can use it as you like.
Note that the transfer and circulation of this currency will be at very low fees (an amount much less than $ 0.1), unlike money transfer services such as PayPal and Western Union.
And because Facebook launched the Libra currency, it will enable you to transfer and receive this currency through WhatsApp and Messenger, and also through a separate financial application called Calibra.
Facebook establishes Calibra
In order to facilitate the process of trading these currencies, and in order for Facebook to promote this service - we will talk about this in more detail later - he established a separate company called Calibra.
This company will be responsible for the process of trading the Libra currency, and for the application for Facebook to trade this currency, and this company will have special servers away from Facebook in order to preserve the clients' financial data.
New programming language Move Programming Language
As I mentioned, Libra is different from traditional digital currencies such as Bitcoin or Ethereum. This is because you only get it by buying it, and Facebook says that one Libra is worth roughly $ 1 when it launches.
So the Libra currency will be an alternative only to regular paper currencies, and it depends on blockchain technology in order to store customer data and record financial transactions, this is because the blockchain is a fast and safer system.
It is similar to what happens in games, you pay money to buy the game currency (such as FIFA or Fortnite game currency), and then you use this currency to buy anything within the game itself.
For this, Facebook acquired some companies in this field in order to develop a new programming language that works with the Blockchain system, and it was called the Move language.
And Facebook claims that this language will make the process of trading Libra much faster than other digital currencies, as the new system can accommodate 1000 conversions per second.
This is in contrast to other currency trades that do not exceed 7 transactions per second.
It is worth noting that this language, and the system on which this currency will depend, will be open source, which means that any programmer can participate and exploit this currency and build various applications.
Libra Association
In order for Facebook to try to convince the global and financial community to launch a new digital currency, Facebook tried to involve the largest international companies with it in this project in order to gain their satisfaction, and to help it promote this currency.
Among these companies (the number has now reached 28), Uber, Visa and MasterCard, PayPal, Vodafone, and others from the most famous companies in the world.
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technology