Facebook announced the debut of its digital currency Libra. Here’s some background on how Libra works. It’s more like PayPal than Bitcoin. It’s designed to be easy enough for everyone to use. But it’s still complicated to understand so I’m going to break it down for you nice and simple.
Why is there a need for libra? Bank charges high. Banks earn from high transaction fees, exchange rate spreads and many hidden cost. The issue with current is also the accountability of printing money. Bitcoin is slow, high transaction fees, not backed by an asset. Because it’s not backed by a REAL WORLD asset, the value flax greatly and it’s not good for businesses.
Libra aims to solve all that. Libra is like cash, but digital cash. With Libra, you could pay / receive digital cash with anybody all over the world who accepts Libra. Since it’s almost free to move Libra from one account to another, you do not need to pay high credit card fees that could add up to 4% of the total. You will be also able to send money from friend to friend just like a message.
Anytime you will be able to cash out of Libra and handed back to you at a local store
How does the Libra technically work? Libra is coded to be stable price, be secure and not just be controlled by Facebook. Libra is run by a non profit Libra Association located in Switzerland. The association includes big names like visa, Mastercard, Lfyt. The council works together to: Manage, develop and expand the network
Libra will be a stable currency unlike bitcoin because it is made up of most stable international currencies like the USD, £, Euro and Yen. The idea is if one of the currency goes up or down massively in price, the Libra will stay stable. That way, shops will accept Libra without worrying the Libra coin will drop tomorrow or another 1MBD scandal happens.
Big swing in prices are the reason why bitcoin hasn’t grown popular in payment methods.
1000 tx per sec, bitcoin 7 tx per secIf Libra succeeds, the real win is this could help 1.7B people in poverty without a bank account. They are exploited by international sending money services that charges steep fees taking 50B away each year. If they are rob, they won’t lose $ because it’s stored online. Libra is tougher to steal and easier to tx.