June 19, 2019 – Facebook has unveiled the Libra cryptocurrency, targeting billions of unbanked whose familiarity with the social network might be a catalyst for its mass adoption.
Calibra is Facebook’s new subsidiary which aims to provide financial services on the Libra network. The first product is a digital wallet where users can store the Libra cryptocurrency. This wallet will be available as a standalone app as well as integrated to both Whatsapp and Messenger.
Libra will be the native cryptocurrency of Calibra wallet. From articles and videos, it appears that the wallet will have instant conversion of the funds to the user’s country’s legal tender. For example, if a person in the US wants to send $50 to a recipient in the Philippines, the user will receive the same amount converted to Pesos. However, what ran through the network (what really gets transferred) are the Libra coins.
The Libra Association is the not-for-profit consortium that will eventually govern the Libra Network. It is composed of 28 founding members including Visa, Masterard, Uber, Coinbase, and others. The association is separate from Calibra and Facebook. It will be open to new membership in the future.
While the whitepaper puts emphasis on privacy, touting that they will share the user’s account information with Facebook or third parties without consent, there are limited cases, which include regulatory compliance, AML, fraud prevention, and “data sharing with payment processing and other service providers to complete the transaction”.
Accessing the wallet will require ID verification and KYC.
Important to note: Ryan Todd, researcher for The Block, mentioned that while there’s a “repeatedly expressed” statement of the separation between Calibra and Facebook, “one can’t help but wonder if there are loopholes to their commitments of no sharing of data back to Facebook and third parties”.
Calibra will not be available in countries that have outright banned cryptocurrencies.
“Serving the unbanked” is the primary aim of this new initiative. However, there are opinions on whether the unbanked who don’t have access to “banks” to begin with because they don’t have proper government issued-ID will actually be able to use the wallet given that KYC is needed to access it. As a counterpoint, opinion varies as to whether Facebook’s current data on its users will be enough of a “KYC” in a sense.
Erik Voorhees of Shapeshift calls Libra as the single largest bridge towards decentralized finance that has ever been built by minimizing the middlemen fees and potentially increasing its users’ wealth. He also said that it is clearly not a “pure cryptocurrency” so nobody should expect privacy by using it.
This article first appeared on BitPinas: Facebook-Led Libra Cryptocurrency Wants to Serve the Unbanked