What Is Libra Cryptocurrency?

The Libra cryptocurrency was a currency built on blockchain and had the backing of a basket of assets, which included government debt securities and some major currencies. California-based Facebook (now Meta Platforms) proposed this cryptocurrency with the aim of making it a straightforward, low-fee virtual currency based on blockchain.

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The social media company envisaged Libra as a digital currency on individuals’ smartphones, which one could use to make purchases. The backing of the major currencies provided the stablecoin with price stability. This, in turn, promoted the cryptocurrency’s efficacy as a straightforward currency that one could utilize to perform daily transactions. Libra cryptocurrency announcement date was June 18, 2019.

Libra Cryptocurrency Explained

The Libra cryptocurrency was a digital currency developed by Meta Platforms, who envisioned it as a global, low-fee, simple medium of exchange. The company aimed to make the digital asset a mainstream virtual currency everyone could use to transfer money worldwide securely. Moreover, it tried to offer everyone cheaper, improved, and better access to financial services.

Libra was used, held, and purchased through different cryptocurrency wallet applications. One could receive the libra tokens if they cashed in dollars. The digital asset was intended to be utilized as a medium of exchange at businesses that supported its use. Libra Association, which later became Diem Association, tracked the tokens.

As people exchanged their nation’s currency for the Libra tokens, the association was responsible for ensuring that those tokens had the backing of a basket comprising some important currencies and securities. That basket allowed the Libra cryptocurrency price to be stable. The stablecoins were denominated in a G3 currency (USD, EUR, or GBP). That said, Libra planned to develop its multi-currency stablecoin based on a selection of currencies.

Diem Associate had to serve as the cryptocurrency’s regulatory body, and Facebook could not run it solely. Instead, 28 founding partners constituted the association, which included Visa, Mastercard, eBay, and 25 other companies. Facebook had the right to cast a single vote like the other organizations.

That digital asset used blockchain technology. That said, one must remember that it was not an actual blockchain currency as it was not completely decentralized. Only Diem Association members could access the transactions’ ledger.

Rebranding

In December 2020, Libra, the Facebook-backed cryptocurrency, rebranded itself ‘Diem’, which means ‘day’ in Latin, as it renewed its effort to get regulatory approval by emphasizing the project’s independence. The previous year, Facebook slimmed down plans for the cryptocurrency after central banks and regulators expressed their concerns, suggesting that it could impact control over monetary policy, threaten safety, and upend financial stability.

According to the chief executive officer of the Diem Association, Stuart Levey, the name switch emphasized a revamped, simpler structure. He said that the initial name was tied to the project’s early iteration, which did not receive a favorable reception from the regulators. That said, the change dramatically altered that proposition, according to Levey.

How To Buy?

There were different ways to purchase Libra tokens. Let us look at two of them.

#1 – Purchasing Libra Through Facebook’s Applications

One could buy Libra tokens by following these steps:

• Sign up on Facebook by providing certain details like name, date of birth, and gender and clicking on the sign-up option.
• Download the WhatsApp or Messenger app from Apple Store or the Google Play store and install it.
• Open the Novi wallet through WhatsApp or Messenger. Enter bank account data or credit card details to purchase Libra Tokens.
• Lastly, purchase Libra tokens using fiat currency (USD, GBP, or EUR).

#2 – Purchasing Libra Tokens On Cryptocurrency Exchanges

Individuals could buy Libra tokens on a cryptocurrency exchange by following these steps:

• Choose a cryptocurrency exchange and set up an account using personal details like location, password, and email.
• Complete the identity verification process, which may require applicants to submit valid ID documents like a passport, driver’s license, etc.
• Add a payment method to the account to be able to deposit money. Then, link a bank account, debit card, or PayPal account to withdraw or transfer funds.
• Select the Libra token option from the online platform’s ‘Buy’ section, enter the total amount of Libra tokens, and choose the payment method and the cryptocurrency wallet that would hold the tokens before confirming the order.

Examples

Let us look at a few Libra cryptocurrency examples to understand the concept better.

Example #1

In August 2022, Facebook announced the takeover of Servicefriend, a startup that develops bots based on AI or artificial intelligence for messaging applications. The social media company acquired the startup to make the Libra cryptocurrency more user-friendly by integrating it into the customer service of its digital wallet called Calibra, which allowed individuals to store Libra tokens.

Example #2

In January 2022, Facebook’s virtual currency venture wound down as Diem Association, the regulator of Diem cryptocurrency, offloaded its technology to Silvergate Capital Corp, a company based in California, for roughly $200 million.

After the digital currency’s launch in 2019, it was instantly subject to criticism and regulatory concerns as policymakers worldwide worried that the project could harm users’ privacy and enable crime. That said, the last blow to the venture came when a financial technology executive of Facebook, David Marcus, who was supervising the development of Diem, left the organization.

Privacy Concerns

The Libra blockchain used to be open to all people. This meant any person could create apps and build products on top of that. This open-access setup had its advantages and limitations. Its low entry barriers drove innovation and encouraged competition. However, it was exposed to the risk of disrepute application developers accessing a user’s tokens.

Also, the digital asset was not decentralized, although the white paper focused on the intention to become decentralized. Ultimately, the issues related to privacy practices from the regulators obstructed Libra from turning into a mainstream currency.

Ironically, the cryptocurrency’s failure also originated from the participation of various large regulated organizations, including Facebook. This provided regulators and both foreign and U.S. governments with an identifiable target for expressing concerns regarding money laundering, capital control circumvention, consumer privacy, and other financial risks.

Frequently Asked Questions (FAQs)

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