Facebook has been developing the digital currency for more than a year, and the development work has the backing of a number of high-profile companies, including payments, retail and technology companies.

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Libra's ambition

The internal name of Facebook's digital currency project is "Project Libra", which is characterized as a stable currency and will be anchored to multi-national legal currencies.

The members of the Libra Association can be described as a strong lineup, which is extremely gorgeous. These include the leaders in the blockchain industry, Coinbase, BisonTrails, Xapo, Anchorage; well-known e-commerce companies, Ebay, Farfetch; giants in the payment field, Visa, PayPal, MasterCard; leaders in the online car-hailing industry, Uber and Lyft, Of course, there are many giants in other industries to join.

These companies in the association come from various fields, and Facebook will use Libra's in-depth cooperation with them to penetrate into application scenarios such as payment, taxi, online shopping, travel, hotel ordering, and games.

Facebook allows internal employees of the project to receive the cryptocurrency as salary, which is a good start and plays a leading role. It is enough to prove that Facebook attaches great importance to this area.

The social media giant hopes to start testing its cryptocurrency, which has been internally known as GlobalCoin, by the end of the year. The name "GlobalCoin" represents Facebook's global ambitions. It can be expected that its emergence will have a huge impact on developing countries, the US banking system, and the global capital market.

According to the Financial Times, Agustin Carstens, general manager of the Bank of International Settlements, known as the "central bank of central banks," recently said that because of Facebook's launch of the Libra cryptocurrency, they had to issue their own in advance. Digital currency, and the Bank for International Settlements will also support countries around the world in creating digital versions of national currencies because the market changes faster. Agustin Carstens was previously dismissive of "first generation" cryptocurrencies, calling Bitcoin and Ethereum speculative, but now thanks to Libra, the BIS believes it can quickly establish itself in global finance dominance and pose a potential threat to traditional financial institutions.

Initially, many cryptocurrency projects looked at Libra as an adversary, but they will benefit from the growing awareness that Facebook is bringing to the crypto space.

Facebook plans to apply its stable currency to its three major social software, WhatsApp, Facebook Messenger, and Instagram. Currently, the total number of users of these three products is about 2.7 billion. The Libra stablecoin will promote blockchain education for 2.7 billion Internet users in the future, which will not only help increase public awareness of digital assets such as Bitcoin and reduce people's prejudice that many cryptocurrencies are scams, but also mean blockchain It will officially enter the stage of applying the public chain from the system public chain.

Facebook has launched Calibra, a supporting wallet for its stablecoin Libra. Its official website states that the wallet hopes that users can send money by sending messages and photos, and that it will complete a transfer transaction within seconds.

According to the official website, users can convert local currency to Libra through Calibra to add funds to the wallet, which can be converted back when withdrawing money. When converting your local currency to or from Libra, the app will display the exchange rate so you know exactly what the exchange rate is. In the future, Calibra will be available directly in the WhatsApp and Messenger apps.

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the road will not be smooth

The biggest concern among members of Facebook's blockchain department is that Libra will not get a fair chance, fearing that it will be rejected by people before it reaches the real service goals. Obviously, this concern is not groundless.

The less national currency a country's citizens hold, the less power the country's central bank has to set monetary policy, making it harder to stimulate the local economy during times of economic stress.

What Libra is facing is not only the technical issues and the feasibility of the business model, but also needs to meet the legal and regulatory requirements of various countries. This global cryptocurrency needs to be regulated starting with anti-money laundering rules, and Facebook needs to establish an internal compliance framework to meet regulatory requirements. Like the Circle USDC head of product said, anything Facebook does will be heavily scrutinized by the government, but their entry into the crypto system should be a tipping point for regulation and mainstream awareness.

BitMEX CEO Arthur Hayes said in a recent interview with Bloomberg that Libra will disrupt commercial banks and central banks and will destroy all stablecoins. Huang Yi, vice president of China Construction Bank, said at the 2019 World Economic Forum Annual Meeting of the New Champions when talking about the stable currency Libra issued by Facebook, that if the Libra model succeeds, it will not be a "challenge" but a "subversion" to the banking system .

It is foreseeable that no matter whether Libra is successful or not, there will be many large institutions trying to establish a currency that is more conducive to globalization in the future.

During the Cold War, the United States and the Soviet Union engaged in a qualitative and quantitative competition in military equipment. But in the new era, the form and battlefield of the arms race among major powers have also changed, and the future is likely to be a competition in the financial system.

Wang Xin, Director of the Research Bureau of the Central Bank, once said at the launching ceremony of the Digital Finance Open Research Program and the first academic seminar, "If the central bank directly issues digital currency, it will help improve the payment function and the effectiveness of monetary policy. In the future, we will promote the development of the central bank's digital currency. .”

Many elites have realized that if China cannot actively participate in the wave of digital economy, it will lose its original advantages in the new competition, and may even be in a completely passive state.

The mainstream US economy is embracing digital currency step by step. The emergence of Libra will effectively reduce the transaction costs between multinational companies and different regions, and improve the efficiency of assistance and payment. It will be strongly supported by multinational companies. The largest governing body in the world today is not a country, but a multinational corporation. If we say that in the United States, enterprises dominate the government, and it is only loyal to interests. Well, Libra will be blocked in the United States in a short period of time, but in the long run, I believe it will be supported by the government.

There is no doubt that the Facebook digital currency is the most significant event in the field of encrypted digital currency since the launch of the Bitcoin mainnet in 2009, and a new era is about to begin.