Why is Libra so much hyped?
Facebook’s planned to launch its own cryptocurrency named Libra, the question arising is that how this corporate giant is going to profit from this? The project itself is dependent upon blockchain technology. But the catch is that blockchain technology has been introduced to challenge the already existing and conventional corporate businesses and the concept of capitalism, simply how Facebook makes money itself.
To lead this particular project, Facebook is in association with several other companies like Vodafone, Mastercard has created a non-profit organization named Libra association which is based in Switzerland.
Using blockchain technology, Facebook aims not only to be dominant in social media but also to be the world’s most significant marketplace beating other corporations such as Google, Amazon and eBay. To find out the reason behind this statement, we need to focus not on LIbra but the companion of this technology, the custodial wallet named Calibra.
Using Blockchain but not exactly a blockchain
Before delving into Facebook’s new currency Libra, let us know about Blockchain first. In 2008, an individual person or group named Satoshi Nakamoto created the first-ever cryptocurrency named Bitcoin using a new technology called Blockchain. In Blockchain, a distributed ledger is used to conduct transactions. The most significant specification of this technology is that without the help or authorization of a third party, every transaction can be conducted by users all over the world. The technology uses cryptography to maintain the security of the system.
Now you can buy the coins and conduct transactions using the distributed ledger, but how do you prove ownership of these coins. Here comes the use of crypto wallets or commonly known as wallets. The crypto coins are recorded against a particular address, and a secret key is given to the owner of those coins. Therefore with a wallet, you can prove your ownership of those coins and conduct transactions.
Facebook, on the other hand, has a unique idea for Libra. The Libra association has stated that they want to enhance the transaction process in such a way that people can send money without any complications, just like sending a text message. So to manage Libra, Facebook will provide Calibra, the custodian of the currency Libra. It will hold your currency just like the bank holds your money for you. Facebook can claim that this system will make it easier for people to use Libra, but in reality, it will work just like how the conventional bank performs its own business.
With this, Facebook is now aiming to beat its rival, Amazon. Calibra will provide the necessary buyer data to Facebook, and Facebook is a personal data mining company that revenues through advertising and earlier, it had also introduced its own marketplace. Now, what if Facebook can be both the selling platform and cash register at the same time. Calibra can become the potential game-changer for Facebook. It can provide the data of the buyers so that advertisers can customize their advertisements and target those customers.