FACEBOOK LAUCH  ITS CRYTOCURRENCY LIBRA

From next year, Libra will indeed pay for its purchases or send money with a simple smartphone, without bank account. A small revolution that could finally democratize virtual currencies, too often likened to speculation or dubious practices.

What is the purpose of a cryptocurrency?

Like any currency, a cryptocurrency makes payments. The big difference with the bank money we use every day is that these payments "are made directly from one party to another without going through a financial intermediary". The quote is from Satoshi Nakamoto, the mysterious creator of bitcoin, the first cryptocurrency launched in January 2009. Totally independent, it only needs the internet to work.

Cryptocurrencies allow an entire population that does not have access to banking services to exchange money. Which would represent, according to Facebook, "half of the adults in the world". Serving as a safe haven, they are also widely used in some countries hit by inflation.

Apart from these situations, their use to make routine purchases remains limited. A few years ago, a few shops still accepted payment in bitcoin: most have given up, because of the enormous fluctuations of its course.

A virtual currency for everyone

This is the point that Facebook wants to correct with Libra, a virtual currency that is easy to use and in common use, backed by traditional currencies to avoid excessive price variations. In the jargon of cryptocurrency, we speak of stablecoin. With Libra, Facebook could democratize cryptocurrency: it will be available on WhatsApp and Messenger, two services whose number of users exceeds one billion.

To manage its cryptocurrency, Facebook will rely on a hundred "nodes", each allocated ten million dollars. Twenty have already found takers [list in English], grouped together. Their owners are exclusively consortia or companies: Visa, Mastercard, Uber, Booking, Paypal, Ebay, Spotify ... What goods or services can we buy with libras? They can be used outside the Facebook group, since 27 companies have joined the project. The use of libra as a means of payment will be free.

End of the excesses of cryptocurrency

Cryptocurrencies have often hit the headlines for bad reasons: rampant speculation (especially on bitcoin), platform piracy, relative anonymity of transactions, accusations of money laundering ... Drifts are all marginal, and increasingly rare. The bursting of the bubble in early 2018 calmed the speculators' ardor, and the trading platforms now require ID at registration.

The arrival of Libra should reassure the general public. We can imagine that Facebook, which has been working on this project for more than two years, has made the security of its system a priority. The US giant is targeting 2.7 billion users.

The price of Libra should be relatively stable, since it will be indexed to the four largest currencies in the world (the euro, the dollar, the pound and the yen)

Facebook also wants to reassure governments. Before using the service, users will have to prove their identity via an official document.

"Sending money should be as simple as sending a photo," says Mark Zuckerberg at the annual Facebook conference in California. Successful bet, it seems for this alternative economy and 100% electronic for everyone.