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This is how the Facebook cryptocurrency Libra works

The Facebook is now far more than a social network is probably well known. Because since the starting shot in 2004, not only the number of members has grown steadily, but also the number of affiliated companies that belong to Facebook. In addition, Facebook is a promotional giants and achieved in 2018 the previous sales record of over 55 billion US dollars (worldwide).

But of course Facebook would not be so successful over the years if it would not constantly expand its business with new innovations, and so is now the new in-house cryptocurrency LIBRA in the starting blocks with which not only increased sales, but also the already huge tide to grow on data.

This is behind the new Facebook crypto currency Libra

Topic Overview

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But what exactly are cryptocurrencies and how can we as users benefit from it? Most people have probably heard of cryptocurrencies, and thus tend to associate illegal trades in the darknet or the like. Of course, this is clearly too short, because we too can benefit from cryptocurrencies like Libra completely legally.

In this article, we would like to shed more light on what crypro currencies are, and what is specifically behind the Libra project.

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This is how the Facebook cryptocurrency Libra works

The Facebook is now far more than a social network is probably well known. Because since the starting shot in 2004, not only the number of members has grown steadily, but also the number of affiliated companies that belong to Facebook. In addition, Facebook is a promotional giants and achieved in 2018 the previous sales record of over 55 billion US dollars (worldwide).

But of course Facebook would not be so successful over the years if it would not constantly expand its business with new innovations, and so is now the new in-house cryptocurrency LIBRA in the starting blocks with which not only increased sales, but also the already huge tide to grow on data.

This is behind the new Facebook crypto currency Libra

Topic Overview

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But what exactly are cryptocurrencies and how can we as users benefit from it? Most people have probably heard of cryptocurrencies, and thus tend to associate illegal trades in the darknet or the like. Of course, this is clearly too short, because we too can benefit from cryptocurrencies like Libra completely legally.

In this article, we would like to shed more light on what crypro currencies are, and what is specifically behind the Libra project.

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1. What are cryptocurrencies anyway?

1. What are cryptocurrencies anyway?

The name cryptocurrency raises the question of what a cryptocurrency is at all to many people, and how it differs from the known currencies that we deal with daily in our economic cycle?

The explanation is in part already in the naming, because even if the regular currencies of the daily payments exist primarily as giral or book money as numbers in computers, so there is at least still tangible cash with which can be paid. This is different for cryptocurrencies because they are actually “cryptic” and purely digitally available.

These can be traded and exchanged, but by no means everywhere. So it will probably not happen that you can pay in the near future in the supermarket with crypto currencies. Furthermore, these currencies are not subject to any control by banks or governments due to their decentralized structure. Cryptocurrencies are created through a network of computers, can be purchased through real money exchanges and stored in wallets (digital purses).

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A peculiarity in contrast to conventional currencies is also that with cryptocurrencies a digital property record exists, which in turn is stored in a blockchain. So, if a user wants to transfer part of his digital currency to another user, he sends it to his digital wallet.

When completed, such a transaction will only be valid once it has been verified and pasted into the blockchain. So you already see that you have to deal more intensively with the topic to understand it to some extent.

The name cryptocurrency raises the question of what a cryptocurrency is at all to many people, and how it differs from the known currencies that we deal with daily in our economic cycle?

The explanation is in part already in the naming, because even if the regular currencies of the daily payments exist primarily as giral or book money as numbers in computers, so there is at least still tangible cash with which can be paid. This is different for cryptocurrencies because they are actually “cryptic” and purely digitally available.

These can be traded and exchanged, but by no means everywhere. So it will probably not happen that you can pay in the near future in the supermarket with crypto currencies. Furthermore, these currencies are not subject to any control by banks or governments due to their decentralized structure. Cryptocurrencies are created through a network of computers, can be purchased through real money exchanges and stored in wallets (digital purses).

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A peculiarity in contrast to conventional currencies is also that with cryptocurrencies a digital property record exists, which in turn is stored in a blockchain. So, if a user wants to transfer part of his digital currency to another user, he sends it to his digital wallet.

When completed, such a transaction will only be valid once it has been verified and pasted into the blockchain. So you already see that you have to deal more intensively with the topic to understand it to some extent.

2. Which cryptocurrencies are there?

2. Which cryptocurrencies are there?

The launch of the cryptocurrencies began in 2009 with the most famous currency, the “Bitcoin”. From this point on, the debt money system, which was already decoupled from the real economy and supplemented by another player in the market, was publicly traded.

As a result, more and more crypto currencies came on the market, all of which have their peculiarities. Meanwhile, the number of available cryptocurrencies has become as unmanageable as that of financial and insurance products.

The best-known cryptocurrencies are:

    • Bitcoin
      There are now more than 16 million bitcoins worldwide in circulation. If you look at the current market value of around 10 euros, this represents a considerable value of 16 billion euros for a currency that exists exclusively digitally.
    • Ethereum
      In the real sense, Ethereum is not a cryptocurrency, but rather a platform that is used to handle “Smart Contracts
    • Dash
      Launched the crypto currency Dash originally under the name “Darkcoin”. It is popular among users primarily by high anonymity, and rapid transaction of transactions.
    • Ripple
      Also ripple is not a cryptocurrency in the classical sense, but a combination of trading place and payment network designed. However, the otherwise currency-neutral network also has its own cryptocurrency.
    • Monero
      The still quite young crypto currency Monero wants to assert itself in the market in comparison to the Bitcoin with still more anonymity and decentralization.
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  • Litecoin
    At Litecoin, the primary goal of the creators of the open source project was to significantly hinder the strong centralization of mining compared to Bitcoin.
  • NEM
    The cryptocurrency NEM with its relatively small market share was at that time intended as an improvement of the NXT, and is mainly used in the private blockchain Mijin.
  • Zcash
    Zcasch is also one of the younger crypto currencies, and was created in 2016. The market volume of about 30 million US dollars is of course very low compared to Bitcoin.

The cryptocurrencies presented here are actually only a small selection of the available ones. You did not know any of them apart from Bitcoin? Frankly, we were the same with the exception of one or the other. On the one hand, this is probably not only because the number of crypto currencies has become too diverse, but on the other hand, the confidence in these products is not too big for most investors in these means of payment.

The launch of the cryptocurrencies began in 2009 with the most famous currency, the “Bitcoin”. From this point on, the debt money system, which was already decoupled from the real economy and supplemented by another player in the market, was publicly traded.

As a result, more and more crypto currencies came on the market, all of which have their peculiarities. Meanwhile, the number of available cryptocurrencies has become as unmanageable as that of financial and insurance products.

The best-known cryptocurrencies are:

    • Bitcoin
      There are now more than 16 million bitcoins worldwide in circulation. If you look at the current market value of around 10 euros, this represents a considerable value of 16 billion euros for a currency that exists exclusively digitally.
    • Ethereum
      In the real sense, Ethereum is not a cryptocurrency, but rather a platform that is used to handle “Smart Contracts
    • Dash
      Launched the crypto currency Dash originally under the name “Darkcoin”. It is popular among users primarily by high anonymity, and rapid transaction of transactions.
    • Ripple
      Also ripple is not a cryptocurrency in the classical sense, but a combination of trading place and payment network designed. However, the otherwise currency-neutral network also has its own cryptocurrency.
    • Monero
      The still quite young crypto currency Monero wants to assert itself in the market in comparison to the Bitcoin with still more anonymity and decentralization.
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  • Litecoin
    At Litecoin, the primary goal of the creators of the open source project was to significantly hinder the strong centralization of mining compared to Bitcoin.
  • NEM
    The cryptocurrency NEM with its relatively small market share was at that time intended as an improvement of the NXT, and is mainly used in the private blockchain Mijin.
  • Zcash
    Zcasch is also one of the younger crypto currencies, and was created in 2016. The market volume of about 30 million US dollars is of course very low compared to Bitcoin.

The cryptocurrencies presented here are actually only a small selection of the available ones. You did not know any of them apart from Bitcoin? Frankly, we were the same with the exception of one or the other. On the one hand, this is probably not only because the number of crypto currencies has become too diverse, but on the other hand, the confidence in these products is not too big for most investors in these means of payment.

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3. How does Facebook Libra work?

3. How does Facebook Libra work?

Basically, the Facebook cryptocurrency Libra works on the same principle as all cryptocurrencies on a blockchain-like system. This is a kind of distributed register on which all transacted transactions are stored unchangeable.

It should not be so complicated for the user as he would have to take care of the technical backround. The project is thought to be a convenient and affordable way to handle payments. And this is exactly where Facebook as the initiator of the project comes into play.

Actually, Libra is not a pure invention of Facebook, but it is 28 major companies and institutions that are represented in the Libra Association, and decide together. But it was definitely Facebook in the lead role that developed the idea, and also the technology. In the past, Facebook has already made several attempts to implement its own payment solutions in-house messenger. However, these could not really establish themselves on the market.

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This should now change with the Libra project. In the meantime companies like Spotify, Mastercard and many more count. to the Libra Association through which not only competencies are bundled, but also user numbers are to be increased. It is planned to host 100 members in 2020.

Interestingly, Facebook itself is not part of the Libra Association, but founded the subsidiary Calibra, which provides a digital wallet. This in turn should then later be integrated into the various services of Facebook such as WhatsApp and the Messenger.

Basically, the Facebook cryptocurrency Libra works on the same principle as all cryptocurrencies on a blockchain-like system. This is a kind of distributed register on which all transacted transactions are stored unchangeable.

It should not be so complicated for the user as he would have to take care of the technical backround. The project is thought to be a convenient and affordable way to handle payments. And this is exactly where Facebook as the initiator of the project comes into play.

Actually, Libra is not a pure invention of Facebook, but it is 28 major companies and institutions that are represented in the Libra Association, and decide together. But it was definitely Facebook in the lead role that developed the idea, and also the technology. In the past, Facebook has already made several attempts to implement its own payment solutions in-house messenger. However, these could not really establish themselves on the market.

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This should now change with the Libra project. In the meantime companies like Spotify, Mastercard and many more count. to the Libra Association through which not only competencies are bundled, but also user numbers are to be increased. It is planned to host 100 members in 2020.

Interestingly, Facebook itself is not part of the Libra Association, but founded the subsidiary Calibra, which provides a digital wallet. This in turn should then later be integrated into the various services of Facebook such as WhatsApp and the Messenger.

4. What is the value of Libra and who sets it?

4. What is the value of Libra and who sets it?

The aim of the creators of Libra is to create a stable world currency, and the promises that the Bitcoin could not keep because of its strong fluctuations in value as a crypto currency could redeem at this point.

The value of Libra is to be tied to a so-called currency basket which summarizes several stable world currencies. As a result, the price fluctuations of Libra should be in the cent range. Thus, from today’s perspective, the cryptocurrency Libra is at least not suitable as a speculative object. In addition, every Libra that is issued should be covered by a reserve of the same value.

So if, for example, 1 million Libra are in circulation, then there must also be 1 million US dollars in reserves. To this approach there are the control bodies “Libra Reserve” and the “Libra Association“.

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Of course, Facebook does not make all this out of boredom, but would like to generate as well as the participating companies and return on it. In the long term, this should be done through interest income from the reserve. Because the more people use Libra, the more it is in circulation, and the more reserves are available from which interest income can be generated.

And since Facebook has a very high range of its products in which the in-house wallet will later be integrated, this could also work.

The aim of the creators of Libra is to create a stable world currency, and the promises that the Bitcoin could not keep because of its strong fluctuations in value as a crypto currency could redeem at this point.

The value of Libra is to be tied to a so-called currency basket which summarizes several stable world currencies. As a result, the price fluctuations of Libra should be in the cent range. Thus, from today’s perspective, the cryptocurrency Libra is at least not suitable as a speculative object. In addition, every Libra that is issued should be covered by a reserve of the same value.

So if, for example, 1 million Libra are in circulation, then there must also be 1 million US dollars in reserves. To this approach there are the control bodies “Libra Reserve” and the “Libra Association“.

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Of course, Facebook does not make all this out of boredom, but would like to generate as well as the participating companies and return on it. In the long term, this should be done through interest income from the reserve. Because the more people use Libra, the more it is in circulation, and the more reserves are available from which interest income can be generated.

And since Facebook has a very high range of its products in which the in-house wallet will later be integrated, this could also work.

5. What makes Libra different from Bitcoin?

5. What makes Libra different from Bitcoin?

The two crypto currencies Libra and Bitcoin have quite a few differences.

  • Centralization
    One of the key differences is the decentralized organization of Bitcoin. The Libra, on the other hand, is subject to a great deal of control over its assets and its use by members of the Libra Association. Bitcoin, on the other hand, is not subject to higher-level control by companies or associations.
  • The Value
    While the value of a Libra is based on several stable world currencies, the Bitcoin is subject to strong fluctuations. And this is where the strength of the Libra should be later on.
  • The Blockchain
    Also in the way of blockchain the Libra differs from Bitcoin. When the bitcoin transacts, they are captured in the blockchain and stored in the database for protection against manipulation and managed by a network of computers. Although Libra also uses some form of blockchain, Libra’s database allows transactions to be added only by a group of previously specified participants.

The two crypto currencies Libra and Bitcoin have quite a few differences.

  • Centralization
    One of the key differences is the decentralized organization of Bitcoin. The Libra, on the other hand, is subject to a great deal of control over its assets and its use by members of the Libra Association. Bitcoin, on the other hand, is not subject to higher-level control by companies or associations.
  • The Value
    While the value of a Libra is based on several stable world currencies, the Bitcoin is subject to strong fluctuations. And this is where the strength of the Libra should be later on.
  • The Blockchain
    Also in the way of blockchain the Libra differs from Bitcoin. When the bitcoin transacts, they are captured in the blockchain and stored in the database for protection against manipulation and managed by a network of computers. Although Libra also uses some form of blockchain, Libra’s database allows transactions to be added only by a group of previously specified participants.

6. Conclusion

6. Conclusion

Whether the Libra Association with the leading role of Facebook in the market of crypto currencies can prevail in the long term remains to be seen. Ultimately, users always decide about the well-being and woe of a new product.

The question of whether we really need another means of payment can also not be answered so easily, and is a bit far always in the eye of the beholder. Certainly the competition is certainly reviving the business, but makes the market more forgettable for the users.

Because you must never forget that Facebook is one of the biggest data octopi ever, and whether you also want Facebook knows what you spend your money remains at least questionable.

In any case, we will continue to monitor the extent to which European data protection is maintained here, and will report on the worth of the Libra project even after the market launch.

Whether the Libra Association with the leading role of Facebook in the market of crypto currencies can prevail in the long term remains to be seen. Ultimately, users always decide about the well-being and woe of a new product.

The question of whether we really need another means of payment can also not be answered so easily, and is a bit far always in the eye of the beholder. Certainly the competition is certainly reviving the business, but makes the market more forgettable for the users.

Because you must never forget that Facebook is one of the biggest data octopi ever, and whether you also want Facebook knows what you spend your money remains at least questionable.

In any case, we will continue to monitor the extent to which European data protection is maintained here, and will report on the worth of the Libra project even after the market launch.

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About the author:

Michael Suhr
Michael SuhrWebdesigner / Economist
After 20 years in logistics management, I have been working as a freelance web designer and office trainer since the beginning of 2015. Incidentally, I give tips and tricks for more digital skills in my blog as time permits.

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About the author:

Michael Suhr
Michael SuhrWebdesigner / Economist
After 20 years in logistics management, I have been working as a freelance web designer and office trainer since the beginning of 2015. Incidentally, I give tips and tricks for more digital skills in my blog as time permits.

Search by category:

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2019-10-06T08:01:56+02:00By |Categories: Internet, Finance & Shopping, Product Tests|Tags: , , |