Facebook's plan to revolutionize how money works, and why companies and lawmakers are so worried about it, explained in 30 seconds
- Facebook is trying to launch its own cryptocurrency: Libra.
- Libra will be managed by the independent, nonprofit Libra Association and transferred on digital wallet Calibra, a subsidiary of Facebook.
- Lawmakers are wary of a corporation's attempt to create its own currency, and Facebook has assured the government that it will not launch without approval from all appropriate regulatory bodies.
- Visit Business Insider's homepage for more stories.
What is Libra?
It's Facebook's attempt at creating a digital currency, otherwise known as "cryptocurrency," and it has already landed two Facebook executives in front of the US House Committee on Financial Services since it was announced in June.
Here's a 30-second explanation of what Libra is:
Libra is Facebook's attempt to create a cryptocurrency, basically: digital money.
The Libra Association will monitor Libra. The independent non-profit will be based in Switzerland and composed of 100 companies, academic institutions, and other organizations. Currently, the association has 21 members including Uber, Lyft, and Spotify. It has lost seven since members since June, including PayPal, MasterCard, and Visa.
Calibra, a Facebook subsidiary, will serve as a digital wallet for users to send and receive Libra and other cryptocurrencies.
What's the problem?
Mark Zuckerberg told lawmakers in October that, "the idea behind Libra is that sending money should as easy and secure as sending a message." Libra, and digital wallet Calibra, could serve as a digital, financial architecture that brings banking to the underserved, according to Facebook.
Lawmakers are wary that a corporation wants to create a currency. Facebook CEO Mark Zuckerberg and head of Calibra David Marcus both testified before the US House Financial Services Committee in October and July, respectively, to answer this question.
"The committee questioned Zuckerberg on issues such as whether Facebook should be trusted to handle financial data, why Facebook wants to develop a new digital currency instead of using the dollar, how Facebook is working with regulators and lawmakers, and whether or not it's willing to shelve the project if necessary," Lisa Eadicicco wrote for Business Insider about the October hearing.
Here's a 5-minute timeline from the present to Facebook's Libra announcement, via our past coverage.
October 18
October 15
July 17
July 5
New data shows one big reason people will be more willing to invest in Facebook's cryptocurrency
July 2
June 19
Libra promises to become a global payment system by 2020, but there's a gaping hole in their plan
Facebook's new cryptocurrency brings it one step closer to becoming an independent 'virtual nation'
6 things we're still wondering about Libra, Facebook's new cryptocurrency coming in 2020