What is Libra, and how will it change finance?

Libra was renamed Diem and the project was wound up in 2022 without ever launching. This article is from July 2019 and is kept as written.

Cryptography combined with a decentralised network design is where the word blockchain comes from. Bitcoin, which many people will have heard of, uses a blockchain, and was devised by someone using the pseudonym Satoshi Nakamoto in 2008. Bitcoin can be spent in place of money and is regarded as a valuable asset. Later a new term was coined, cryptocurrency, used for the various digital currencies invented after Bitcoin — Ethereum, Litecoin, Zcash, Bitcoin Cash and Stellar Lumens among them.

After Mark Zuckerberg, Facebook's well-known CEO, announced last year that he would be studying cryptocurrency systems and putting them to serious use, he has now announced the name of a new cryptocurrency called Libra, which will be made available on Facebook's platform in 2020. Users will be able to use Libra to buy and sell goods online, or to transfer it to other people much as one would transfer money between ordinary bank accounts.

Libra is a system offered on Facebook, even though it is not a part of Facebook — meaning the two systems are entirely separate, and Facebook is only the party pushing to get Libra more widely used. Libra itself is a collaboration between a number of global organisations, brought together as an intermediary body called the Libra Association, an independent organisation that will oversee and set policy for its use. Members include Mastercard, PayPal, Visa, eBay and Uber; at present there are 27 global organisations formally supporting the use of Libra. The Libra Association is still open to others interested in becoming supporters, at a cost of around 10 million US dollars to set up the processing systems involved.

Libra is a cryptocurrency, so transferring or paying anyone requires a digital wallet. Libra has a wallet system of its own called Calibra, which is a Facebook product directly. At this point some people may find the question of who sets Libra's policy slightly confusing. Think of the Libra Association as being like the Bank of Thailand, while Calibra is like one particular bank through which the currency called Libra can be transferred — except that the banking system able to transfer this currency is monopolised by Facebook alone.