Facebook Libra is a global digital currency by the popular social networking site. Its primary purpose is to provide Facebook users without banking accounts or any access to banking services an opportunity to make online payments. According to the social network, about 1.7 billion people don’t have bank accounts. Libra was first announced on the 18th of June 2019. The social network will release the first version for general consumption in the year 2020.
In anticipation of this upcoming revolutionary launch, there are a few things that you need to know about Facebook Libra cryptocurrency that you can read here. Learning these facts will help you decide better if you should engage in these online payment transactions or not.
One of the first things that you need to know about Facebook Libra is that the Libra symbol is their unit of currency. If the dollar sign represents the US dollar, three wavy lines represent the Libra. Another thing that you should know about this cryptocurrency is that a currency basket and US Treasury securities back it up. A basket of currencies is a group of select currencies utilized to minimize any risks that currency fluctuations bring. The currencies that will be backing Libra include the US dollar, UK pound, Japanese Yen, Swiss Franc, and Euro. Though the value of Libra depends varies between currencies, it will not vary to the group of currencies. An estimated amount of $1 billion will be set aside as a reserve.
The United States Department of Treasury, on the other hand, issues the US Treasury security as a financial tool for government debt. There are four kinds of marketable treasury securities. They are the Treasury bonds, Treasury bills, Treasury Inflation-Protected Securities, and Treasury notes. Auctions conducted by the Federal Reserve Bank of New York sell these instruments. Afterward, you can trade them on secondary markets.
What all of these things mean is that Libra full asset backing the moment it goes live. Full asset backing is akin to the ones that governments provide when they issue currencies. In those instances, the country’s national treasury, its central banks, its commercial banks, and its mint will back the currency. Some currencies come with intrinsic value, like those made of silver or gold. You have other currencies as well that you can exchange for a precious metal like gold, which is known as the gold standard. These days, many countries issue fiat money, meaning it can be a paper currency, metal coinage, or date in the form of bank balances and records of debit or credit card purchases.