What's happening to Facebook's Libra?
Facebook's Libra started off as an ambitious cryptocurrency project that wanted to change the way people use money.
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Updated November 2026. This was first published on 8 August 2020. The idea is the same. Any number below is what the original piece said then. It is not a new count.
Key takeaways
- Facebook’s Libra started off as an ambitious cryptocurrency project that wanted to change the way people use money.
- The goal was to introduce a globally accessible cryptocurrency backed by a blockchain system.
- Unlike the other cryptocurrencies out there, Facebook was planning to create a cryptocurrency that will be backed by a ‘basket of currencies’ rather than a single currency to avoid volatility in value.
Facebook’s Libra started off as an ambitious cryptocurrency project that wanted to change the way people use money. The goal was to introduce a globally accessible cryptocurrency backed by a blockchain system. Unlike the other cryptocurrencies out there, Facebook was planning to create a cryptocurrency that will be backed by a ‘basket of currencies’ rather than a single currency to avoid volatility in value.
The idea was truly revolutionary and if executed properly, it would have benefitted everyone tremendously. Unlike traditional cryptocurrency, Libra is centralized and permissioned which means that transactions can only added by a trusted group of parties. Libra would have been integrated into Facebook, Instagram, and WhatsApp which would have made payments a breeze since these platforms are used by people on a daily basis. Just Imagine, with Facebook’s more than 2.6 million users, if they get just a quarter of them to use Libra, it’s already more than double the US population. The UI of Calibra, the platform built on top of the Libra coin was touted to be surprisingly user-friendly for a crypto platform. As good as all this sounds, Facebook is the same company that sold user data to Cambridge Analytica.
Lawmakers were skeptical about Libra right from the time it was announced. A Facebook vs Congress showdown happened and the Congressmen were not impressed by Facebook’s answers.
Facebook claimed that it will only be one among the hundred members of the Libra association (doesn’t sound true to me) and will not control the Libra system. Mark Zuckerberg went on to say that Libra will not be released until it is approved by the US. The US government’s hesitation is understandable since a few other cryptocurrencies have had its fair share of illegal activities given the pseudoanonymity of the blockchain network.
Initially, the Libra association consisted of giants like PayPal, Visa and MasterCard who invested at least $10 million into the project. Libra’s intent was to compete with the traditional currencies rather than the cryptocurrencies which the government was not comfortable with. As a result, the members started backing off starting from PayPal leaving first. From then on, the Libra project has gone downhill. It started losing its backers, several governments banned Libra and it slowly started to lose traction. With countries announcing the plans of launching their own digital currencies, Facebook was in deep trouble.
After all the trouble they went through, Facebook finally stepped down and revamped the system (Libra 2.0) to please the lawmakers and the regulatory bodies. Rather than fighting against the other currencies in the world, they decided to back each LBR (Libra coin) with certain traditional currencies such as the US Dollar(USD), Euro(EUR) and British Pounds(GBP). These are the currencies confirmed as of now and might rope in other countries to join in as well (if they wish to). It is still going to be using a smart contract based system. The Libra Association is coming up with strong compliance frameworks that will battle black marketing in the system. The Libra white paper also suggests that if central banks develop their own digital currencies, it could replace Libra’s single-currency stablecoin (Poor Facebook). Another suggestion is that the Libra Coin(LBR) will be defined in fixed nominal weights, such as the Special Drawing Rights (SDR) maintained by the International Monetary Fund (IMF).
Libra states that, for countries that do not have a single-currency stablecoin on Libra, it can use the Libra coin(LBR) which will act as a non-volatile asset. These countries can use LBR for cross-border transactions which the recipient can then convert into their local currency to make purchases in their country. The unbanked population will be provided access to unhosted wallets which might not have access to VASPs (Virtual Asset service providers). This unbanked population currently stands at a whopping 1.7 billion (That’s a huge number!).
Not to forget that Chinese Digital Currency Electronic Payment(DCEP) is also under development and will pose as a strong competitor to the Libra coin. I would still take this competition with a pinch of salt since the USA and a few other countries are not really happy with China and it is interesting to see how China overcomes these problems to launch their digital currency and achieve their goal of worldwide Yuan adoption.
Will Libra 2.0 succeed? #
The success of Libra 2.0 is too early to comment on considering the drastic changes Libra went through. Calibra is a wallet that was built to use the Libra token. It was supposed to launch this summer but was pushed back to October. Interestingly, Calibra has been renamed as ‘Novi’ which makes more sense since it now does not operate over an individual currency but rather a token pegged to countries’ currency value. What’s more interesting is that the wallet will not just contain these tokens but also your personal information like your traveller status, proof of age and also your loyalty cards. This will enable people around the world to access global financial services and open the gates to greater economic value by putting Libra in the hands of millions of people around the world. Such a thing would offer benefits that no banking system has ever been able to.
Even though the Libra project went through a major overhaul from plans to create an individual cryptocurrency to a mere PayPal like blockchain-based electronic payments system, it still has a lot of potential since it will be accessible to a large population (let’s hope Facebook doesn’t steal our data). It might even use this to use its ad business that fetched 98% of Facebook’s entire revenue stream in Q1 2020. Nevertheless, this is going to be loved and used by the majority of the people inspite of the privacy concerns as such a global payments system integrated into the apps that we use almost everyday will be much more comfortable than the existing standalone solutions.
All these features rolled into one single wallet that can be used anywhere sounds convenient but its quite unsure how Facebook will pull off such a thing keeping safety and privacy concerns in mind. Let’s all wait until it finally lands and hope it benefits the world rather than use us as bait.
To know more about Libra, here’s the link to the Libra White paper.
Questions and answers #
What is the main point? #
Facebook’s Libra started off as an ambitious cryptocurrency project that wanted to change the way people use money.
What else did the original piece say? #
The goal was to introduce a globally accessible cryptocurrency backed by a blockchain system.