Context:

• Facebook   has   linked   with   28   partners   in   a   Geneva-based   entity   called   the   Libra Association, which will govern its new digital coin set to launch in the first half of 2020.
• Facebook has also created a subsidiary called Calibra, which will offer digital wallets to save, send and spend Libras.
• Calibra   will   be   connected   to   Facebook’s   messaging   platforms   Messenger    and WhatsApp.
• Calibra will conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that are common among banks.
• Libra is a global currency and financial infrastructure.
• it is a digital asset built by Facebook and powered by a new Facebook-created version of blockchain, the encrypted technology used by bitcoin and other cryptocurrencies.

Why Libra?

• Facebook claims it wants to reach the 1.7 billion people around the world who do not have access to a Bank Account.

Authority Incharge:

• The Libra Association is described by Facebook as an independent, not-for-profit organisation based in Switzerland.
• It serves two main functions:
• • To Validate Transactions on the Libra blockchain and
  • To Manage the Reserve Libra is tied to and allocate funds to social
• It functions as what is known as a “Stablecoin”, pegged to existing assets like the dollar or euro, in the aim of making it less subject to the volatility that many Cryptocurrencies Experience.

What is a Cryptocurrency?

• A cryptocurrency is a digital or virtual currency that uses cryptography for security.

Advantages:

• A cryptocurrency is Difficult to Counterfeit because of the security feature of blockchain technology.
• It is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
• Cryptocurrencies hold the promise of making it easier to transfer funds directly between two parties in a transaction, without the need for a trusted third party such as a bank or credit card company; these transfers are facilitated through the use of public keys and private keys for security purposes.
• Fund transfers are done with minimal processing fees, allowing users to avoid the steep fees charged by most banks and financial institutions for wire transfers.
• At the same time, there is no central authority, government, or corporation that has access to your funds or your personal information.

Disadvantages:

• The Semi-Anonymous Nature of Cryptocurrency Transactions makes them well- suited for a host of nefarious activities, such as money laundering and tax evasion.
• Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely.
• The   first   cryptocurrency   to   capture   the   public   imagination   was   Bitcoin,   which   was launched  in  2009  by  an  individual  or  group  known  under  the  pseudonym,  Satoshi Nakamoto.
• Bitcoin’s success has spawned a number of competing cryptocurrencies, known as “Altcoins” such as Litecoin, Namecoin and Peercoin, as well as Ethereum, EOS, and Cardano.

Cryptocurrency in India:

• RBI does not recognize any sort of Cryptocurrency as legal tender.
• The Reserve Bank has explicitly said that “entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs”.