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Cryptocurrencies have become a global phenomenon in the past few years. Now Facebook is launching it's own cryptocurrency, in association with Visa, MasterCard, Uber and others. The stated aim of Libra is to "enable a simple global currency and financial infrastructure that empowers billions of people".
The announcement has sparked fears that Libra could be a threat to traditional banks, warnings to be cautious, and sceptical commentary of claims that it will help developing countries.
Basics - Look - Libra - Cryptocurrencies
But let's go back to the basics and look at what Libra is, how it compares to other cryptocurrencies and whether you should be concerned about using it when it eventually arrives.
What is a cryptocurrency?
Currency - System - Money - Exchange - Goods
Currency is a system of money that is commonly used in exchange for goods and services and, as a result, holds value. Cryptocurrencies are digital currencies that are secured using cryptography.
The more popular recent cryptocurrencies are based on blockchain technology which uses a cryptographic structure that is difficult to change. One of the key properties of this structure is a distributed ledger that keeps account of financial transactions, which anyone can access.
What is Libra?
Libra is a new currency that is being proposed by Facebook. It's considered a cryptocurrency because cryptography will be used to help protect the value of the currency from tampering—such as double spending—and to protect the payment process.
Libra - Backing - Libra - Association - Corporations
Libra has the potential to become successful because of the backing from the Libra Association, which is made up of large international corporations such as Facebook, Uber and Vodafone. MasterCard and Visa have also thrown their hats in the ring, but no traditional banks are on the list.
What's different about Libra compared with other cryptocurrencies like Bitcoin?
Cryptocurrencies - Bitcoin - Ethereum - Nature - Authority
Cryptocurrencies like Bitcoin and Ethereum are quite egalitarian in nature. That's because there is no single authority that verifies transactions between parties, so anyone could potentially do...
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