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Facebook has unveiled ambitious plans to launch a digital currency in a move to create an alternative financial system based on cryptocurrency backed by over two dozen companies, including Visa, Mastercard, PayPal among others. Facebook Libra, a potential rival to Bitcoin, is likely to push more e-commerce on its services and boost ads on its platforms.

It is worth mentioning here is that Bitcoin’s price was flat on Tuesday (June 18) after the announcement at around USD 9,200 as per coinmarketcap.com, the highest it has been for a year. Facebook's main objective is to reach 1.7 billion people worldwide who lack access to the banking system.

The social media giant announced “Project Libra,” a new type of digital money designed for people using its apps and social network. If the plan is successful, users will soon be able to shop with and send the currency called Libra on Messenger and Instagram. As per the company, it can also be used with other merchants such as Uber, Spotify, and MasterCard.

While Facebook did not specify as to when and how the users will get ahold of the currency, executives suggest that the rollout of the cryptocurrency will be in a phased manner and the opportunity to trade Libra is expected to be extended to most users of Facebook services like Messenger, WhatsApp, and Instagram by mid-2020.

Here's everything you need to know about Libra

1. Companies like Uber, Mastercard, eBay have come together to start a non-profit Libra Association.

2. People will be able to send and receive money instantly (minus the transfer or credit card charges!)

3. Calibra, the digital wallet will be available in Whatsapp and Messenger as well.

4. Calibra data will not be shared with Facebook.

5. The real identity will not be tied to publicly visible transactions.

6. So far, Libra is backed by Payments major such as Mastercard, PayPal, PayU, Stripe and Visa. Tech and consumer companies like Booking Holdings, eBay, Facebook, Farfetch, Lyft, Mercado Pago, Spotify, Uber have also backed the project. Telecom companies Iliad and Vodafone are also on board.

7. Blockchain firms Anchorage, Bison Trails, Coinbase & Xapo Holdings along with Venture Capital companies Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital and Union Square Ventures have also backed the cryptocurrency.

8. Several NGOs such as Creative Destruction Lab, Kiva, Mercy Corps and Women’s World Banking are also backing the project.

9. Facebook also announced the digital wallet called Calibra, which will be operated by Facebook as a separate subsidiary. This wallet will provide users with a way to store and spend Libra.

10. Calibra will let users send Libra to almost anyone with a smartphone, as easily and instantly as one might send a text message and at low to no cost. The digital wallet will display the value of users’ Libra in their local currency.

It may be noted that Project Libra’s roll-out comes at a time when Facebook is facing unprecedented scrutiny from regulators and is battling to regain users’ trust after a series of privacy scandals. This is why Facebook is distancing itself from direct management of Libra. Companies like Uber, Mastercard, eBay have come together to start a non-profit Libra Association and the whole Project Libra will be run by this association in Switzerland.

The association will be overseen by other companies, which will have voting power over the design and release of Libra, Facebook officials said. Libra will be fully backed by a reserve of real assets. A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created.

Worth mentioning here is that former finance minister Arun Jaitley said in 2018 Union Budget, "All cryptocurrencies, which include bitcoins, are illegal and the government will take all measures to eliminate their use." The RBI has asked banks, NBFCs and payment service providers to disassociate themselves from entities dealing with virtual currencies (VCs), including bitcoins.

A government official said earlier this year that Cryptocurrency is a "Ponzi scheme" and should be banned to protect the interest of investors. Also, the Investor Education and Protection Fund (IEPF) Authority, which comes under the corporate affairs ministry is also in favour of banning trade in such currencies. With Cryptocurrency trade being illegal in the country, Facebook's Libra might not have a bright future in the country.

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