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What you should know about Libra; the upcoming Facebook-backed cryptocurrency

Some people buy cryptocurrency as an investment. Others hope that the value will increase so that the items they are purchasing will effectively cost less. Libra doesn’t take that tactic. Others use cryptocurrency because they don’t have access to a bank.

The Libra Association says the Libra’s purpose is “empower billions of people,” citing 1.7 billion adults without bank accounts who could use the proposed currency. Mark Zuckerberg said that “sending money online should be as simple as sending photos.”*

Libra could offer Financial Security

Financial security is a primary difference between Libra and other current cryptocurrencies. Facebook has founded the Libra Reserve, which holds highly liquid financial assets to support the digital currency. Bitcoin, Ethereum and other cryptocurrencies are not backed by anything. Which is why their (Bitcoin, Ether, et cetera) value changes dramatically over short period of time (Bitcoin has ranged from $1,914 to $19,345 from 7/12/17 to 7/12/19) . In theory, Libra should be more stable (since it has assets to back up it’s worth). It reminds me of when the value of the U S Dollar was backed up by gold. Interesting article on that here (yes, I’m a nerd – but in a good way)

Libra Functionality

Libra will function as a digital currency that utilizes blockchain (libra Blockchain). No identifying information will be publicly shared – meaning that the name is kept private. The only data shared will be the blockchain address of the sender and receiver.
Facebook is a member of the Libra Association, a nonprofit, but it does not have direct control over Libra. There are 28 large firms that have invested in this – Facebook (obviously), VISA, PayPal and others like Kiva which is a non-profit that does microloans (side note, I have been making microloans through for years – check it out).

Concerns for Libra

Facebook has 2.4 billion users, so it has an incredibly large potential pool of users. Facebook has stated that they will not use the data nor sell it. However, we must balance that statement with the fact that the U S Federal Trade Commission has recently approved a $5 billion settlement with Facebook due to Facebooks privacy practices.
Investment opportunities – You should never invest in any cryptocurrency unless you are prepared to lose all the money invested. If you are curious, please look up the greater fool theory Libra seems more secure, but it is not marketed as an investment.

Let’s see what happens….

*Please see my other articles on how this will be taxed (as the IRS treats this as buying/selling stock). Full tracking must be done – use of crypto wallets will be necessary.

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