Facebook has already developed a digital wallet for smartphones called the Calibra. “Calibra” is closer to the remittance application than Bitcoin. Facebook developed Libra’s technology (partners are still thinking about potential products, and eventually Coinbase. Fintech companies such as Coinbase and PayPal could add Libra to their wallets, but no company has announced it at this time). If you are interested in bitcoin trading, visit Bitcoin trading App.
Calibra will be integrated into WhatsApp and Messenger, which will allow 1 billion users to access Calibra seamlessly. Calibra is also available as a standalone app. The app launched in 2020, when the Libra protocol is due to be completed.
Facebook emphasizes the “dispersion” of the Libra blockchain, but the Calibra experience will be closer to the personal money transfer app “Venmo” than Bitcoin. Calibra stores the Libra coin and the encryption key to access it. It’s user-friendly, considering that users can access coins even if they forget their password or lose their smartphone. This also means that Calibra is more likely to intervene in cases of fraud or problems.
On the other hand, Calibra’s management of coins and keys also means that money can be transferred between users’ wallets without resorting to the blockchain. Blockchain is only involved when customers send money to third-party wallets and services outside Facebook. With this in mind, Facebook benefits two birds with one stone to let go of control of the Libra Association.
With Calibra, Facebook will handle cross-border transfers between friends and family, micropayments within the Facebook app, “Marketplace” payments, small business payments, and more internally. In addition, further development of Libra’s technology will allow it to handle other financial services.
Second, Facebook can benefit from an open-source ecosystem with the Libra Association. You can work with external groups to deal with the complex financial aspects of cryptocurrencies and the cumbersome regulations of each country. In the future, tools and apps developed outside of Facebook will become more and more valuable to Facebook users as partners create a vast network of customers and vendors.
Where Will The Generated Data Go?
Critics and regulators will be nervous when they learn that Facebook will roll out a wallet with many new personal data. But Facebook itself understood this point. That’s why the company struggled to ensure that Libra’s data wasn’t messed up with other personal data and that Libra’s purchase data wasn’t used for targeted advertising. Therefore, Calibra will be established as an independent subsidiary of Facebook, and information will be managed separately.
But that’s also about permitting users to integrate Facebook friend information with Calibra’s data for convenience and feature additions. For example, if users use Calibra built into WhatsApp and Messenger, Facebook will see who or business they have dealt with (Facebook claims they can’t see other details). Also, in the draft Service Terms of Service, Facebook was given the right to use Calibra’s aggregate data. In addition, Libra’s blockchain also has privacy issues.
Facebook designed Libra’s transactions to be publicly and permanently recorded on the blockchain, but it can use pseudonyms such as handle names (note that it’s not anonymous). The company argues that money launderers and drug traffickers should rarely use Libra. Also, as with Bitcoin, law-abiding civilians will be wary of systems where all transaction details are permanently stored.
Is It A Blockchain Approach?
Even if Facebook accepts the claim that “Facebook has no privileges concerning Libra,” some experts criticize the system as empowering a limited number of node holders.
“It’s sad to see crypto efforts being made for large, already-funded companies,” said Emin Gyun-Siler, a computer scientist specializing in cryptocurrencies at Cornell University. However, Facebook economist Christian Catalini also acknowledges that only “unlicensed” blockchains like Bitcoin are truly equal global payment systems accessible to all players. Catalini likened Libra’s node to a taxi license medal in the United States. In short, it’s a paid permit you get to access the market, limiting market participants.
Facebook says a permitting approach is essential. Given the current state of blockchain technology, which is notorious for being slow and costly to operate, the company’s move is unavoidable to run an extensive network of millions of potential users. It’s a claim. If you narrow down the members to only trusted partners in advance, security protocols such as “Proof of Work” (a flawed process for the environment that requires a tremendous amount of computing power to keep Bitcoin safe) can be used. You don’t need it anymore.