News:Facebook has officially launched its cryptocurrency Libra,despite several high-profile defections from the project and intense criticism from US regulators and politicians.
- Libra is a virtual currency where users can buy and store in a digital wallet.It can be used for transactions on a decentralized network that is not controlled by one bank or a government.
- It is powered by a technology called blockchain which functions like an open ledger that gets updated in real time.
- Libra will also have a digital wallet called Calibra which will handle its crypto dealings.
- Libra will be controlled by a non-profit Libra Association.It will be a Geneva-based entity that has 21 members including Uber,Vodafone group among others.
- Originally the Libra Association had 27 potential members but several companies dropped out including Visa, Mastercard and PayPal.
Concerns of Libra:
- The global community has expressed concerns that Libra can disrupt the entire global payment system.
- There is also an issue of privacy and security as Cambridge Analytica scandal had exposed the Facebook’s lapses of data privacy and security.
- Libra could also stifle competition among other providers and even threaten financial stability if users suddenly suffer a loss of confidence in the digital currency.
- It could also globally weakens the government’s control over monetary and banking policies.
India and Libra:
- The Current regulations do not permit the use of cryptocurrency for currency transactions.
- The Draft Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019’ has proposed that private cryptocurrencies should be banned completely in India.
- The draft has also said that anybody who mine, hold, transact or deal with cryptocurrencies in any form whether directly or indirectly through an exchange or trading should attract a jail term of one to 10 years.
- Cryptocurrency is a digital or virtual currency that uses cryptography for security.
- Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank.
- They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.
- The most common cryptocurrencies are Bitcoin, Ethereum, Ripple, and Litecoin.