Facebook wants to establish a digital world currency

In the early days, the digital money is likely to be used primarily for transfers between different currencies, Marcus told the news agency DPA. This would put Libra in competition with services such as Western Union or Moneygram, which charge high fees for international transfers. However, the vision is to eventually make Libra a fully-fledged means of payment for all situations.

It should be easy for consumers to exchange money between Libra and other currencies and make transactions with it. For example, it should be possible to make Libra transfers directly in Facebook's chat services WhatsApp and Messenger. With a link to the bank account, it should also be possible to exchange Libra for other currencies directly on the smartphone.

Facebook has forged an alliance, the Libra Association, to achieve the major goal of a full digital currency. This alliance, and not Facebook, is to manage the digital money. The current 28 members include the financial service providers Visa, Mastercard, Paypal and Stripe - which should make integration into payment systems easier.

Other companies on board include Vodafone and Ebay, the travel booking platform Booking.com, the music streaming service Spotify and the ride-hailing companies Uber and Lyft. Marcus said that he hopes to have more than 100 members by the time Libra launches in 2020. Facebook will not have a special role in the organization.

Previous blockchain currencies such as Bitcoin are notorious for their massive price fluctuations - this is something Facebook wanted to avoid at all costs with Libra. That's why Libra will be fully backed by a reserve fund with various currencies such as dollars, euros and yen.

"For example, if someone buys Libra for 100 euros, these 100 euros flow into the reserve," explained Marcus. The Libra Association will also determine the ratio in which currencies and securities such as bonds are held in the reserve in order to ensure a stable exchange rate. Also, unlike Bitcoin, Libra is not created by the users themselves, but must be purchased from members of the alliance or on trading platforms.

Facebook leaves no doubt that Libra will ultimately become a global currency that can be used to buy anything, anywhere, just like today's money - whether online or in a store.

At the same time, Marcus qualified: "I think that any new currency will take a long time to become as big as an existing national currency of a large economy." One reason for this is that payment methods are already well established in the developed world. "For at least the next ten years, we will all still be receiving our salaries and paying taxes in the currency of the countries we live in."

At the same time, however, there are also countries with high inflation and poorly developed banking systems - and a digital currency like Libra could play a much greater role there "because it can offer a solution to many problems".

Facebook refers in particular to the 1.7 billion people who do not yet have a bank account. Spotify also explains that it hopes participation in the Libra system will enable it to better acquire customers in such regions. However, there are also limits to its global ambitions: Libra will not be available in China.

Various providers will be able to set up digital wallets to store and use Libra. Facebook wants to be just one of many wallet providers, which is why the online network founded the subsidiary Calibra with Marcus at the helm. "Facebook and Calibra will have no special rights or benefits, although we have written all the source code for the blockchain and the transactions," he said. Facebook is under massive pressure to improve data protection, particularly following the Cambridge Analytica scandal.

Users can operate in the Libra system under pseudonyms and have multiple accounts. "Transactions contain no connection to the identity of users in the real world," it said in a paper.

The usual regulation - for example, measures against money laundering - will take effect at wallet level, said Marcus. "We have spoken to regulators around the world." A hurdle has been set for companies wishing to become founding members of the Libra Alliance: they must have a market value of at least one billion dollars or more than 20 million customers. Members must invest at least ten million dollars.

The best-known blockchain currency, Bitcoin, is organized differently: With it, the units are generated by mathematical calculations on the users' computers - "mined", as it is called in technical jargon. The total number of Bitcoin that can be produced is limited. And the calculations involved are becoming increasingly complex. High-performance computers are now needed to create Bitcoin, which is why it is mainly commercial "mining farms" that are currently mining. This increases energy consumption and the scarce supply can lead to price jumps.

At its peak, one Bitcoin cost up to 20,000 dollars at the end of 2017 - followed by a slump. Bitcoin has since worked its way back up to more than 9,000 dollars, thanks in part to rumors about Facebook's plans. On Tuesday night, the price almost reached the 9500 dollar mark. (SDA)