Everything you need to know about Facebook’s Libra

1. Everything you need to know about Facebook’s Libra Member exclusive by Dasia Moore, John Detrixhe, and Matthew De Silva

2. Facebook made headlines in June when it announced that it’s launching a digital currency called Libra. But what exactly is Libra? Why is it significant? And how are regulators reacting to it? Facebook hires the team behind blockchain startup Chainspace. Feb. 4, 2019 Now hiring  Marcus testifies before the US Congress; he promises that Libra will not launch without US regulators’ approval. July 16-17, 2019 Libra on trial Rumors that Facebook is interested in cryptocurrency begin when David Marcus, then VP of its Messenger service, moves to a role leading a new blockchain research team. May 8, 2018 Early signs Facebook says Libra will launch in the first half of next year, but regulators’ discomfort with the project makes that timeline a long shot. Facebook registers a payment services company called Libra Networks in Geneva, Switzerland. 2020 Ready. Set. Go? May 2, 2019 Going on the books Facebook confirms its plans to launch a digital currency and says it’s creating a new division called Calibra, to serve as a digital wallet for Libra coins. June 18, 2019 It’s official

3. What is Libra? Libra is a digital currency. As a “stablecoin,” Libra will be backed by a reserve of stable, government-issued currencies—perhaps the US dollar, the euro, and the yen. This means one libra will convert to a set number of dollars, euros, or whatever other currency is backing its value. Libra is different from better-known cryptocurrency models like bitcoin in two key ways: These differences matter because they could enable Facebook to re-chart the future of cryptocurrency toward a more regulated, centralized future. Crucially, by mimicking government-issued money, Libra challenges governments’ exclusive right to issue sovereign currency.

4. David Marcus Role: Head of Calibra Marcus was previously PayPal’s president and CEO of Zong, a mobile payment platform he founded in 2008. What is Libra’s purpose? Facebook. Libra believes it can make sending money around the world cheaper and faster, especially for the 1.7 billion adults around the world who are unbanked. But it’s not yet clear how Libra would avoid the transaction fees that banks and wire services charge while providing the same level of security against fraud and complying with global banking regulations. Who’s behind Libra? There are two major figures at Facebook driving most of the decisions about its development: Kevin Weil Role: VP of product at Calibra Weil spent two years as the vice president of product for Instagram and is a co-creator of Libra.

5. The Libra Association Facebook isn’t alone in this project. It founded the Libra Association, a nonprofit based in Switzerland, as a network of partners that will help control Libra, its reserve, and the blockchain technology behind it. There are 28 members, counting Facebook. How much money is in Libra? Each of the Libra Association’s 28 members has pledged to commit at least $10 million to it, but we don’t know how much of that $280 million (or more) Libra has in its reserve so far. Facebook has also kept quiet about how much money it has invested in the project, but says it wants to launch Libra with a $1 billion reserve. Libra Association.

6. Is it time for companies and consumers to start preparing for Libra’s launch? • Not at all. It’s unlikely that Libra will go live in 2020, if at all. Here are three reasons why it might not happen: • The Libra Association and Facebook’s blockchain are still works in progress. • Too many regulators oppose the idea. • Facebook’s reputation is too great a liability.

7. A partnership in progress The Libra Association brings together expertise in ecommerce, payments, tech, and more. But one key industry is missing from the table: banking. Facebook is also a long way from meeting its goal of 100 partners. It currently has 27 members. As for the members that have already joined—the New York Times reports that several signed non-binding agreements and are prepared to leave the venture if they dislike Facebook’s direction. 8 6 5 4 4 2

8. Pushback from regulators Facebook has to convince regulators around the world that now is the time for a global digital currency. That’s likely to be a tough task. Watchdogs are concerned about any cryptocurrency that mimics government-issued money, and Facebook’s poor track record on privacy and data security only adds to some regulators’ doubts. Maxine Waters Role: US congress, financial services committee chair “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.” Bruno LeMaire Role: French finance minister “It is out of question…[that Libra] become a sovereign currency. It can’t and it must not happen.” “We cannot accept private companies issuing their own currencies without democratic control.” Jerome Powell Role: US Federal Reserve chair “While the project's sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns.”

9. A global stablecoin for retail purposes could…support greater financial inclusion…However...they give rise to a number of risks related to public policy priorities including anti-money laundering and countering the financing of terrorism, consumer and data protection, cyber resilience, fair competition, and tax compliance.” Benoît Cœuré, European Central Bank 9

10. Facebook’s privacy track record The biggest brake on Facebook’s Libra rollout might be Facebook itself. Its reputation for misusing and failing to protect user data makes watchdogs wary of letting the company control a global currency and a digital wallet that could quickly become one of the most popular payment services in the world thanks to Facebook’s massive global reach. The company has promised not to use Calibra data to drive targeted ads on social media. But it will likely take more to reassure regulators—and consumers—that Facebook can ethically handle billions of people’s financial transactions and data.

11. Privacy isn’t the only concern Facebook is free to ban people from its social media platform. Does this mean it will also control who has access to Libra? US congressman Sean Duffy asked David Marcus this in July, but Marcus didn’t seem to have an answer. To play videos in deck, be sure external content is enabled. If you’re reading a PDF, watch on YouTube.

12. Want to know more? Check out this coverage from Quartz. • Facebook unveils Libra, its new cryptocurrency • Five major issues raised by Facebook's Libra hearing • Facebook's Libra cryptocurrency could be delayed • The winners and losers of Facebook’s Libra • You might also be interested in our member-exclusive field guide to crypto after the crash. • Have questions about this presentation, or suggestions for us? Send us a note at members@qz.com.