Janis is a cryptocurrency enthusiast and a bitcoin adherent. He has a background in video production, but for the past couple of years, he is a full-time crypto researcher and writer. He has a good understanding of multiple cryptocurrencies and loves to cover daily news. He considers himself a semi-bitcoin maximalist but always is open to any kind of new ideas that could be put on the blockchain. In his free time, he likes skateboarding and cars.
David Marcus, the head of Calibra wallet, went on Facebook to explain the company’s motivation behind building Libra. David elaborates on why Facebook didn’t choose to build on top of existing systems, but rather chose to build a new one.
David Marcus, the head of Calibra Wallet, which will be the official wallet for Libra currency, which Facebook along with other Libra Association members are developing, did a quite explanatory Facebook post and explained why Facebook chose to build a new currency system rather than using some of the existing ones.
First, he overlooked the existing money systems or networks as he calls them and explains that they are not well interconnected. He says that most of them were built in 1960’s and 1970’s and that in most of the cases, these networks “live on top of legacy, fragmented infrastructure.”
Next, he mentioned that the current systems have broad limitations because of the underlying infrastructure that they are dependent on:
“For example, while you can send and receive money from within one wallet, you typically cannot send and receive between wallets from different companies.
To make a helpful analogy, it’s a bit like if you couldn’t send emails from Gmail to Yahoo! Mail”.
Further, he addressed that the current systems often need a number of intermediaries to be involved in order for the money to go from point A to point B. Transactions are usually delayed or with massive fees that could range to even $45-$50.
“Long story short, building on top of existing rails and across disconnected payment networks won’t reduce cost, open up the market to more innovation, nor lower the barrier of access to modern financial services as much as building a new infrastructure with a very stable, high quality global medium of exchange supporting it.”
Facebook’s Ambitious Route
So the first part of the post consisted of explaining the problems and ongoings of the current system, the second part was mainly about explaining why Facebook chose to “take a more ambitious route”. He writes that Libra will enable wallets, merchants and services from all around the world “to move value at an incredibly low cost.”
Libra will offer near real-time transaction settlements. Consumers won’t have to worry about liquidity pools of various currencies across the world. Building and accepting such a protocol would massively reduce costs and eliminate many intermediaries.
David envisions Libra as the protocol that will finally enable fast, cheap, and stable money transfers across many service providers, hence the Libra association. He says that by using Libra, people would benefit from this at large and overall – it would enable billions of people “to have access to the essential services and to the world’s economy”.
“This is why we’ve decided to take the more ambitious route, and why we’re so committed to seeing it through. Because people all around the world deserve better, and it’s about time for a change.”