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Libra, a new currency is born

By Jean-Claude Elias - Jun 20,2019 - Last updated at Jun 20,2019

Let us face it, the most annoying, frustrating aspect of technology is when we do not understand it fully, when it is not clear enough. In this line, cryptocurrencies deserve an award for being indeed cryptic — literally. Perhaps the originators should have chosen another name, though it probably would not have changed much.

As if it was not enough to have digital currencies that more than 90 per cent of the population do not understand, have no idea how it works, not to mention are not able to deal with them, now an impressive set of 28 real big names want to introduce a new currency to make online payment easier and have decided to call it Libra.

Among these “real big names”: Facebook, MasterCard, Visa, PayPal, Spotify, Uber, Vodafone and eBay. An impressive list by any measure.

The news has hit all the media this week, and it seems that Libra will not be exactly a cryptocurrency as such, but rather a “unified” digital currency that will make online payment faster, easier, smoother. Among the benefits it is supposed bring is to save you the annoying cost associated with money payment and transfers, which typically averages seven per cent.

How is Libra different from a cryptocurrency?

Techcrunch.com has a nice way to describe it: “Cash in a local currency, get Libra, spend them like dollars without big transaction fees or your real name attached, cash them out whenever you want.” So one of the first differences is that Libra will be “pinned” to a known, sound and reliable currency. This is a major point, for cryptocurrencies had their “unanchored price […] susceptible to huge and unpredictable swings, making it tough for merchants to accept as payment”.

So perhaps Libra should not be called cryptocurrency after all, though at this point most websites still would use this term to describe it. Libra may be more in line with the global online payment concept, regardless of what actual, real-life currency it may or may not be pinned or anchored to. This being said, the entire notion is still in the “white paper” stage, and we may very soon see more explanation, eventually more adjustment to the system.

Regardless of what is easy or difficult to understand, it is plain to see that full online payment is the way to go in the near and the foreseeable future. Already payments are massively processed online by paying your purchases or subscriptions with your credit card. However, a credit card works with a preset currency, typically your own local one and/or the US dollar. When it is time to settle your monthly due balance, currency conversion and all that it entails is unavoidable. Libra precisely is supposed to avoid this hassle, this extra cost.

While the world keeps moving everything online, not all authorities are willing to go with the flow, not before fully understanding any newly introduced system, and having tangible guarantees that it will not be wreaking havoc and will not be devastating traditional, well established systems.

There has not been any recent update about Jordan Central Bank stand against cryptocurrencies, but the latest news we had was that it clearly does not approve dealing with Bitcoin and other similar currencies.

Last month Jordanian Customs took new measures to try and regulate the clearing of all parcels that have been bought through online shopping, at individual level, for they recently noticed the size, the volume, of these personal imports. However small or insignificant your single, personal online order may seem to be, from, for instance, Amazon once you multiply it by the number of shoppers and orders you easily reach figures that can seriously affect a country’s economy, trade, not to mentions its tax system, the sales tax in particular.

All these payments are made online by credit card. How will Libra change this? How will local authorities react or respond to Libra? Wait and see. Whatever the outcome, it is more fascinating to watch that any TV series!

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