In June, Facebook said ‘ta-daaaa’ and revealed plans to launch a new cryptocurrency called Libra. Nothing to do with horoscopes.
Quick refresher: Cryptocurrencies have been around since 2009 when Bitcoin (the OG) was born. Now there are hundreds, including popular ones like Litecoin and Ethereum. Cryptocurrencies are digital money. Meaning you can’t physically hand it over at a store. Instead, you hold it in your "digital wallet." And try REALLY hard to never forget your password.
Here’s how Libra would work: You trade in your IRL currency. Then you can spend and send Libra worldwide for almost no fees. And you can change your mind and cash out for cold, hard cash anytime.
What’s not to like? Lots of people get freaked out by cryptocurrencies’ notorious mood — er, price — swings. But unlike those other guys, Libra’s value will be tied to actual assets (like the US dollar and gov bonds) and backed by a reserve fund. Meaning more stability.
Still, it’s been getting a lot of heat. And Zuck likes to remind everyone that Facebook is not calling the shots on their own. 20 other orgs are part of the Switzerland-based non-profit managing Libra...cleverly named the Libra Association. Here’s what Libra could mean for your wallet if their dreams come true.
It could get a LOT easier to spend money. Spending Libra could be as easy as sending a text. You’ll be able to access its digital wallet Calibra on FB Messenger, WhatsApp, and its own app to send money to friends.
If you’re thinking this sounds like Venmo or PayPal, you’re not wrong. But maybe with cheaper fees and the ability to load up with cash instead of a debit or credit card one day.
Related: How to 50/20/30 Your Budget
You might want to keep an eye on your credit if you use it. The words Facebook and trust haven’t always gone together. Just ask regulators and lawmakers, who aren't sold on the idea. But the Libra Association promises it will protect your personal info. Still, it might not be a bad idea to check your credit report for fraudulent activity every few months. Just in case.
Your investments could go on a ride. FB is a big player in many people’s portfolios. If you have investments that track major indexes, like the S&P 500, you probably own a little piece of FB. Stock prices spiked right after the co. shared its status update this summer. But if regulators ever totally shut down Libra's launch plans, the opposite could happen. Buckle up.
Related: theSkimm on Investing
theSkimm: Facebook and friends are trying to change the payment game. But crypto might not be everyone's cup of currency. If Libra seems too risky or sounds like a great way to blow your budget without realizing it, feel free to unfollow.
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