How Facebook's Weight Will Work: Yahoo U

Facebook CEO Mark Zuckerberg was grilled by lawmakers this week on the company's cryptocurrency project Vågen. The project has attracted the attention of regulators and policy makers around the world. But what is the Weight, and how does it work?

Among many other talking points, Zuckerberg made a point of calling Weight a payment system, and not money.

As Facebook posted in its White Paper in June, Libra is meant to be a way to send money instantly, with low fees, to people all over the world. Currently, it may take several days to send money overseas (through SWIFT interbank transfers or wire services such as Western Union). These processes can also be quite expensive.

With Libra, a Facebook user would sign up for a "Calibra" wallet and send units of Libra to another Calibra wallet. Since there are no transaction banks in this case, the transfer takes place immediately on Facebook's blockchain. There is no multi-day delay in debiting and crediting the money from one bank to the other.

But what makes Libra new and different from Bitcoin or other cryptocurrencies is partnered with a consortium of companies like Lyft, Uber, Spotify and Vodafone to help it develop and use blockchain.

Instead of having to convert Libra to domestic currency to call an Uber or pay for the monthly Vodafone bill, users can pay directly in Libra devices. In theory, this would dramatically reduce the cost of currency conversion.

<p class = "canvas atom canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "But a number of companies have bail from the project: Booking Holdings, Mercado Pago, PayPal, eBay, MasterCard, and also Visa and Stripe. David Marcus, head of Facebook subsidiary titled Libra & # 39; s development, told Yahoo Finance that & nbsp; founding members of Libra will still be able to trade in Libra & nbsp; when the project starts. "data-reactid =" 21 "> But a number of companies have been bail from the project: Booking Holdings, Mercado Pago, PayPal , eBay, MasterCard, and also Visa and Stripe. David Marcus, head of the Facebook subsidiary, titled Libra & # 39; s Development, told Yahoo Finance that non-founding members of Libra will still be able to trade in Libra when the project starts.

<h3 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " The scale concerns " data-reactid = "29"> Libra Concerns

The exodus of companies from the project is just one problem that Libra faces.

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Regulators have also expressed concern about financial stability Facebook has 2.7 billion users, and if a significant number of people on that platform choose to use Calibra wallets as a de facto bank, there is concern that blockchain may be large enough to present what they call & nbsp; "systemic" risk to the financial system . Federal Reserve Chairman Jerome Powell has shared this collaboration with Congress. "Data-reactid =" 31 "> Regulators have also expressed concern about the financial stability of the project. Facebook has 2.7 billion users, and if a significant number of people on that platform choose to use Calibra wallets as a de facto bank, there is concern that blockchain may be large enough to present what they call "systemic" risk of the financial system. Federal Reserve Chairman Jerome Powell has shared this concern with Congress.

Facebook recognizes this risk.

"We have to assume that there is a chance that this can have systemic risk and design it in a way that it cannot become a systemic risk," Marcus told Yahoo Finance.

Libra also bills itself as it They call a "pseudonymous" layout, where Calibra wallets are linked to addresses that are not related to their real identity, which raises questions about how authorities are following the money if the emphasis is being spent on illegal activities.

There are also privacy concerns. Facebook was fined $ 5 billion from the FTC for privacy earlier this year, and although Facebook insists its Calibra subsidiary will handle the project separately, lawmakers have been pushing hard on Zuckerberg to ensure users will be protected.

Libra has targeted a launch date the first half of 2020. But Zuckerberg told Capitol Hill earlier this week that they will not launch it until US regulators grant them gr lighted light.

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = " Valentina Caval is manufacturer at Yahoo Finance. Brian Cheung is a reporter at Yahoo Finance. "data-reactid =" 37 "> Valentina Caval is a producer at Yahoo Finance. Brian Cheung is a reporter at Yahoo Finance.

<p class =" canvas-atom canvas-text Mb ( 1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Read and see more of Yahoo U here "data-reactid =" 38 "> Read and see more of Yahoo U here

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Read the latest financial and business news from Yahoo Finance "data -reactid =" 39 "> Read the latest financial and business news from Yahoo Finance

<p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Follow Yahoo Finance on Twitter Facebook [19659014] Instagram Flipboard SmartNe ws [19659015] LinkedIn YouTube [19659014]and reddit . "data-reactid =" 40 "> Follow Yahoo Finance on Twitter Facebook [19659015] Instagram Flipboard [19659014] SmartNews LinkedIn YouTube and 19659014] reddit