Is Facebook entering the Crypto currency Club with a safer and better offering? With close to 2.4 billion active users and over 600 million Whatsapp users, Facebook is betting on Libra, a Stablecoin, a collateralized genre of crypto currency. Let us understand through this illustrative article.

1. Fiat - USD
Mobile Payments
Disclaimer : Any information contained herein is not intended to be a source of advice. Author claims no responsibility to anyone who acts on the basis of information presented here.
Authors : Pulkit Goel, CFA & CA Aditya Agarwal
CRYPTOCURRENCY 2.0 : STABLECOINS
9000
BC
1200
BC
1000
BC
118
BC
806 1816 1913 1950 1971 1999
COUNTRYWISE
STAND ON CRYPTOCURRENCY
✓
INFLUENCER’S VIEWS ON CRYPTOCURRENCY
“Bringing crypto-assets into the regulatory tent could potentially catalyze innovations to serve the public
better.”
(03/02/2018) Mark Carney, Governor, Bank Of England
“We need better cross-border payments ... because it’s good for development, it’s good for financial
inclusion, so Bitcoin can help us”
(26/01/2018) Benoit Coeure, European Central Bank Ex. Board Member
“I regret making comments saying Bitcoin is a fraud, The blockchain is real. You can have crypto yen and
dollars and stuff like that.”
(01/09/2018) Jamie Dimon, CEO, JPMorgan Chase & Co.
“Not so long ago, some experts argued that personal computers would never be adopted and that tablets
would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”
Countries with “weak institutions and unstable national currencies” may see growing use.”
(29/09/2017) Christine Lagarde, MD, International Monetary Fund
SHIFTING TOWARDS
G LO B A L C U R R E N C Y
Technological innovations are happening everyday with an aim to bring people
closer irrespective of geographical boundaries. There are countless people who
have access to technology but not to convenient and safe financial infrastructure.
Present payment and banking systems need to evolve with technology to develop
a faster and secure medium of financial exchange.

2008
Bitcoin Launched
Jan’09
Bitcoin Genesis
Block Mined
(1st TX)
May’10
Bitcoin Pizza
(2 pizzas bought
for 1000 BTC)
July’10
MtGox 1st
Bitcoin
Exchange
Launched
Feb’11-13
Silk Road
(Dark Web
Marketplace)
2014
Gaming cos.
start accepting
Crypto
Currency
2011-16
Other Crypto
Currency
emerged
2015
Bit License
Established by
(NYDFS)
Dec’17
Bitcoin
Derivatives
launched at
CBOE & CME
2018
Crypto currency
market tanks
questioning its
credibility
Dec’17
Crypto Currency
hits all time high
(Boom phase)
2018-19
Stablecoins
(SC) emerges
as a solution to
volatility
2019
announcement
to launch its
Stablecoin
FIAT CURRENCY : Fiat money is government-issued currency that is not backed by a physical commodity, such
as gold or silver. The value of fiat money is derived from the relationship between supply and demand; and the
stability of the issuing government. Most modern paper currencies are fiat currencies.
STABLECOINS : Stablecoins, are simply cryptocurrencies with stable value that is collateralized to the value of
an underlying asset such as USD, GBP or precious metals like Gold, Silver. They share all the objectives of a
cryptocurrency while overcoming its limitations like volatility, making them much more usable as a store of
value, medium of exchange, and unit of account.
▪Regulated
▪Stable
▪Government Backed
▪Medium of Exchange
▪Centralized
▪High Transaction Costs
▪High Transaction Time
▪No Banking access to all
▪Weaker Economies
▪ Price Stability
▪ Secure
▪ Decentralised
▪ Store of Value
▪ Medium of Exchange
▪ Globally Scalable
▪ Immutable Transactions
▪ Lower Transaction Cost
▪ Lower Transaction Time
▪ Secure
▪ Decentralised
▪ Immutable
Transactions
▪ Medium of Exchange
▪ Globally Scalable
▪ Highly Volatile
▪ Unregulated
▪ Not a store of value
EXI ST I NG PAYMENT SYST EM
STAB L ECOI N
CRYPTOCURRENCY
Bank
F I AT CURRENCY v/s STAB L ECOI N
INTRODUCING STABLECOINS
CAPTURES DESIRED CHARACTERSTICS OF EXISTING PAYMENT SYSTEM AND CRYPTOCURRENCIES
Launch Year : Sep’18
Market Cap : $ 15 Mn
Daily Volume : $ 9 Mn
Launch Year : Sep’18
Market Cap : $ 164 Mn
Daily Volume : $ 124 Mn
-
2
4
6
8
10
12
14
2017 2018 2019
inUSDBillions
Growing Trading Volume
Bitcoin Ethereum Litecoin Ripple USD(S)
USD(S): USD backed stablecoins includes Tether, Paxos Standard, USD Coin & True USD Source : www.coinmarketcap.com
POPULARITY OF STABLECOINS
NEW YORK DEPARTMENT OF FINANCIAL SERVICES REGULATED STABLECOINS WERE LAUNCHED,
NOW ITS TRADING GROWTH IS SURPASSING OTHER MAJOR CRYPTOCURRENCIES
EVOLUTION
MEDIUM OF EXCHANGE
CRYPTOCURRENCY
LAUNCH AND PROGRESSION
FACEBOOK JOINS THE CRYPTO CLUB
LIBRA LAUNCH IS THE BIGGEST ANNOUNCEMENT IN THE WORLD OF STABLECOINS WITH NUMEROUS GLOBAL GIANTS JOINING
HANDS, IT WILL BE BACKED BY RESERVE OF GOVERNMENT SECURITIES
Mission: “a simple global currency and infrastructure that empowers billions of people”
Cryptocurrency Type :
Collaterized Stablecoin
Reserves: Reserves
backing Libra will consist
of “low-volatility” assets
like bank deposits and
government securities in
currencies from stable
central banks like USD,
GBP, EUR, and JPY
Launch : 2020 Speed : 1000 TPS
Reduced transaction cost
and time
Regulated : Facebook has
created Calibra FinCEN-
registered subsidiary to
ensure “separation
between social and
financial data and to build
and operate services on its
behalf on top of the Libra
network`
18th June’2019
Governance: Libra Association of 100 members is a non-profit based in Switzerland.
Backed by secure technology and tangible collateral, STABLECOIN extract and
combine benefits of both cryptocurrencies and fiat currencies. It has potential to
address many transactional limitations in the present world. Utilizing Facebook’s
global penetration, Libra specially is set to become popular
Bitcoin is the first peer-to-peer payment system and digital currency. It is a
cryptocurrency, which uses cryptography to control the creation and transfer
of money. Users send payments by broadcasting digitally signed messages to
the network. Participants known as miners verify and timestamp transactions
into a shared public database called the block-chain, for which they are
rewarded with transaction fees and newly minted bitcoins.