Social media giant Facebook released details about its crypto venture this morning. The cryptocurrency, which will be available during the first half of 2020, is the first such effort by a mainstream company and is expected to lead to greater adoption and awareness about cryptocurrencies.

Here is a brief FAQ on Libra:

What is Libra?

Libra is a global cryptocurrency that will be available for use on Facebook’s network during the first half of next year. It will run on the Libra blockchain.

Ah, Blockchain…The Solution to Humanity’s Problems

Yes, Facebook has been bitten by the blockchain bug. But Facebook’s blockchain is not a connected a chain of blocks or databases. Instead, it is a “single data structure that records the history of transactions and states over time.”

What does that mean, you ask?

The difference, in very simple words, lies between distributing data over a bunch of databases for easy retrieval or using a single database for storage and retrieval. It is unclear if the “single data structure” will result in a different consensus mechanism, as it is described by Bitcoin inventor Satoshi Nakamoto in his whitepaper, or if it has a material effect on the network’s functioning.

How will I be able to buy Libra?

While it has not specified the mode of distribution, Facebook plans to create wallets for Libra. But the cryptocurrency itself is open-source, meaning that users will be able to store in any cryptocurrency wallet. Earlier reports have indicated that the social media network plans to pay users in Libra to watch videos of ads or to click on them.   

What are Calibra and the Libra Association?

Calibra is the subsidiary that Facebook has created to manage its crypto venture. The subsidiary plans to release apps, tools, and new products on the Libra blockchain. Its first app is the Calibra wallet to hold Facebook’s coin.

The Libra Association is a Switzerland-based nonprofit foundation responsible for governing the cryptocurrency. Its council will take major policy or technical decisions related to the cryptocurrency. Each decision will require consent of two-thirds of votes from council members.

The nonprofit will shield Facebook from regulatory concerns that may arise from establishing and maintaining an economic network on its platform.  

What will I be able to do with Libra?

Facebook has ambitious plans for Libra. It plans to offer products and services using the cryptocurrency.

Money transfers and banking seems to be the immediate goal for Facebook. In its whitepaper, the social media behemoth makes the case for bringing 1.7 billion unbanked individuals into the financial services ecosystem using Libra. Given the company’s previous record of monetizing user data and playing games with user privacy, those claims should be taken with a grain of salt. That said, Facebook’s breadth and reach will make sure that any financial services effort that harnesses its network will be taken seriously.

Libra will have a direct impact on Facebook’s bottom line. Earlier reports indicate that Facebook’s messaging app – Whatsapp – may use Libra for money transfers in India and across borders. Facebook may also use Libra to reinvigorate its failed e-commerce ambitions. The social media network plans to pay users in Libra to watch ads or click on them. Users can spend the earned Libra on products and services within the Facebook ecosystem.   

Aren’t cryptocurrencies volatile? How can I use Libra if its value is constantly fluctuating?

Yes, it is not uncommon for cryptocurrencies, including even supposedly-mature ones like Bitcoin, to skyrocket and crash in value within a couple of hours. But Facebook has promised that Libra will have “low-volatility.” Presumably, this means that its price will not fluctuate significantly as compared to other crypto assets.

How will Facebook ensure stability for its cryptocurrency?

Libra is backed by a global reserve of liquid and low-risk assets, including government securities and bonds. The reserves will ensure solvency even if the value of Libra crashes due to some reason. In addition to this, the company plans to charge $10 million in licensing fees to run validator nodes, or nodes that store transaction data related to Libra.

Can I invest in Libra?

No. Facebook plans to release another token for that purpose. But that token is currently only available to accredited investors and members of the Libra Association. The company has not commmented on whether it will be made available to the general public in the future.

What is the Libra Investment Token?

The Libra Investment Token is the token security that Facebook plans to issue in a security token offering, akin to an IPO. Funds raised from the STO will be used to finance operations for the cryptocurrency. The STO is private placement, meaning that it is only available for accredited investors and members of the Libra Association. It is not clear if the company plans to make it available to the general public in the future.

Who are Facebook’s partners in the Libra Association?

The company has listed 28 partners to kick off the initiative. By its launch next year, it plans to increase the member count for Libra Association to 100. The current list of partners is a diverse mix and includes payment processing behemoths like MasterCard and Visa, noted venture capital firms like Andreessen Horowitz, and non-profits like the Kiva Foundation.