How Libra Coin Solves Trust and Transparency Issue in Payments
Traditionally, payments were made through a barter system, where people would exchange items of equal value against each other. Then, currencies were introduced as a medium of payments, and now they are being used globally for all kinds of payments and monetary transactions. However, both these systems are based on trust and, therefore, not very efficient. There is a timely need for a trustless system of payments that can provide better transparency and control on digital monetary transactions.
Libra Coin is a decentralized currency and digital payment system that enables users to send and receive money to/from practically anywhere in the world. The Libra digital payment system is peer-to-peer, i.e. all transactions are direct between the sender and the receiver with no intermediaries involved. Most importantly, this is a trustless system of payments, where the users are not required to trust any third-party or mediator like a bank with their money or personal information.
Why are traditional (trust-based) payment systems inefficient?
Traditional payments systems like the ones we use normally are trust-based, i.e. the users need to trust a third-party or intermediary to perform the payment on their behalf. All kinds of online payment transactions, including bank transfer, UPI, credit/debit card payments, etc. are based on trust. Here’s how.
When opening a bank account and putting your money in it, you are trusting the bank with your hard-earned money and to keep it safe. At the same time, whenever you want to use this money in your bank account, you have to seek permission from your bank. Whether it’s a withdrawal transaction, a payment or any other type of bank transaction, the bank needs to verify the same before processing it. Similarly, by allowing you to use a credit card to make payments, the credit card company is trusting you to pay them back on time.
Except for cash transactions, which also are not very secure and efficient, all traditional online payments are based on trust.
Why are trust-based payment systems not good enough?
Well, there are a number of problems with traditional payment methods that are based on trust. For one, it is possible to cheat the system. Loan defaults, credit card frauds, etc. are common examples of this. In a trust-based payment system, it is difficult to find trustworthy people. Second, users are required to trust third-parties, including several intermediaries like banks, financial institutions, credit card companies, and more, as well as need to share their personal information with them in order to make payments. This brings in the concern of security and privacy in payments.
Another problem with traditional payment systems is the lack of transparency, as users have practically no idea how their payments are being processed. Also, there is no transparency in processing fees and time.
How Libra — a trustless payment system solves the trust & transparency issues in payments
Libra coin is a digital payment system created for the Libra ecosystem. It is a decentralized system, where users can transact directly with each other. Since there are no third-parties or middlemen involved, users need not to trust anyone or share their personal information in order to make payments. They can simply send or receive money to/from other users using the Libra coin on a highly secure blockchain-based network. As for transparency, all crypto transactions are stored on a public, distributed network and are easy to verify in case of a dispute. There is 100% transparency and security in Libra coin payments.
Find out more at https://libraecosystem.com/