At last, and after months of speculation about every little detail, Facebook has unveiled the Libra cryptocurrency for the world to see. The project’s whitepaper was revealed on Tuesday, June 18, with one notable takeaway: the user does not need to have a Facebook account to be a Libra token holder.
The Libra Association is the combination of the ideas and expertise of 28 founding members that include powerhouses like Visa, Mastercard, PayPal, Uber, Lyft, Coinbase and many more. Facebook’s global stablecoin, named “libra,” will have its own scalable blockchain and will, according to the whitepaper, be backed by a reserve of assets “designed to give it intrinsic value” and beat volatility fluctuations.
The Reserve: A “Basket of Bank Deposits and Government Securities”
The reserve will be formed from a basket of bank deposits and short-term government securities, which will be held in the Libra Reserve for every issued Libra. The goal is for Libra to develop a “stable currency built on a secure and stable open-source blockchain and governed by an independent association.”
The Libra Association is governed by the Libra Association Council. The council’s members are the founding members, each of which runs a validator node on the network and had to make a minimum investment of $10 million to seal the position as such. For each $10 million invested, an entity secures one vote on the council, according to Facebook.
The company hopes to have “approximately 100 members of the Libra Association by the target launch in the first half of 2020.”
According to Libra, the world “truly needs a reliable digital currency and infrastructure that together can deliver on the promise of “the internet of money.” The company identifies that moving money should be easy and cost-effective, not to mention safe, and states that “now is the time to create a new kind of digital currency built on the foundation of blockchain technology. The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.”
The Libra Blockchain
The Libra blockchain is the ecosystem in which the libra currency will function, an open-source software that millions of people can use to satisfy their financial needs, according to the document.
“With the proliferation of smartphones and wireless data, increasingly more people will be online and able to access Libra through these new services. To enable the Libra ecosystem to achieve this vision over time, the blockchain has been built from the ground up to prioritize scalability, security, efficiency in storage and throughput, and future adaptability,” per the paper.
Whilst the hope is to launch the Libra blockchain with all of its features next year, Facebook has not lost time in announcing it in the middle of 2019. Similarly, it included in the project is Calibra, a subsidiary of the social media giant.
“While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.”
Calibra will be tasked with the development of financial products and related services around the Libra network, starting with a digital wallet for the Libra coin, which in turn will allow holders to transfer funds to each other and also store them.
Once the system is ready to go, users will be able to access their wallet functionality through an Android and iOS app, as well as via Facebook Messenger and WhatsApp.
The Libra Currency
The Libra currency is the center of the system; it is the unit itself. According to the published text, “Libra will need to be accepted in many places and easy to access for those who want to use it. In other words, people need to have confidence that they can use Libra and that its value will remain relatively stable over time. Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets.”
Regarding the Libra Reserve, it “will be administered with the objective of preserving the value of Libra over time.”
Also announced to the world was the creation of the Libra Investment Token, a different one from its global, user-oriented cryptocurrency libra.
All in all, the project seems ambitious and plausible, and given Facebook’s size and position as one of the world’s prominent companies, all eyes will be on it when the time of the launch comes. The coin has the potential to facilitate payments across Facebook’s platforms including WhatsApp, Messenger and Instagram, providing a potential exposure to a combined 2.7 billion users on a monthly basis.
By Andres Chavez