Facebook is back in the headlines yet again. The often-controversial social media giant has recently announced groundbreaking details of their upcoming cryptocurrency, Libra. This has incited a storm of debate and led Facebook back into the courtroom to defend the blockchain’s legitimacy and of course, privacy concerns.
Facebook has released a cascade of details regarding Libra on their website section, The White Paper. According to their mission statement, Libra is aiming to create “a simple global currency and financial infrastructure that empowers billions of people.” Facebook is aiming to bring innovation to the financial industry noting that 1.7 billion adults globally remain outside of the fiscal system with no access to a traditional bank. Libra aims to empower these people by providing them entry to participate in the financial ecosystem. Facebook is promising a reliable digital currency and infrastructure that will reinvent how we do transactions and strive to be “the internet of money.” Below, we will analyze and dissect the details from the Libra White Paper.
Currently, the currency and network remain in the planning stage, as only the rudimentary code has been released so far. Facebook is defining Libra, not as a cryptocurrency, but rather a permissioned (meaning only preapproved financial entities can validate and execute transactions) blockchain digital currency. Libra will be a stablecoin, backed by the Libra reserve in order to maintain its store of value and reduce volatility, which has been common amongst premier cryptocurrencies like Bitcoin. Libra is not actually a blockchain in the traditional sense because it was coded from the ground up in order to ensure the security and safety of the system’s funds.
Libra is designed to be a true digital currency asset accessible to all. Facebook is aiming to scale digital currency to the mass market and assist those who are currently unable to participate in the financial system. Libra was designed using the Move programming language in order to implement custom transaction logic and “smart contracts” within the blockchain network and ensure security and safety for all users. The digital currency will be fully backed by a reserve of real assets, the Libra Reserve. This provides assurance that the Libra currency will be a stable, low-volatility currency that can be converted to local fiat currency based on the exchange rate.
Facebook is striving to create a simple system to allow its users to keep their funds safe, without reliance on a bank or even a credit card. Libra will be a decentralized currency with a smart contract platform to enable seamless transactions within its user base. The Libra blockchain will be pseudonymous and allow its users to hold one or more addresses that are not linked to their real-world identity. It will be governed as a public good and will serve to advance financial inclusion around the globe.
Facebook has assembled the Libra Association Council, consisting of 28 members backing and supporting their digital currency. The council is a not-for-profit entity headquartered in Geneva, Switzerland. The Libra Association is designed to facilitate the operation of the Libra currency and to coordinate in their pursuit of developing, managing, and expanding the reserve. This committee includes some prominent names in the financial world like Visa, Mastercard, eBay, PayPal, and others who have all pledged $10 million to the project.
The Libra Association will be prioritizing the escalation towards increased decentralization as the currency progresses. This objective will ensure low barriers of entry for using the network and also build long-term resilience for Libra’s financial ecosystem. The Libra Association is working towards a transition from permissioned to a permissionless governance on the currencies network within the first five years of development.
Facebook has revealed the target launch date to be the first half of 2020. The Libra association is planning widespread testing of the digital currencies protocol and wallet services to confirm the system is prepared for its launch. They will be constructing APIs (Application Programming Interface) to enable frictionless user interaction within the Libra blockchain. The Libra Association Council plans to expand to 100 diverse and geographically distributed members within a few years.