All your questions on Facebook Libra Coin answered in this 1600 page guide!
Whether you are a crypto follower or not, you must have come across the term ‘Facebook Libra’ in the past few months. Well, to say that it is a controversial topic would be an understatement.
There have been wild discussions on the pros and cons of Facebook Libra. If you want a peek at these debates, head over to Reddit and you will see the range of different opinions.
The article isn’t another debate on Libra. We are going to help you understand the purpose of this cryptocurrency, its members or association, working protocol, and implementation.
Facebook Libra Coin
The first blockchain initiative by Facebook started in 2017. In mid-2018, David Marcus, heading facebook messenger, moved to lead this initiative. Following this, soon the rumors of Facebook launching a cryptocurrency started making rounds.
Initially, the cryptocurrency was known as ‘Global Coin’ or ‘Facebook Coin’.
Finally, on June 18, 2019, Facebook officially announced Libra- a cryptocurrency based on blockchain technology.
Facebook has already released white paper of Libra and if everything goes well, the public launch of the cryptocurrency is set in 2020.
According to its white paper:
” Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.“
The rising global remittance industry and billions of unbanked people are mentioned as the two main reasons (in its whitepaper) for introducing a cryptocurrency.
While the number of people having smartphones and internet access is rapidly increasing per year, there are still 1.7 billion people who do not have access to a bank account.
Furthermore, the global remittance industry, which is now worth billions of dollars annually, is also growing at a much faster pace. Even today, it costs anywhere between 3-9% to send money from one part of the globe to another.
Libra Coin is meant to address two of these main issues. One by connecting the unbanked into a formal financial inclusion system. Another, by offering accessible financial transfers with zero or negligible transfer fees, across any part of the world.
As it states in its white paper “deliver a giant leap forward toward a lower-cost, more accessible, more connected global financial system.”
What is Facebook Libra Coin
Simply put, libra coin is a cryptocurrency which will allow people to buy things and send money with zero transfer fees. It is built on a blockchain platform.
Just as a dollar sign is denoted by $, a libra coin is going to be denoted by three wavy vertical lines.
So, basically you cash in your dollars to get Libra, spend it (just like dollars)- just much faster, in clicks and without any big transaction fees. But, there is so much to that story. Keep on reading!
According to its white paper, the Libra blockchain is going to be based on the following 3 requirements
- Able to scale to billions of accounts, which requires high transaction throughput, low latency, and an efficient, high-capacity storage system.
- Highly secure, to ensure the safety of funds and financial data.
- Flexible, so it can power the Libra ecosystem’s governance as well as future innovation in financial services.
Libra Coin Partners
Even though everyone keeps referring it as facebook libra coin, it is not just Zuckerburg’s game (at least on the surface). The association of Libra Coin presently consists of major hotshot organizations.
Libra coin partners scale from payments field (Mastercard, Paypal, Visa, etc) to Technology (Uber, Spotify, Lyft, Facebook, etc) and even some from emerging blockchain space (Coinbase, Xapo Holdings Limited, etc).
Suffice to say, it is already backed by powerful corporations around the World.
Facebook wants to expand the current 28 member partner to 100 members before its official launch in 2020. Of course, the particular ‘club’ isn’t meant for everyone. In order to become a member of Libra association, companies must pass certain conditions. Some of these contingencies include businesses must hit two of three thresholds of a $1 billion USD market value or $500 million in customer balances, has to be recognized as top 100 industry leader and so on and so forth. You get the point.
Additionally, according to its whitepaper, the Libra blockchain will act as a separate entity altogether. Facebook or any of the other founding associations of Libra Blockchain does not have any direct connection to Libra.
But, the waters are rarely as clear as they appear to be!
Facebook does intend to launch ‘Calibra’- a digital wallet which stores Libra cryptocurrency. It intends to provide its facebook users a means to send, receive and store Libra through this digital wallet. Alongside, the launch of Libra Facebook will also launch Calibra- which is going to be available on Facebook messenger, Whatsapp as well as a standalone app. The executives of Facebook have stated that Calibra will not share account holder’s purchase information without authentication (but again it is Facebook, right!). A search function can enable the account holders transaction history with Facebook account.
Libra Coin Price
One of the greatest flaws of bitcoin is its volatility. The price fluctuations in bitcoin make it impossible to use it for daily transactions.
Libra coin intends to up the game of cryptocurrency and take it mainstream such that people can use it as easily as dollars. So, the price of a libra coin is largely meant to be stable. Currently, the coin is not set to any value as such. However, it mentions that the value of the coin is tied to a basket of currencies (like dollars, euro, and pounds) and short-term government securities. The value of this basket determines the price of Libra.
How does Facebook Cryptocurrency Libra Work
One of the crucial factor which helped bitcoin garner so much attention is the fact that it is built on a completely decentralized blockchain platform. No central entity, banks or government have a say in how bitcoin operates. Each transaction is monitored and validated by millions of nodes scattered across the planet.
Though the libra coin is built on a blockchain platform it is not as decentralized as it wants to make us believe. If in our present financial system banks and governments act as central entity responsible for validating transactions, in case of Libra it is going to be the members of Libra blockchain.
Each member and this includes Facebook, gets one vote in the Libra Association. Each member has equal obligations and power in the association. All the members are at equal peers to each other and hence have the same influence onto the blockchain.
Each payment on the blockchain is operated and vetted by the members of the association. Thus, it is known as a ‘permissioned blockchain’. The consensus or the validity of any transaction is reached after two-thirds of the nodes (or members) give an approval. But, unlike bitcoin, only the members of Libra Association are allowed to validate any transaction. Thus, at least for now, the members of Libra act as a centralized organization or entity. This point has been a subject of many debates in the past few months. ‘Just how decentralized is the Libra blockchain’?
The Libra Whitepaper states that in its coming years it will try to change the ‘permissioned blockchain’ into ‘permissionless blockchain’.
Each payment or transaction carried out will be stored and written on Libra blockchain. Alike bitcoin, the public ledger database is protected by cryptography.
One of the reasons for a permissioned blockchain cited in its whitepaper is that it is designed to handle more transactions. Since libra is permissioned, it can handle up to 1000 transactions per second. Bitcoin (a permissionless blockchain) handles up to 7 transactions per second.
The blockchain uses a new programming language known as ‘Move’. It is meant to provide enhanced security and safety. So, in future, all the Smart contracts built atop Libra Blockchain will use this particular coding language.
The transactions or data written on Libra cannot be reversed. It is permanently embedded on the public ledger. There is a minimal fee while carrying out transactions on Libra. It is meant to help deter bad actors from spamming the blockchain.
Well, after its recent launch, not everyone seems to be too keen about Libra cryptocurrency. Governments and countries around the world have expressed concerns. Chairperson of United States Financial Committee has even asked Facebook to halt the development and launch of Libra.
The French government has cited that such a cryptocurrency promoted terrorism finance and money laundering. Recent reports also suggest that members of the Libra Association are already backing out due to increasing pressure from regulators around the World.
The one thing for sure is that it is a powerful step towards blockchain and cryptocurrencies. Some of the most powerful corporations around the world are backing the project. It also means that cryptocurrencies and blockchain technology have started gaining quick attention.
Will Facebook help other cryptocurrencies become mainstream too? Or is Libra just a facade and will give rise of a corporate conglomerate? Will Libra ever get a chance to kick off amidst the regulations? Will Libra ever become a decentralized permissionless blockchain?
There are far too many questions surrounding the project. Only time can give answers to!