The white paper for Facebook’s digital currency, Libra was released this week and it received widespread media coverage. In this article, we take a look at 7 things about Facebook’s cryptocurrency to expect when Libra is launched in 2020.
It is a Stable coin
The first A stable coin is a type of cryptocurrency that is hooked to other stores of value like gold, securities, fiat money or other cryptocurrencies to combat volatility. Libra is a stable coin because it is pinned to a set of fiat currencies like the EUR, GBP, JPY and USD. It is also pegged to a security token called Libra Investment Token.
It Is Not Run by Facebook
Unlike what most people assume, Libra is not run by Facebook. Instead, it is run by an independent body called The Libra Association. Even though this body is an offshoot of Facebook, the white paper states that it works independently of it. Many people believe that this is a move by Facebook to remove this new finance project from the privacy controversy that is Facebook is known for.
Another fascinating thing is how the white paper is not signed by Mark Zuckerberg or Facebook’s head of blockchain engineering, Evan Cheng. According to the white paper, Facebook is only a partner.
It Would Move From a Permissioned to a Permissionless Network
On a permissioned network, Libra would be in charge of authorising those who can have access to the Libra blockchain. But, on the permissionless network, anyone who meets up to certain technical requirements can have access to the blockchain. The reason the Libra Association gives for taking this route is that they would like to monitor the blockchain closely in its first few months of inception before opening it up to the public.
It Is Built on The Libra Blockchain
The Libra token is built on the Libra blockchain. But, unlike the Bitcoin and Ethereum blockchain, a new programming language has been drafted for this blockchain. The name of the programming language is Move.
The Libra white paper also highlights that transactions that would be carried out on the Libra blockchain would be private transactions. The identity of its users would not be visible as users would only need their public and private keys to carry out transactions.
It Will Operate Smart Contract
A smart contract operates pretty much like a normal contract except that it is a set of codes on the blockchain which automatically means that it is decentralized. Prior to the Libra blockchain, the only blockchain that effectively operated smart contracts was the Ethereum blockchain.
Backed by Big Companies
Its Founding Members as they are called, are companies that are in partnership with the Libra team on this project. Founding members participate in the responsibilities of governance, implementation and strategy.
Some of its founding members are Booking Holdings, Facebook’s Calibra, Amazon, eBay, Paypal, Mastercard, Uber, Visa, Vodafone, Coinbase, Women’s World Banking and a group of others.
There has been Mixed Reactions
Reactions to the release of the Libra white paper haven’t been entirely positive. For a start, it has been hit by a host of regulation hurdles from places like Europe and India. As there’s this nagging concern about the challenges it would pose for already established financial institutions like banks. In India, for instance, the government is hostile to cryptocurrencies. People who have or transact with them are liable to a 10-year jail term.
Then there’s also the privacy issue. Facebook has a big bag of privacy issues attached to its name. This is a big concern for most people.