The white paper for Facebook’s proposed coin, Libra, was released on Tuesday, June 18.
According to the white paper, Libra would be a new decentralized blockchain, a cryptocurrency with low-volatility, and enabled to operate smart contracts. While these features already exist in the cryptocurrency space to a relative degree, the white paper proposes more advanced features for all of these properties.
Even though the white paper does not go into depths about how some of its proposed plans would be executed, it answers a lot of important questions about this new cryptocurrency.
The first thing you should know is Libra aims to provide a novel approach to responsible financial services.
In this light, the white paper opens with a clear-cut mission statement:
“Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.”
As against working independent of existing financial institutions, as most cryptocurrencies operate, Libra plans to achieve its goals by working alongside them. The belief behind this is the idea that the future of finance which the cryptocurrency network hopes to achieve can only be got by working with established financial organisations.
What Problems would this Cryptocurrency Solve?
Traditional Banking Barriers: One of the challenges highlighted in the white paper is the fact that far too many people have little or no access to efficient financial services due to some of the common roadblocks that come with using traditional financial services like high fees, insufficient funds, distance and unavailable required documents.
Volatility: Libra plans to combat volatility by hitching its coin to a range of currencies and debt securities. Amongst the currencies that Libra would be backed by are GBP, USD, JPY and EUR.
Unique Properties of the Libra Coin
A Private Identity: Like Bitcoin, users of Libra would enjoy anonymity. Users would only be identified through their public and private keys.
It has its own Programming Language: A new programming language called Move has been created specifically for the Libra blockchain.
Here’s an excerpt from Libra’s website:
“Move is the name of a new programming language designed to make it safe and easy to program with digital assets. The move is used to implement custom transaction logic and smart contracts on the Libra Blockchain.”
Governed by a Non-profit: Libra is run by a non-profit called The Independent Libra Association. This non-profit is based in Geneva Switzerland. In this light, the non-profit would also be responsible for minting and burning the Libra currency based on certain measures.
Permissioned to Permissionless: The white paper also states that the Libra blockchain would move from a permissioned to a permissionless blockchain. The difference between the two is that while Libra would manage access to the blockchain network on a permissioned network, anyone that measures up to some technical requirements can have access on a permissionless network.
Backed by a Reserve of Assets: As mentioned earlier, the Libra coin would be backed by a range of fairly stable currencies such as the USD, GBP, EUR and JPY, and a security token called Libra Investment Token to combat volatility.
What would the Coin be used for?
The aim is that this coin would serve as a means of transactions both within and across borders. The Libra team wants to make sending money across the world fast and seamless. The goal is that you’ll be able to send funds to anyone anywhere in the world through Whatsapp, Facebook Messenger and Instagram.
Is the Coin Supported by any Organisation?
One of the advantages that this coin appears to have is its support system. Libra is backed by Uber, eBay, Amazon, Booking Holdings, Visa, Paypal, Vodafone group and a host of others. These companies, 28 at the time of this post, are called founding members. The Libra association hopes to have as many as 100 founding members at the time of its launch in 2020.
Thus far, speculations are that the release of this coin would change remittance and transactions as we know it today.
“[Libra’s] hope is to create more access to better, cheaper, and open financial services — no matter who you are, where you live, what you do, or how much you have.”