Table of Contents:
- 1. Libra and its goals
- 2. What is Libra and Association?
- 3. What is Calibra? The role of Facebook
- 4. Blockchain Libra
- 5. Reserve
Everything you need to know about Libra
The moment Libra came to the light, it became one of the most important topic both in the world of mainstream media as well as in the business world. What is more, it was also widely commented by regulators as well as politics, including American House of Representatives. Quite often people simplify Libra, calling it Facebook cryptocurrency. This is why we decided to share more information about it, mainly thanks to its white paper.
Libra and its goals
According to the statistics provided by white paper, more than 1.7 billion adults around the world do not have access to basic financial services. At the same time, this is a group that needs them the most. Thanks to quick Internet connections, billions of people already gained access to huge base of knowledge and many telecommunication services. The only thing that is now missing is making money transfer as easy and cheap as sending a message. Libra is planning to create a new digital currency and the entire infrastructure connected to it in a way it can form The Internet of Money.
As we can read in the white paper, “the mission of Libra is to create simple, global currency and finance infrastructure that will bring benefits towards billions of people”. It is based on three key elements:
- Secured, scalable and reliable blockchain;
- Reserve (more about that later on) that will guarantee a cover for newly created digital currency in an already existing assets, securing its real value;
- Independent Libra Association whose task is to take care of a development of the ecosystem and Reserve management.
What is Libra and Association?
Libra is a cryptocurrency that works on the Blockchain with the same name. It was created by Libra Association, which is a non-profit organisation seated in Geneva, Switzerland. Its goal is to manage the blockchain and Reserve, and of course to complete the social goals connected with financial exclusion of almost 2 billion adults in the world.
The members of the Association are node operators who approve transactions and in fact are responsible for appropriate operation of the blockchain. These are companies scattered throughout the world, non-profit organizations, multilateral organizations, as well as academic institutions. Together with Facebook, currently there are 28 of them, and we can find them the following companies:
- Payment companies: Visa, MasterCard, PayPal;
- Telecommunication: Vodafone Group;
- E-commerce, social media, transport – eBay, Facebook, Calibra, Uber;
- Blockchain: Anchorage, Xapo;
- Venture capital: Andreessen Horowitz;
- Non-profit: Creative Destruction Lab, Kiva, Mercy Corps.
When the network is launched in the first half of 2020, the Association will have approximately 100 members.
What is Calibra? The role of Facebook
Facebook itself played a key role while completing Association and creating Libra Blockchain itself. It will be Association that will make crucial decisions from 2020, but by the end of 2019, Facebook will have leading role. When Libra is launched, all the members, including Facebook, will have the same rights, duties, and financial obligations.
Libra will become the part of Facebook ecosystem within 18 months and besides main service, which is Facebook.com, it will also include Messenger and WhatsApp. As a result, Libra will be accessible for approximately 2.4 billion users.
In order to separate social media related data from financial date, Facebook decided to establish a separate subsidiary, which we all know as Calibra. Besides obvious duties like for example building applications and services for Libra network, Calibra will also offer us digital wallets for the users to store their digital currency and of course to spend them. This wallet will be available in WhatsApp and Messenger. Because of that, at the very beginning it will find its way to over billion users.
This is a pseudonymous type of system and it allows users to have numerous addresses, which are not connected to a person with specified identity. Software on which Libra blockchain is based on is open-source, whereas blockchain was built from the ground. Its key qualities are as follows:
- Gigantic scalability that allows billions of accounts to be served. It also includes high capacity and efficiency;
- Hugh security level of funds and financial data;
- Flexibility, which guarantees efficient operation of management system as well as offers huge space to introduce in the future new, innovative solutions.
Libra Blockchain will allow users to create smart contracts after the ecosystem will be transformed from permissioned into permissionless based on a specially created programming language known as Move. As we read in white paper, this programming language will be “an executable language based on bite code that one can use in order to conduct regular transactions and to serve smart contracts”.
Every emitted Libra unit will have securities. These securities are based on the basket of assets that will include four main FIAT currencies: USD, EUR, JPY, and GBP, as well as short-term government debt securities with high stability and liquidity, known as Reserve. Due to the fact that Libra is not closely related to the rate of one asset, it is not a stablecoin in the traditional sense of this term. The list presented above is not a closed list. There are criteria that an individual asset needs to meet in order to be included into the Reserve:
- It must be an asset that is freely traded and cannot be correlated with another asset;
- The decision making process should bet at the discretion of public organizations (like for example central banks) or the asset should be widely available (like for example gold, silver, or any other resource);
- The asset should be listed within different jurisdictions. This point eliminates the shares of companies such as Google or Apple. However, the criteria are met by Bitcoin, gold due to the fact that they are tradeable in many markets.
The funds from Reserve come mainly from users, since the emission of every monetary unit is associated with depositing an appropriate amount of assets included in the basket. The second source of funds in Reserve are special units known as Libra Investment Tokens, which were purchased by the investors at the initial stage of the investment. They are the units of participation in the governance of Libra project. However, their value is not connected with the cryptocurrency rate.