Facebook’s Libra cryptocurrency is set to arrive in the early part of 2020. Mark Zuckerberg wants Libra to become the global payment system that finally replaces fiat and takes the place of Bitcoin as the world’s leading cryptocurrency.
It is ambitious. It is exactly what you expect from a Facebook project. But Facebook exerting control over financial services is worrying, for more than a few reasons.
Wondering what all the fuss is about? Here are the six most important things to know about Facebook Libra.
1. Libra Will Launch in 2020 For Facebook Services
Let’s start with the basics. Facebook’s cryptocurrency, Libra, will launch in the first half of 2020. There is no set date as yet but expect something solid to appear toward the end of 2019.
Libra will be available on Facebook Messenger, WhatsApp, and other Facebook services after launch. At the time of writing, Facebook has made no indication that Libra will become available anywhere else during the launch phase.
Facebook wants Libra to help the billions of people around the world without access to regular banking facilities.
2. Libra Has a Blockchain
Libra isn’t piggybacking on someone else’s blockchain. It is going to have its own Libra blockchain. The Libra white paper gave some interesting insights into the Libra blockchain:
- At launch, the Libra blockchain will be private; only the investor nodes will have access to the ledger (more on these investors in a moment).
- Over time, the Libra blockchain will transition to a permissionless blockchain, bringing in line with other cryptocurrencies.
- The Libra blockchain is secure and anonymous. Only your public-private key pairs exist on the Libra blockchain.
- There is no maximum or minimum amount of Libra. Also, you cannot mine Libra.
- Early estimates and tests suggest the Libra blockchain will handle 1,000 transactions per second.
- The Libra blockchain introduces an entirely new programming language, called Move. Programmers will use Move to create smart contracts and dApps on the Libra blockchain.
- It also uses a lesser-known protocol, Coda, to make the Libra blockchain easier to use on smartphones. A user only needs proof of the last block to validate the ledger.
- And, like Binance Coin, Libra will burn tokens to respond to shifting supply and demand.
The Libra blockchain, then, isn’t really a blockchain. At least, not yet, and certainly not in the way most crypto and blockchain advocates would consider useful.
3. Libra Has Some Serious Investors
Facebook is positioning Libra as a stablecoin. A stablecoin is a cryptocurrency token with a stable value, as opposed to the fluctuations and speculative nature of most alternatives. Another stablecoin you might know is Tether. (Check out our Tether Coin Study to learn more.)
To remain stable, Libra has significant backing of assets and other currencies. Facebook has gathered a strong core of initial investors, each of which must invest a minimum of $10 million. At the time of writing, there are 28 investors. By the time Libra launches in 2020, Facebook wants a core of 100 investors, giving Libra a backing of at least $1 billion.
Facebook Libra investors include Mastercard, VISA, Stripe, PayPal, Uber, Lyft, eBay, Coinbase, Spotify, and more:
Each investor will have the opportunity to run one of the network validating nodes. To begin with, these are the only operational nodes.
4. Facebook Won’t Control Libra
All the talk is of Facebook’s cryptocurrency, Libra. But Facebook isn’t going to remain at the helms for long. At least, that’s what the current plan is.
The initial investors will also earn a seat at the Libra Association. The Libra Association will take control of Libra’s development once the cryptocurrency launches. Each member will have a single vote to steer development.
However, Facebook will have two. Facebook will have a seat at the Libra Association, as will its new crypto subsidiary, Calibra.
How hands-off Facebook is toward Libra remains to be seen. But the approach is a response to the privacy concerns that dog Facebook at every turn, as well as the anxiety that having Facebook as the controller of a global currency creates.
5. The Libra Wallet Is Called Calibra
The name of the crypto subsidiary is Calibra. It is also the name of the Facebook Libra wallet. The Calibra wallet will become the first place you can buy and store Libra.
Until competitors hit the market, Calibra will be the only way for people to interact with Libra. For many, it will be the only wallet they ever use to manage their Libra. Billions of people will have access to Calibra, turning it into the most used cryptocurrency wallet instantly.
Calibra will integrate with Facebook Messenger, WhatsApp, and other Facebook services. But it will also have standalone iOS and Android apps.
6. Facebook Libra Is Creating Serious Privacy Concerns
Privacy is paramount in the 21st Century, yet billions of us willingly hand our data to Facebook in exchange for a free service. The idea that Facebook is going to expand its reach on the personal data of its billions of users, plus the millions more who are likely to join is going down like a lead balloon.
It isn’t just the idea that Facebook might access more data. A core development point for Libra is financial services, such as credit and lending. For this to work, users will have to not only reveal their identities to Facebook (via a regulator), but their credit history, jobs, income, and much more.
The alarm from privacy groups, governments, and financial regulators is evident.
Within 48 hours of the Facebook Libra announcement, the leading G7 nations announced a working group to evaluate the risk of Libra. US Congresspeople and Senators announced an immediate investigation, Bank of England governor Mark Carney said Libra “will have to be subject to the highest standards of regulation,” and the French Finance Minister, Bruno Le Maire, said “It is out of the question [that Libra] become a sovereign currency. It can’t, and it must not happen.”
Facebook’s Libra Cryptocurrency Is Coming
But it isn’t coming to take on Bitcoin, as many thought. Libra’s target is fiat currency. Replacing fiat currency and taking financial services to the billions without banking or access to regular facilities is the goal. Will Libra actually help the people in those countries? This writer is skeptical.
Want to know more about Facebook Libra? Check out what Blocks Decoded thinks of the Facebook cryptocurrency so far.