Everything you need to know about Libra, The Facebook Cryptocurrency!
Everything you need to know about Libra, The Facebook Cryptocurrency!
Facebook has just announced Libra, a new cryptocurrency with unprecedented ambitions: concretizing the promise of “the internet of money” with a little volatile unit, and better framed than the initiatives known so far, especially Bitcoin and Ethereum.
Bitcoin, born in 2009, is the first cryptocurrency to be launched, and today it is the most known cryptocurrency. Cryptocurrencies have since multiplied and provoked many debates and questions about their operating models, based on blockchain technology (storage and transmission of information), and their consequences.
Having generated a lot of losses in addition to big profits, cryptocurrencies are potentially likely to fundamentally change the rules of monetary circulation.
It was to be called the Facebook Coin, the FB Coin, Facebook has finally found a name for it and it will be Libra.
By launching its own cryptocurrency for its billions of users around the world, Facebook has the big ambition to replace banks and Paypal in a certain way.
Its media power, financial influence and above all its sprawling social network in the world just attracted the attention of the world on cryptocurrency and Bitcoin.
It is the first time that an American President, Donald Trump, speaks on the subject of cryptocurrency and Bitcoin declaring that the Dollar remains the strong currency.
The fact to talk about Bitcoin indicates the importance that cryptocurrencies are taking and the danger they represent for the states, banks and the financial system that will soon undergo a profound revolution with the disappearance of cash!
The American President, Donald Trump, also expressed himself on Facebook and its future cryptocurrency Libra.
Recalling that if Facebook wants to launch a cryptocurrency and become a bank or a financial institution in a way, the company will have to submit its project to US regulations on banks and other financial institution.
Again, the fact that the US President himself talks about Facebook and Libra indicates the danger and importance of Facebook’s crypto project!
Facebook has finally revealed the details of its cryptocurrency, Libra, which will allow you to buy goods and services or send money to people for a fee almost equal to zero.
You will buy or retrieve your Libra by pseudonym online or at local businesses such as grocery stores, and you will spend it using interoperable third-party wallet applications or Facebook’s own Calibra wallet integrated with WhatsApp, Messenger and its own application.
Today, Facebook has published its white paper explaining Libra and its network on testnet to solve the problems of its blockchain system before its public launch in the first half of 2020.
You can see Libra’s white paper here: https://bitcoincryptoadvice.com/the-libra-white-paper
The social network has managed to gather an impressive amount of partners around Libra (represented by the symbol ≋) and Calibra, respectively a new cryptocurrency, and a new secure crypto wallet to store these units.
The goal is to enable billions of users of the social network and its applications to make purchases and money transfers with the least possible costs.
While posing Libra as a factor of inclusion for those who are excluded from banks and conventional means of payment.
Some kind of a new Paypal or online bank in a way.
Why the name Libra?
Libra is at the same time the astrological sign of the scale that represents justice, the word “free” in French and an old unit of Roman weight.
Libra and Calibra: release date.
Libra and Calibra are still under development.
And should not be available until next year, 2020.
It is nevertheless possible to register on the Calibra website to benefit from early access when it becomes available.
Libra and Calibra: why Facebook is looking to create the new PayPal.
In broad terms, Libra seems to be looking to extend the revolution in online payments started by PayPal, allowing payments, and transfers almost free of charge.
But Facebook is also targeting 1.7 billion people who do not have a bank account and would be tempted by alternatives.
In addition, Facebook has become over time a sprawling group, and especially one of the largest advertising agencies on the web.
By launching a cryptocurrency, it is not excluded that the social network can, in the long run, have a dreadfully precise idea of what people buy.
And nurture the optimization of its advertising campaigns with this data.
Nevertheless, we must note – we will come back to this – that this cryptocurrency will not be controlled by Facebook, which has only one vote, like each of its many partners, in a governance council, the Libra Association.
It remains to be hoped that this council will act as a counterweight.
What sets Libra apart from Bitcoin and Ethereum.
Bitcoin and Ethereum have several characteristics that do not make them comparatively ideal.
First they are extremely volatile values, with their lot of bubbles, which always end up exploding.
This inconsistency in value alone is a major handicap which explains why extremely few traders accept cryptocurrencies.
But it is only when enough businesses accept cryptocurrencies that the latter will no longer be mere objects of speculation.
And that’s not all: the system is based on an infrastructure that consumes a lot of energy – we are talking here about mining, sometimes amateur, with material often not very economical.
Finally these cryptocurrencies are not as simple to use as a bank card, for example.
As it stands, Bitcoin and Ethereum – to name just a few – have little chance of replacing current payment methods.
Bitcoin appears to be more like digital gold, the new gold.
Ethereum is more like the backbone of a new decentralized financial system.
Libra, by comparison, is a stablecoin: its value is indexed on currencies to avoid fluctuations.
Like Tether USDT or TrueUSD but people do not tend to trust those new companies, located in off shore countries when Facebook could be clearly trusted by most people on this planet thanks to its financial power and well known brand.
Facebook insists on ease of use and overall efficiency.
Mark Zuckerberg’s social network is also based on an extensive network of partners.
Suggesting adoption of this quick payment method on a large number of platforms.
What can you buy with Libra?
“A standalone Calibra application will be available in the App Store and Google Play.
You can also use Calibra directly from your WhatsApp and Messenger applications” reads Calibra’s website – the first official crypto wallet for Libra. This gives a first idea of how it can be used.
But the list of cryptocurrency partners seems to give a second important clue:
Payments: Mastercard, PayPal, PayU, Stripe, Visa
Technology: Booking, eBay, Facebook/Calibra, Farfetch, Lyft, Pago Mercado, Spotify, Uber
Telecommunications: Iliad, Vodafone Group
Blockchain: Anchorage, Bison Trails, Coinbase, Xapo Holdings Limited
Capital Venture: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
NGO, Academic: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
Facebook explains in its white paper of a hundred pages that “the success [of the system] means that when a person works abroad, she has a quick and easy way to send money to her family, or for a student, to be able to pay his rent as easily as one buys a coffee.
There is also Alex Norström, head of Spotify, who explains that the reason why the company has joined Libra is “the opportunity to better reach the entire Spotify market, eliminate friction and allow payment on a mass scale “.
We can imagine that a large number of partners, including Mastercard, PayPal or Uber, will somehow offer this method of payment.
How does Libra work?
The way Libra (≋) works for the user is very simple: the user buys Libra in its own currency, it can then spend it normally without paying a large transaction fee and without seeing their name attached to the transaction, and can remove them at any time. In detail, it’s more complicated. Each Libra has a quantity of currency.
When the user buys Libra, a unit is created, in exchange for a sum of money.
When he withdraws his currency, the corresponding amount of Libra is destroyed.
Thus, all existing Libra are still in circulation.
And each Libra corresponds to foreign currency reserves – a guarantee of stability.
The Libra Association is the guarantor of its independence!
To avoid being the target of criticism – after all Facebook has not always been honorably illustrated in recent years, especially in terms of privacy and use of data – the social network entrusted its governance to Libra Association.
This consortium brings together all the partners mentioned above and makes the important decisions on development, reserve values, and rules.
Each member has one vote, including Facebook.
Which means that each member will not be able to take control of Libra to its advantage.
Each member has to spend a minimum of $10 million to join Libra Association.
They share a portion of the dividends that flow from the foreign currency reserve paid by Libra users.
Among the conditions to join the consortium, it is also necessary to provide computing resources, bandwidth, an engineer responsible for maintaining the node and implement enterprise-level security measures.
To make this club more exclusive, and above all to give more reach to Libra, the members of governance must be giants valued at more than $1 billion.
A high-speed, secure and energy-saving blockchain!
The infrastructure is optimized to allow up to 1000 transactions per second (against 15 for Ethrerum and 7 for Bitcoin).
The characteristics of this blockchain are based on several principles that reduce the need for resources of the whole system.
As with other blockchains, every transaction is irretrievably in the blockchain, and systems are in place to make them tamper-proof.
In addition, in case of compromised validation nodes, Libra Association may suspend transactions and investigate to find out the extent of the damage, then push updates before resuming transactions.
These are not completely free. As on Ethereum, you have to pay a small fee.
The goal here is mainly to prevent spamming by hackers who wish to paralyze the system.
Finally this blockchain is open source.
At first its functioning will be less decentralized, and decisions will be made by a small group of actors.
A temporary phase that should allow to reach a fully decentralized model.
For more technical details on the intrinsic functioning of Libra, Facebook has posted a White Paper that will allow the most curious of you to deepen the subject.
You can see Libra’s white paper in PDF here: https://bitcoincryptoadvice.com/the-libra-white-paper
Is this a new way for Facebook to get all our financial data?
This is obviously one of the big issues that is Facebook’s reputation for protecting privacy.
Not surprisingly, the social network ensures that there is no need to worry.
Calibra, the issuer of the crypto wallet needed to use Libra, is a subsidiary of Facebook.
The agreement allows Calibra to be regulated by the authorities to prevent money laundering and other financial crimes.
But according to the company, Calibra’s financial data will also be separated from Facebook’s social data.
Calibra ensures that “Calibra’s accounts receivable information and financial data will not be used to improve advertising targeting on the Facebook product family.”
The company declares that it will only share the data of its customers with third parties in limited cases, such as to comply with the law, prevent fraud or facilitate payments.
It is also indicated that Calibra will ask the customer’s consent before using the Facebook data to improve the features.
What do authorities and the political world think of Libra?
The initial reaction was not great.
In Washington, politicians quickly complained about Facebook’s track record of protecting users’ privacy.
Maxine Waters, a Democratic senator from California who chairs the House of Representatives’ Financial Services Committee, asked Facebook to suspend the development of Libra until Congress can learn more about the project.
“The cryptocurrency market currently lacks a clear regulatory framework to provide strong protection for investors, consumers and the economy,” Senator Waters said in a statement. “Regulators should see this as a wake-up call to take privacy and national security concerns, cybersecurity risks and business risks posed by cryptocurrencies seriously. ”
Sherrod Brown, a Democratic senator from Ohio, tweeted that one could not trust Facebook to handle cryptocurrency alone. “Facebook is already too big and powerful, and it has used that power to exploit users’ data without protecting their privacy,” he said. “We can not allow Facebook to use a new risky cryptocurrency on an unsupervised Swiss bank account. ”
If Libra would become a success, it could become a menace for banks who would not be needed anymore as Libra will probably offer loans in the future.
So the bank lobby is going to work hard to stop Libra, even States and Countries might start to worry of Libra replacing their own local and national currency!
That’s why Donal Trump came out of the woods to talk about Bitcoin and Libra as they are getting more and more importance.
A Global Coin!
Facebook is absolutely right: today’s money does not work for everyone.
Those of us who live comfortably in developed countries probably do not see the hardships faced by migrant workers or unbanked people abroad, or even teenagers without a bank account.
Attracted by greedy lenders and high-cost remittance services, targeted by attackers and excluded from traditional financial services, the poor are becoming poorer.
Libra has the potential to bring more money back to working parents and help people retain their credit even if they are stripped of their material assets.
That would do more to fulfill Facebook’s mission of making the world smaller than the whole.
If Facebook succeeds and legions of people collect money for Libra, Facebook and the other founding members of the Libra association could reap big dividends.
And if, suddenly, it becomes very fast to buy things via Facebook using Libra, companies will increase their advertising spend.
But if Libra is hacked or unreliable, it could cost money for many people around the world while offering them cryptocurrency.
And by offering an open Libra platform, unscrupulous developers could create applications that not only capture the personal information of people like Cambridge Analytica, but their hard-earned digital money …
Facebook is trying to reinvent money, Paypal 2.0.
Next year, we’ll see if the Libra Association can do it.
An important point in this article is that users will not be in possession of their private keys.
And as we say in English, not your keys not your coins, indicating that at any time Libra will control your money in Libra and can block it at will or if it is hacked, you lose your tokens.
But it is certainly likely that Libra and Facebook will ignore this aspect and that most people will not pay attention to this thinking that it is not important…
It remains for Facebook to pass the stage of regulations and authorizations of the US authorities to launch its cryptocurrency.
Members of the congress, banking lobbies are already against this project that would change the financial world.
The banks do not intend to disappear tomorrow and will surely give Facebook a hard time before launching its Libra token.
Future debates will certainly be exciting and the future will tell if Facebook can launch its cryptocurrency or not.
And if Libra is launched, we will know if it is a success or if the public prefers to go for really decentralized cryptocurrencies like Bitcoin.
Another positive point that brings Libra and Facebook is the spotlight on cryptocurrency, which will lead many new people to take a look at cryptocurrency and Bitcoin!