And just like that, it’s happened: Facebook has finally announced the launch of not only its very own cryptocurrency, but also a separate wallet app that doesn’t even require you to have a social media account in order to use it.
The news about Libra coin has spread like wildfire, and in a matter of days, dozens of opinionated articles have flooded the media. While some saw this as an opportunity for long-awaited mass adoption, others have been quite skeptical about trusting Facebook with their money and suspect that the system will be designed in a way that once fiat money comes into Libra’s economy, it’s destined to stay there forever.
There were some who dug into the Libra coin whitepaper and concluded that the Facebook token is not as significant as their hidden agenda towards carrying out digital identity standards on a global basis. And even Binance exchange is already flirting with the idea of becoming one of Libra’s validators.
However, lawmakers themselves were not really thrilled with Libra either and immediately asked Facebook to postpone their ambitious plans.
If you didn’t have a chance to learn about the subject yet or still not sure what to think of it, we’ve done the homework for you and summed up all you need to know about the Facebook coin, the Libra Association, and Calibra wallet.
What is Libra coin?
So why exactly is everyone so thrilled and excited about the Libra coin to begin with? It’s the idea that’s behind it that is absolutely brilliant: Facebook saw the opportunity of entering the crypto market and seized it. Right now, if you want to stay in accordance with the law, in most cases, you use exchanges to buy your crypto. These exchanges, in turn, use bank accounts and monitor their users’ activity as required by specific KYC/AML procedures. The whole regulation field still remains uncertain and even blockchain analysis firms cannot land all the ‘criminals’.
And here’s where Facebook has an ace up its sleeve: they already have millions of users worldwide and if they are going to offer them a bunch of useful goods and services that most of them use anyway, these users are probably going to give it a try. And chances are they might find it really useful. To execute this masterplan, Facebook needs affluent alliances from the non-crypto world and some blockchain-related ones as well (someone has to perform that KYC after all). This is a serious threat to the traditional finance system and, basically, a loophole between the worlds of fiat and crypto and a promise of de-dollarization.
Here are Libra’s main points:
- Interestingly enough, the Libra Blockchain is not exactly a blockchain but a transaction database
- They created yet another programming language, Move, for designing smart contracts.
- Libra’s consensus algorithm is of BFT type.
- Although some people call it a stablecoin, it’s not a traditional stablecoin as we know it. Libra is a low-volatility currency “fully backed with a basket of bank deposits and treasuries from high-quality central banks.”
- Investors will get their dividends from a percentage of the assets. This percentage will also cover the costs of the system operation.
- Once validators deposit or withdraw fiat money from authorized resellers, Libra coins are issued or destroyed accordingly.
- The great plan is to find 100 validator nodes that will form the Libra Association before launching and, in the future, open blockchain for other validators as well.
- The launch is scheduled for 2020.
- The accounts on Libra’s blockchain are not connected to physical users, which implies pseudonymity. Users can change their private keys without changing the account address itself.
- Libra is open source and the testnet is available on GitHub.
And the most user-relevant points are the following:
- You will have to pay a certain gas fee to execute transactions and they say it’s going to be really low (depending on the network load).
- The awaited transaction confirmation time is 10 seconds.
- There might be an additional commission for storing data.
- You need no Facebook or Whatsapp account to use Libra, but you will need a government-issued ID for using Calibra.
- We won’t know much about the Libra coin price until the official launch in 2020.
Additionally, Libra is going to launch a reward program for companies using Libra. Wallet developers that conduct KYC procedures or those who confirm users’ activity during a year period can expect to get extra payments. Merchants will get rewards for every Libra transaction they process.
The Libra Association is responsible for the system’s development. It is a Geneva-based non-profit organization that works on evolving and scaling the network by cooperating with the community and establishing relationships with lawmakers.
The association is accepting businesses, crypto investors, non-commercial companies and universities that fit a certain profile, but crypto-related participants should not exceed one-third of the total amount. Each participant will have no more than 1% of the votes to keep it fair. The minimal contribution fee is $10 million in exchange for the Libra Investment Token (LIT).
In the future, the membership can become free and open to all Libra token holders.
Calibra wallet by Facebook
Cailbra wallet is a wallet made by Facebook that will sort out the KYC procedures, and it is yet uncertain if other wallets will be allowed to enter the game straight away. However, you’ll need to prepare your ID if you want to use it. Another interesting feature is that users will have the right to claim a refund in the case of a system hack or some other ‘misfortunes’. Initially, Calibra won’t make any profits, but that may change in the future by introducing additional services.
Facebook’s Libra coin sounds a lot like Chinese WeChat and blockchain put together. If their ambitious plans do work out, we might finally witness that mass adoption every crypto believer has been dreaming of, which would be great news. However, way too many questions about turning this into reality remain open. Clearly, regulators are already raising the alarm and hate the idea of a major global crypto payment network; it’s not going to be easy to skip strict KYC/AML procedures.