Libra: For a while now, there’s been a lurking fear of cryptocurrencies and anything related to them because of the little knowledge most people have about what is going on & the disruption that’s involved.
There have also been raising concerns over the future of cryptocurrencies and significant adoption simultaneously by big companies that have started accepting various forms of crypto payments. This has dragged on and on.
Meanwhile, a few weeks ago, social media giant Facebook, Inc announced Libra, a decentralized cryptocurrency that will allow users of Facebook and WhatsApp to easily send each other money and make online purchases and suddenly, the world is now listening and instantly interested in cryptocurrencies and whatnot.
The birth of Libra doesn’t come off as a surprise to many tech enthusiasts that have quite followed the agile steps of Facebook’s founder Mark Zuckerberg as he continues to grow his tech empire. If there is a dream Mr. Zuckerberg has always had, it is going into financial payments & tapping on the billions of users of his platforms(Facebook & Whatsapp) to enable them to send, receive cash and pay for goods and services.
His intentions have been evidenced through his open talks on FinTech, Crypto & Blockchain, the launch of Messenger’s feature in 2015 that would enable users to send and receive money via the platform although it later failed and his significant visits to Nigeria & Kenya to see the rapid progress of mobile money payments in Africa.
However, for a topic that has been relentlessly swept under the carpet even with its significant disruption in the financial sector, why is Libra such a force to reckon with in the world of cryptocurrencies and why is it such a big deal.
What makes Libra stand out?
Whereas we’ve seen a number of Cryptocurrencies such as Bitcoin, Bitcoin Cash, Gemini USD, Paxos, and Circle’s US Dollar Coin showing a strong possibility in building a decentralized peer to peer to digital cash and a payment network that’s secure, and that anyone can use, Facebook’s Libra is seeking to be a gamechanger and has already made the headlines for both the good and bad reasons.
For starters, not much is known about Libra Currency pending an official launch in 2020 when it’s expected to go live. However, there have been significant features that have been announced by Facebook and reported by the media. On close observations, here is what is seemingly making Libra stand out and be such a big deal;
- A formidable list of Partners
Libra’s prominence isn’t just all about it’s affiliation to Facebook. The new form of cryptocurrency is backed by a long list of founding members who will be jointly making decisions about the future of Libra. It’s backed by the Geneva, Switzerland-based Libra Association, a non-profit organization and besides Facebook, the list includes partners such as; Mastercard, Visa, PayPal, Stripe, eBay, Uber, Lyft, Spotify, Coinbase, Xapo, Andreessen Horowitz, Union Square Ventures, Mercy Corps, and Women’s World Banking, among others.
It’s these kinds of solid partners that have given Libra a formidable force to reckon with. When it finally goes live in 2020, there will be heavy backing that will help Libra leverage on a variety of markets. The good news too is that there will still be more members added to this already great list.
- Libra itself is a StableCoin
Unlike currencies such as Bitcoin and Ethereum that go up and down by 10% on a daily basis, Libra is a special type of that remains fairly stable compared to the value of another fairly stable real-world asset, such as the U.S. dollar. It will be fiat-backed, meaning that there will be a $1 worth of bank deposits and short-term government securities guaranteeing for every $1 worth of Libra. Instead of closely following the value of a real-world asset, like the US dollar, Libra will have its own value. However, it will be backed by a basket of “low-volatility” assets to ensure its stability.
- A confusing type of Blockchain
The Libra Blockchain is designed like a true blockchain, with a Byzantine Fault Tolerance approach, the use of Merkle trees to guarantee the integrity and a network of nodes. However, Libra is a confusing type of cryptocurrency that doesn’t allow just about anyone to node off it except for the founding members of the Libra Association.
To understand this better; Bitcoin and Ethereum are permissionless networks, meaning anyone can join in and run a node, thus becoming a part of the blockchain’s infrastructure. However on Libra, initially, only a small list of approved companies and organizations will be able to run a node.
In other words, it looks like a blockchain, but it’s not a real blockchain. It’s not truly decentralized. It’s not truly open, as the ledger of transactions will be accessible to Libra Association founding members exclusively. However, Facebook says it plans to let anyone run a node at some point over the next five years. Libra will start out as a permissioned blockchain, and slowly transition to a permissionless blockchain.
- It’s not entirely about Facebook
Whereas many have tried hard to continue disassociating themselves with Facebook, the social media giant knows it very well and are indeed doing something about it. Although Facebook and Mr. Zuckerberg are seemingly at the forefront of the new currency, Libra is several things that are bigger than just those two: the Libra Blockchain, the Libra currency, and the Libra Association.
-The Libra Association is the Geneva, Switzerland-based not-for-profit organization that governs Libra, and is run by Founding Members, which include Facebook — but the social network does not have a special preference in the decision making progress.
-The Libra Blockchain is a new type of blockchain, primarily designed to support the Libra cryptocurrency, but one that also allows anyone to build smart contracts on top of it, similarly to Ethereum.
-The Libra coin is a special type of cryptocurrency, a stablecoin, meaning its value should not change much compared to some stable real world asset, like the U.S. dollar. It’s backed by actual fiat money and equivalents, held by custodians chosen by the Libra association.
Facebook’s goal of creating a new global currency is to target the 1.7 billion people who are still unbanked. They are also heavily relying on key features such as low cost of transactions, ease of use, security, and support by numerous strong backers to drive adoption.