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Today we will be talking about the highly anticipated Facebook currency Libra and some of its properties that we are aware of. Facebooks most recent business related announcement is that it is launching its own digital currency. The new coin named Libra, is a stable coin although it functions much differently from currencies such as tether and additionally Facebook has built its own blockchain to support It.
Facebooks ambition for its cryptocurrency is to be a replacement for paper money and credit cards. Their aim is to create a more efficient payment system that users can purchase immediately and directly from their devices wallet or app. This will also include transferring money to friends or family without the conventional restrictions that other services are hindered with.
One of Facebooks largest publicly stated goals is for Libra to assist as currency for migrant workers and unbanked populations in the developing world. By creating a system that offers similar usability to cash and debit cards, Libra can help people keep their funds safe and accessible, in areas of the world without access to banks.
WHAT IS LIBRA
Libra is similar to other crypto currencies but probably more so to stable coins such as fiat. It is constructed on a native blockchain and backed by a reserve of several strong currencies such as the dollar and Euro which will mitigate the impact of price volatility. In other words having multiple real world currencies supporting Libra will make dramatic price fluctuations less likely.
Libra is different enough from other similar coins to necessitate a closer look, especially now that the they have released its testnet and accompanying white paper. According to the project’s leadership, Libra is to operate more as digital cash than the traditional speculative function most cryptocurrencies serve, prioritising actual use of the currency over holding for financial gain.
LIBRA IS A DIFFERENT BREED
The Libra blockchain is essentially structured like many others however it functions quite differently, it is reliant on validators with permissioned access rather than nodes on the chain as you would typically see in blockchain technology.
The white paper itself states, “There is no concept of a block of transactions in the ledger history,” with data assigned to validators sequentially (by number) instead of in groups. These validators will be comprised of a network of 27 major companies which include Visa, MasterCard, PayPal, eBay, Uber and Vodafone. These companies have each individually have pledged $10 million for Libra’s development and there are plans for 100 validators in total.
instead of operating like a traditional distributed ledger, the Libra blockchain uses a single data structure that records all transactions and states over time. It is based on a new programming language called Move, this will eventually be used for smart contracts, and therefore full applications on the Libra blockchain. This is more complicated than the standard forking method most blockchains use, it requires a ground-up approach. Future development will become easier for Libra as they have developed the proprietary framework.
Libra is not a blockchain in the traditional sense as it doesn’t share many of the common attributes including being public, censorship resistant, unchangeable, and neutral. Libra is not any of these things according to the white-paper and many are denouncing it’s validity as a crypto currency.
To make use of the storage and bandwidth we can expect to pay The Libra association a fixed fee. These fees, along with the assets being held in the Libra Reserve are expected to be enough to cover Libra’s operational expenses, as well as to pay out dividends to holders. It looks as though libra are not seeking to profit from transactional fees but will in other ways possibly from interest generated from financial assets and increased Facebook ads revenue.
The overall processing time of transactions will far exceed that of actual crypto currencies at an estimated 1000 transactions per second. Facebook has opted out of true decentralisation in order to make Libra more appealing to the mainstream. This has split pot in terms of people heavily rejecting or accepting the idea as many believe crypto currencies should be public transparent and held up to those ideals that they were founded on to begin with.
On the other end of the spectrum people believe that this will open the floodgates for mass crypto currency adoption and act as a gateway currency finally making crypto a household name and increasing liquidity in the crypto markets. Libra’s concept of minimal volatility could also lower foreign exchange cost and facilitate even smoother cross-border trading capabilities and social inclusion.
In summary we know that libra will be less volatile than some of its stable coin counterparts. Libra will easily compete and probably surpass its popularised rivals. Regardless of all of the facts the creation of Facebook’s Libra is a potentially massive milestone for the crypto community and has opinions split on its worth. Libra has a massive support system from some major businesses and will most likely corner the market as a legitimate mainstream currency. With that in mind it looks likely to fail as a true crypto currency as it is not really decentralised and doesn’t uphold the values that currencies such as bitcoin were designed to implement.
Thankyou for taking part in our discussion today ladies and gentlemen, please sit back and contemplate what you have learned today and remember Contemplation is the key to learning.