The head and founder of Facebook, Mark Zuckerberg, published a post on his social networking page dedicated to the creation of the Libra Association – a consortium of 27 organizations that will be sharing with Facebook (and he has access to a user base of 2.4 billion people) to develop the new cryptocurrency ecosystem Libra. A white paper project has been published on the Libra website. From the document you can learn about the goals and objectives of the platform, as well as about the mechanism of its work.
Any white paper starts with the problems of the market that a startup will solve. Judging by the positioning of the project, Libra is first of all a Fintech startup. The project authors present LibraCoin as a new global currency that will facilitate cross-border remittances and reduce their cost, as well as help the integration into the global economy of 1.7 billion people without a bank account.
Libra should provide its users with a reliable currency and infrastructure that will ultimately lead to the creation of Internet money, and cross-border transfers should become as easy and simple as sending text messages or sharing photos. Thus, the project’s mission (another turnaround for such documents) is to create an international currency and financial infrastructure that will expand the capabilities of millions of people.
The advantages of the project, the authors of the document see the following :
- Secure, scalable and reliable blockchain .
- Liquidity of LibraCoin, which is provided with reserve assets.
- The ecosystem is managed by an independent consortium, the Libra Association.
White paper Libra lists a list of the founding organizations of the ecosystem, including:
- Payment systems: MasterCard, PayPal, PayU, Stripe and Visa.
- Technology companies and marketplaces: Booking Holdings, eBay, Facebook / Calibra, Farfetch, Lyft, MercadoPago, Spotify, Uber.
- Telecommunication companies: Iliad and Vodafone Group.
- Blockchain companies: Anchorage, Bison Trails, Coinbase and Xapo.
- Venture capital companies: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures.
- Non-profit organizations: Creative Destruction Lab, Kiva, Mercy Corps, Women's World Banking.
The basis of Facebook's cryptocurrency is the Libra open-sourced blockchain, which will be public and available for integration to millions of users and companies (the cryptocurrency from JPMorgan Chase , on the contrary, is not public). Initially, the Libra blockchain will be closed: to connect to the network of new validating nodes will require the approval of the rest of the ecosystem.
In the future, it is planned to transfer the project to an open blockchain, which will become one of the main tasks of the ecosystem. Libra blockchain will allow to integrate billions of users, it will be written in a specially developed for this new programming language Move. The Libra Consensus Protocol will be called LibraBFT . It is resistant to the Byzantine error, which means Libra’s blockchain infrastructure will function normally, even if some nodes fall into the hands of intruders or work incorrectly.
Smart contracts will be written in the language of the Move, developed specifically for the Libra blockchain. According to white paper, Move is “bytecode executable language used to implement user transactions and smart contracts.” At the time Libra is launched, only smart contracts previously approved by Libra Association will be used. This may be a limitation, given that many organizations plan to use the network. Developers can familiarize themselves with the testnet and study the documentation on the site Libra Developer portal .
Addresses of users in the Libra blockchain will work on a system of pseudonyms, as in Bitcoin and Ethereum, one user can have several accounts in Libra at once. However, this will not prevent law enforcement agencies from identifying wallet owners by their Facebook and WhatsApp accounts. The system provides for the creation and execution of smart contracts.
The new currency will have the same name as the ecosystem itself – Libra. The authors of white paper emphasize that, unlike most cryptocurrencies , Libra will be a token with a stable value, but not a stablecock in the usual sense. It will be used for making payments and accepted as a means of payment by ecosystem participants. Its liquidity will provide a reserve fund (Libra Reserve).
The fund's portfolio consists of bank deposits and government short-term bonds, all of these assets are represented in 4 fiat currencies: USD, EUR, JPY and GBP. The reserve fund will be geographically distributed and will be stored in different jurisdictions. Libra can be sold and purchased on stock exchanges, which, according to the authors of the project, will allow its active use for cross-border remittances. Interestingly, cryptocurrency emission is not limited: an ecosystem can release or, on the contrary, burn any amount of Libra.
Libra ecosystem creates a Calibra wallet for storage and transfer, which will be integrated with Facebook Messenger and WhatsApp mobile applications. Calibra is already registered in the United States as a financial services provider, and also guarantees users the recovery of wallets in case of fraud.
The ecosystem will be managed by the Libra Association. It is an independent non-profit organization based in Geneva (Switzerland). One of the important tasks of the association will be the creation and distribution of grants aimed at ensuring international financial integration. The association will include organizations that own Libra blockchain nodes.
To obtain the right to own a node and to participate in an association, that is, to manage a network, its members need to purchase a Libra Investment Token (LIT) security token worth $ 10 million. They can be various international business structures, educational and non-profit organizations. The price of a LIT depends on the value of any potential income or rewards in the network and is separated from the daily value of the Libra token.
It is planned that by the time of the launch of the ecosystem in the first half of 2020, the Libra association should include more than 100 participants. White paper states that Facebook played a key role in creating an association, but the social network, like other participants, cannot have more than 1% of the votes in an association. The plans for the development of Libra announced the creation of API and libraries that will facilitate users to interact with the ecosystem.
The creation of cryptocurrency by such major players as JPMorgan Chase and Facebook is good news, which indicates the growing demand for and popularity of cryptocurrency in the world. But not all community leaders approve the arrival of major players on their territory.
Facebook Libra coin don't need KYC. 2 billion people. Not just name, id, address, phone number. Real-time, friends, real-time / historic location, what you like … And now your wallet too. Best AML!
– CZ Binance (@cz_binance) June 18, 2019
CEO Binance Changpen Zhao believes that Facebook with an array of big data for two billion people may not conduct any KYC, because the company already knows everything about users: their friends, relatives, hobbies and other confidential information, and now the wallet. Obviously, this way Zhao hints that you should not trust Facebook, which sells user data and uses it for personal purposes.
Zhao also added that Facebook must integrate its applications (Messenger, WhatsApp and Instagram) with Bitcoin and BNB, since, unlike Libra, Bitcoin is already running. In addition, it is not clear how Libra will interact with other cryptocurrencies, which means there is a risk that the development of this ecosystem will not be able to increase the demand for other cryptocurrencies.
Prospects for cryptocurrency Libra Russia
What could be an obstacle to the emergence of Libra in Russia? Libra will be backed by “real assets”, including:
- known currencies
- central bank accounts,
- government obligations of a number of countries.
Among the “known currencies” is the US dollar, however, settlements in Russia by the American currency or any cash substitutes based on the US dollar are prohibited. The only means of payment in Russia is the Russian ruble. Even the stablebing on the basis of the Russian ruble in Russia from the American corporation did not have a chance to exist, since it would be perceived by the Central Bank of the Russian Federation for a money surrogate.
Moreover, no matter how the “distributed registry” is discussed, the presence of a foreign company in its organizers would put an end to the question of the fate of such a digital asset in Russia. As a result, we see the Libra project, which will be integrated by the organizers into Facebook, WhatsApp and Instagram, which means that this could potentially mean blocking not only Calibra, but also these social networks.
Yes, Instagram is popular in Russia, but this once again shows that Russia urgently needs to create its own digital projects. The fact that this is possible shows a positive attitude towards the idea of cryptocurrency, which Igor Sechin, the chief executive officer of Rosneft, the world's largest public oil and gas corporation, recently demonstrated .
There is a general positive attitude of Russian President Vladimir Putin to new financial technologies. Russia should develop its own cryptocurrency, which will be based on the Russian ruble, barrels of oil and gold. This will help strengthen the position of Russia in the BRICS, the SCO countries, to remove issues related to the fact that Chinese banks actually comply with US sanctions on the Russian economy. This will be able to provide a significantly higher growth rate of trade.
In addition, due to the multiplicative effect, it can become the only currently viewed tool that can guarantee the implementation of the May decrees of the President of the Russian Federation. To make the implementation of national projects more effective and to achieve as a result of economic growth, as well as a noticeable and sustainable improvement in the welfare of Russians
Publication date 21.06.2019
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