After the failure of Messenger Payment, Facebook is getting back in the game of payment networks with its own cryptocurrency. The world’s largest social network has started a new project, called Libra. Earlier, cryptocurrencies like Bitcoin and Ethereum have shown the possibility of building a peer-to-peer digital currency and a payment network that is safe, decentralized and easy to use. Afterward, came stablecoins like DAI, USDC, and TUSD that have shown the possibility of a cryptocurrency whose value isn’t as unpredictable as of cryptocurrencies like Bitcoin and Ethereum. Now, in order to take on all these cryptocurrencies, Facebook is already using a system that consists of some of the best traits of existing
Why is Facebook Launching Libra?
The first thought that came into everyone’s mind was, why is Facebook launching a cryptocurrency in the first place?
As per Facebook’s statement, they wish to reach the millions of people who still don’t have access to bank accounts. Logically, this can prove to be beneficial as people may not have access to bank accounts, but they have access to the internet.
The only concern that people have in their mind is regarding their privacy. In order to clear this as well, US government officials have asked Mark Zuckerberg to clarify this concern.
Who Governs Libra?
Different companies have joined hands to form a “Libra Association” that will be in charge of Libra. It will be functioning as a “stablecoin”, pegged to a physical currency, which will make it less volatile than most of the cryptocurrencies.
The Libra Association is based in Switzerland and is described as a non-profit organization by Facebook. It will be engaged in performing 2 functions:
- Validating transactions on the Libra blockchain
- Allocating funds to social causes
The operating decisions for Libra will be taken by a governing body within the Libra Association, called Libra Association Council. Each member of this council will be voting upon a policy or decisions that are to be implemented.
Only the companies who contributed a minimum amount of $10m will be listed as the Libra Association’s founding members. Currently, the list includes companies like eBay, PayPal, Visa, Master Card, Uber, Lyft, Spotify, and many more.
Characteristics of Libra
Being a new concept, it may be hard for everyone to understand the basics of Libra. In order to make you understand the concept of Libra a little better, here is a little information about it.
A Smart Contract Platform
Just like other cryptocurrencies like Ethereum, developers will be allowed to build decentralized applications on top of Libra’s blockchain. But, Ethereum is an all-purpose decentralized smart contract platform and Libra isn’t. It will be inclined more towards financial applications.
Introducing a New Programming Language, Move
Facebook is introducing a new programming language called Move, which means, developers will have to learn a new programming structure. In order to make its potential users feel safe, Facebook has clarified that Libra is designed with high security and safety features as it is their first priority.
According to Libra’s Whitepaper
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
In the end, Facebook’s Libra can prove to be a revolutionary step in the financial system and can be highly beneficial for both Facebook and its users. But, the only thing that will cause problems for Facebook in regulating this cryptocurrency is concerns regarding privacy and security. Facebook has been asked to clear this question in the coming time and if their answer seems convincing enough, they are good to go. But knowing Facebook, they will anyway find a way to move forward.