Facebook has recently released the whitepaper of its upcoming digital currency that it’s planning to create in conjunction with Libra and a number of other well-known corporations.
The document states that its key mission is “to enable a simple global currency and financial infrastructure that empowers billions of people”. It aims to provide “unbanked” people in regions with poor infrastructure with access to financial pleasures at low costs.
It causes a sense of Deja Vu. We’ve heard such bold claims from dozens of other startups back in 2017, but where are all these honorable masters now? Hold your breath, because most are currently dead in the water.
Electroneum, Humaniq, Ripio Credit Network, Pundi X – all these noble projects share the same pattern: incredible growth at the end of 2017 with a slow and silent death afterwards.
Facebook is a different story though. It has much more resources to reach its goals, with VISA and MasterCard themselves backing the project. Let’s take a closer look at what the new digital currency represents.
Libra Coin Features
Although Libra utilizes blockchain technology, it’s fundamentally different from Satoshi Nakamoto’s invention – Bitcoin. Here are some of its features to consider:
- A stablecoin backed by a reserve of real assets, such as and short-term government bonds and fiat currencies (USD, EUR, GBP, etc.).
- A broad network of partners. The names on this list are impressive, VISA, MasterCard, PayPal, Xapo, eBay and many other big name brands are all on board.
- Easy payments for unbanked areas. One can already transfer and withdraw funds via Facebook Messenger and WhatsApp. With Libra Coin, it will be much easier as you won’t have to link your account to your bank card.
- Mass adoption. Facebook has more than 2 billion users worldwide.
- Open-sourced. Although the initial development of Libra blockchain was conducted by a private team, the technology is now available on GitHub for developers worldwide to make improvements.
Technical aspects
As Libra developers create their own project from scratch, they are not limited by any restrictions that are inherent to existing blockchains. Developers who want to create dApps based on Libra should consider the following aspects of the new platform.
Scalability
The ICO boom in 2017 has revealed Ethereum’s main flaw. The platform is only able to process 19 transactions per second and charges high fees when congested.
Libra will be a permissioned network operated by a small number of approved companies. This will allow it to overcome the scalability problem and process thousands of transactions per second.
Move, a new programming language
Just like most of the other blockchain platforms, Libra is going to utilize a totally new programming language for dApp development. This will create additional obstacles as developers will have to study the new language from scratch. The first app will be a wallet, just so you know.
Incentives for all participants
All pioneers will be rewarded with Libra coins: developers for creating dApps, node operators for attracting more users, and users for active participation. Also, to make the platform more attractive for merchants, Libra promises to give them a percentage of transaction value back.
Some questions to be answered
In spite of all the advantages that the new digital currency promises to provide, there are still some concerns for the end-users to consider.
- Centralization. Libra coins are issued and controlled by a single company which results in all the problems that Bitcoin was designed to resolve. Users don’t truly possess their money and their transactions can be blocked by the central authority at any time without any explanation.
- Opaque issuance model. With Bitcoin, the issuance of every single coin can be traced back to the miner who created it. According to Libra’s whitepaper, new coins will be minted when authorized resellers purchase them from Libra Association with fiat currency. All transactions will be meticulously audited by third-party instances, but how can the average person make sure that the conducted audit is fair and square? A similar issue that Tether has.
- Hight entry threshold. To become a part of Libra Association, a company must have a 1 billion USD of market capitalization. It’s not as easy as purchasing and setting up an ASIC to mine bitcoins, is it?
- Inflation. Bitcoin supply is limited to 21 million, which puts restrictions on its inflation in the long-term perspective. Libra can be issued without any limits, just like dollars are issued by the Federal Reserve.
- No privacy. Facebook will have complete control over your life, rather than just your transactions. It has much more information about your personality than any centralized authority does – your age, your habits, your friend, your whole life.
Who will you entrust your money to?
While authorities of any country serve as soulless machines that ensure compliance with the laws, the main goal of any business is making money. Those who sing the praises of this new digital coin should keep this fact in mind.
Yes, Libra has the potential to fulfill its honorable purposes and provide remote areas with a convenient payment tool. But, it will not provide you with the same freedom that Bitcoin does. Instead of giving away your private data to the government, you will give it away to corporations. Libra might be honorable in nature, but it’s coming at a huge cost – your privacy.
