TL;DR: “Libra is a global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology. People will be able to send, receive, spend, and secure their money, enabling a more inclusive global financial system,” which count as among the first public statements about the newly revealed and highly anticipated project from Facebook and an association of corporate partners.
Libra Revealed: Sprawling, Ambitious, Savvy, Launching in 2020
After months of leaks, non-disclosure agreements, press embargoes, and speculation, the Facebook-headed project Libra was formally announced at 5am EST on 18 June 2019. Its vision contains three main parts: currency, a fiat-pegged basket reserve, and a blockchain. It will surely be endlessly poured-over and analyzed in the months to come before its expected rollout in early 2020; here’s a first look at Libra’s basic contents and skeletal workings.
The currency unit is indeed libra (noted without capitalization), and it’s hoping to be “as widely accepted and as easy to use as possible to create a currency that people can use with confidence and convenience in their everyday lives.” In other press materials associated with the project, it touts developing countries as a primary target, from Africa to Latin America. It will have a wallet component as well, Calibra, described as “newly formed Facebook subsidiary” which “will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020.”
“Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value,” the website landing page blurbs. An explainer link takes a deeper dive on the Reserve concept, noting in four major question headings, and subsequent answers, as to how it will be formulated.
Libra Reserve is Permissioned, Governed by Corporate Partners from a Switzerland-Based Association
“The Libra Reserve plays a vital role in supporting value preservation, building trust,” the linked page assures, “protecting the resources users, merchants, and developers bring to the network.” Interestingly, Libra leaves open how “over time” the network is to become “permissionless,” and that in turn links to still more explanation. Managed by corporate partners, a supposed non-profit Libra Association, the Reserve is aimed at specifically undermining confidence in established projects such as Bitcoin Core (BTC) and Ethereum (ETH) … both of which have abandoned medium-of-exchange roadmaps.
Governance will be a critical component in the project’s ultimate appraisal, especially as Facebook has notorious on-going problems with issues of privacy and censorship. Perhaps one way to diffuse such criticism is to align itself with dozens of assorted non-profit groups, legacy financial payment platforms, and technology startups — and all those boxes appear to be checked. Whether they assuage fears or heighten them, time and implementation will prove.
Until then, “money in the reserve will come from two sources: investors in the separate Investment Token, and users of Libra,” the site explanation continues. “The association will pay out incentives in Libra coin to Founding Members to encourage adoption by users, merchants, and developers. The funds for the coins that will be distributed as incentives will come from a private placement to investors. On the user side, for new Libra coins to be created, there must be an equivalent purchase of Libra for fiat and transfer of that fiat to the reserve. Hence, the reserve will grow as users’ demand for Libra increases. In short, on both the investor and user side, there is only one way to create more Libra — by purchasing more Libra for fiat and growing the reserve.”
The Libra Blockchain, New Programming Language
The Libra blockchain pdf itself is nearly 30 pages, and lists more than 50 developers. It claims to be “a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world.”
In a nod to cryptocurrencies’ open source ethos, the project has an active, live Libra Core “in anticipation of a global collaborative effort to advance this new ecosystem,” described as “a set of replicas — referred to as validators — from different authorities to jointly maintain a database of programmable resources. These resources are owned by different user accounts authenticated by public key cryptography and adhere to custom rules specified by the developers of these resources. Validators process transactions and interact with each other to reach consensus on the state of the database. Transactions are based on predefined and, in future versions, user-defined smart contracts in a new programming language called Move.” There’s an entire section on Move as well, which is further described as “central” to the project.
Developers are invited to execute a first transaction on the Libra blockchain, clone and build Libra Core, build a Libra client, connect to its testnet, and create a standard Alice and Bob account (there’s also a GitHub). Overall, Libra is more than expected while simultaneously what most observers anticipated, a giant project to dominate the medium-of-exchange sector with something like a stateless money. Its advantages and problems will be dissected in the coming days and months, but one thing is absolutely clear: Libra is a serious project.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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