In our 21st Century, many people around the world do not have access to banking services, and the fees and costs for transfers and payday loans are astronomical. Facebook says, “approximately 70% of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees.” Blockchain Technology has opened doors for countless people around the world, and banking is no exception. However, many blockchains that are trying to help the unbanked still have issues with scalability and libertarian motives of upending the existing financial system.
Enter the Libra Blockchain founded by Facebook. Libra doesn’t want to upend the existing system, on the grounds that an anarchist approach will not be effective in the long run. Libra believes working within the existing financial framework will create a more sustainable and secure system.
Libra will launch as an open source centralized “permissioned blockchain”. Bitcoin and altcoin maximalists may have issue with this approach. At first the validator nodes will be run by companies that are the founding members of the Libra Association. The project’s goal “is to eventually become a decentralized “permissionless blockchain” where anyone with Libra coin can run a validator node.” That’s what they say, however, considering Facebook has about 2.4 billion users worldwide and blockchain has a history of scalability issues, that might mean the goal of decentralization is going to be difficult. And. another hurdle for Facebook is convincing Congress that it’s trustworthy. That may be a taller task than scalability concerns.
The operations behind Libra, the Libra Association, is based in Switzerland, to give governance for this new venture. It’s true that Facebook played a huge role in the creation of the Libra Association, however, Facebook is just one member and the final decisions are decided by all members. Members include many high-powered companies such as PayPal, Uber, Lyft, Coinbase, venture capital groups, and nonprofits like Kiva and Mercy Corps. However, what’s surprising are the members that are missing, like Google and Microsoft, so the love for Libra isn’t universal. In fact, Google and Microsoft have given much attention and resources to the Ethereum Blockchain Project. Another surprise is there are no banks as members.
A unique aspect of the Libra cryptocurrency is the Libra Reserve; real assets backing the Libra coins designed to give assurance to users and perhaps blur the lines between real and virtual currency. These real assets include deposits and government securities. The backing of Libra with real assets is a throwback to how paper currencies used to be backed by gold. In addition, the interest from these investments will be used to pay for the system and to pay dividends to investors.
If you’re excited about Libra and can’t wait to buy coins, according to the white paper, only Authorized Resellers can purchase Libra coin, in fiat currency, from the Libra Association. The authorized resellers then become the middlemen (or intermediary) who will eventually sell the cryptocurrency to users. When the Authorized Reseller sells Libra coin back to the Libra Association they get destroyed (burned).
Once you’re able to buy Libra coins, they will initially be stored in the Calibra wallet, Facebook’s own creation. The Calibra wallet is expected to be desktop and mobile friendly, allowing users to send or receive or spend Libra coin. User accounts will be verified with a Personal ID. Calibra’s design is meant to protect users from fraud and Facebook will offer customer service to help with issues.
One important note to consider, expect that Calibra will share your activities with others. Considering that Calibra is a subsidiary of Facebook, we can expect Calibra will share data with Facebook and other businesses as well.
In other words, the Calibra wallet has EYES!!
On the technical side, the Libra blockchain uses a programming language called Move, a new programming language designed by them for their blockchain. Move is somewhat like Vyper, which Ethereum uses, to create smart contracts. However, Move is supposed to be easier and designed to allow companies to create their own products for use with Libra and Calibra.
Libra also uses the Byzantine Fault Tolerant consensus approach and added their own spin to it, the LibraBFT protocol. The unique design of their protocol says it will keep the network running even if some of the network nodes fail. As we all know, in the world of technology, there will be times when the internet goes down, potentially creating a bottleneck. Libra is attempting to compensate for this.
In summary, so far, Facebook has been able to conquer the social media world, by allowing us to stay in touch; albeit at the price of collecting and selling our data. Plus, they still haven’t been able to become the ‘monarch’ of the marketplace, like Amazon. Perhaps with Libra and Calibra, Facebook will dethrone Amazon. However, at this point it’s not clear what Facebook plans are. They are clearly keeping a healthy distance from the Libra Blockchain, but the Calibra Wallet is their baby. If all goes well, the expected launch of Libra and Calibra is sometime in 2020.