Facebook Announces Its Own Cryptocurrency and Libra Association
On June 18, Facebook’s Mark Zuckerberg announced its long-awaited Libra blockchain as well as introduced its stablecoin and presented the so-called “Libra Association”.
Today, Facebook is coming together with 27 organizations around the world to start the non-profit Libra Association and…
The social media giant also released a white paper describing the details of its cryptocurrency along with other useful information. What are the plans for the future?
Facebook opens a subsidiary company called “Calibra” that will be responsible for keeping social and financial data separate and building and deploying services on top of the Libra network.
Also, Facebook will integrate WhatsApp Messenger and Facebook app with its own Calibra digital wallet through which users will be able to perform transactions with Libra coin both online and in retail outlets.
As a stablecoin, Libra is backed by real assets — the Libra Reserve supported by a vast network of traditional exchanges that buy and sell Libra. Respectively, any fluctuations in exchange rates will depend on the current price of the underlying physical assets, such as USD, EUR, and others. Nevertheless, the choice of reserve guarantees less volatility of exchange prices.
The holders of Libra Reserve assets will be distributed around the world within a decentralized and secure blockchain network. Here’s what Facebook says about assets.
Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem (The Libra Association), and support further growth and adoption.
Besides launching its own blockchain platform, Facebook revealed the Libra Association, a non-profit organization based in Geneva. Its founding members, including PayPal, Visa, Mastercard, Uber, and others, backed Facebook coin by investing not less than $10mln in the project. Facebook and other founders have an equal share of governance over the Libra network and Libra Reserve.
By now, the Libra Association has 28 founding members (including Facebook itself), but the social media giant intends to extend this number to 100 participants before Libra’s official launch. The requirements for joining Libra are stated here.
The Libra blockchain stores all transactions in a cryptographically secure digital ledger capable of 1,000 TPS. The network is managed and verified by the Libra Association founding members acting as validating nodes. For a transaction to be added to a blockchain, ⅔ nodes need to reach consensus about its legitimacy.
Irreversible transactions ensure high security of the network. Facebook states that in the case of ⅓ of validator nodes being compromised by a hacker attack, network authorities will timely suspend transactions to figure out the scope of the threat and deal with it. Apparently, the network will be permissioned, but eventually, Facebook plans to make it permissionless.
Like on Ethereum, users will need to pay transaction fees to buy “gas” for running on-chain operations.
Notes for Developers
- Facebook’s blockchain network has the Apache 2.0 license, which guarantees an open-source structure.
- Developers can build and launch dapps on the network with the Move coding language.
- The prototype of the Libra blockchain is already available for testing, with a mainnet to launch sometime in 2020.
- Developers working with the Libra blockchain will have to comply with their local laws and regulations since Libra isn’t centrally regulated.
- The number of available smart contract modules will be limited in the first release: developers will be able to use only those that facilitate payments.
For more information about Facebook’s Libra project, read the official white paper.
As we can see, Facebook is now rapidly entering the blockchain space with solutions that will presumably have significant influence over the blockchain industry. Only time will tell what outcome this event will eventually bring.