Based on the Blockchain (but private), it will be managed by a Foundation. Zuckerberg’s ambition is to create a new electronic currency that is easy to use and available worldwide.
Facebook has its own currency. It’s called Libra, and is described as “a simple global digital currency and financial infrastructure capable of empowering billions of people”. Technically, Libra will be based on a secure, scalable and reliable blockchain; it will be supported by a reserve of assets destined to give it intrinsic value and will be governed by the independent Libra Association, established to manage and develop this new ecosystem ”.
It is, in its own way, a historic moment, not so much for the cryptocurrencies that already exist (and indeed today the Bitcoin, which is the most famous, marks the highest quotation for a year or so). How much because, in Zuckerberg’s intentions, Libra will revolutionize finance and guarantee easy, safe and cheap access to services to those who are currently excluded. 1.7 billion people, almost half of the adults in the world, do not have an active bank account, and these numbers are worse in developing countries and even worse for women. “The cost of such an exclusion is high about 70% of small businesses in emerging countries do not have access to credit, and every year migrants lose $ 25 billion to because of remittance taxes ”.
But the advent of the Internet and mobile broadband has allowed billions of people to have access to knowledge and information, to more convenient and low-cost communications and services. For all this today, a 40-dollar smartphone is enough in almost the entire world, and with Libra it will also be possible to use it to access the financial ecosystem.
The Blockchain and cryptocurrencies are decentralized, globally accessible, low cost and secure. But their use in the mass market has been hampered by their volatility and lack of scalability, as well as attempts to disrupt the existing system and circumvent laws that counter money laundering. So today the Blockchain is above all a territory of conquest for hucksters and prophets of digital, even though there is no lack of laudable initiatives and open to the future.
Facebook seems to be starting on the right foot: “We believe that collaboration and innovation with the financial sector, including regulators and experts from different industrial sectors, is the only way to ensure that a sustainable, safe and reliable framework is at the base of this new system. And this approach can represent a huge step forward towards a more accessible, low cost and more connected global financial system, “reads the announcement. According to Zuckerberg’s latest orientation, the idea now is not to destroy but to build, and to do it together.
“With Libra we will allow developers and businesses to build new inclusive financial services products for people around the world. This ecosystem will be supported by the Libra Blockchain, built from the ground up to prioritize scalability, security and reliability, as well as the flexibility needed to evolve over time; and from the Libra Reserve, a reserve of real assets that will support the Libra currency, providing low volatility, broad global acceptance and fungibility, ”notes the document. To increase trust and stability, the social network therefore gives part of the control of this “private blockchain” (a contradiction in terms for purists of technology) to a Foundation. It will not be a monocratic Blockchain, but remains very far from that of bitcoins, which is much more distributed and without owners.
Libra will be a Stablecoin, that is, a digital currency with a parity with the dollar. It will – it seems – a hundred knots and a billion dollars to guarantee the cryptocurrency and to support the project. It will therefore not be a monocratic blockchain, but it is still very far from that of bitcoins, much more distributed and without owners.
The Libra Foundation will have the task of facilitating the development of the Blockchain Libra and managing the Reserve. Members will be geographically and diversified distributed enterprises, NGOs and academic institutions. The initial group of “Founding Members” is already impressive:
– Payments: Mastercard, PayPal, PayU (the technological arm of Naspers’ fintech), Stripe, Visa
– Technology and markets: Booking Holdings, eBay, Facebook / Calibra, Farfetch, Lyft,
– Mercado Pago, Spotify AB, Uber Technologies, Inc.
– Telecommunications: Iliad, Vodafone Group
– Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
– Risk capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
– Non-profit organizations, multilateral organizations and academic institutions: Creative destruction laboratory, Kiva, Mercy Corps, Women’s Banking World
In the coming months, the association will recruit other members and funds to diversify and further support the network: the launch of the Libra ecosystem is scheduled for the first half of 2020.
As a first step, the code for the Libra Blockchain is available from today under an Apache 2.0 license.
Each member of the Foundation will have to invest at least ten million dollars and in exchange will have the right to vote on decisions concerning the cryptocurrency network. Once the initial phase is over, Facebook will be a member like the others, and for this it has created a subsidiary, Calibra, which will develop financial services and products linked to the Libra network. There will be a digital wallet for the Libra coin, which will allow users to transfer funds to each other, as well as keeping their coins locally.
In particular, customers will be able to access the features of the portfolio with an app on iOS and Android, or through Messenger and WhatsApp, which today exceed one billion users. And actually, you won’t need to be a member of the social network to use Libra.
Calibra is registered as a financial services company with the US Treasury Department and is now working to obtain the funds transfer licenses. The subsidiary also intends to follow the guidelines issued by the Financial Action Task Force and other national regulatory authorities, and will not conduct business in jurisdictions that prohibit cryptocurrencies. “Calibra is committed to keeping illegal activities off the platform and working with law enforcement agencies globally,” the factsheet states.
The subsidiary of Facebook will also be responsible for verifying the identity of those using the cryptocurrency. However, financial data and social media profiles will not be linked. “The Libra protocol does not link accounts to a real world identity,” the white paper reads. “A user is free to create multiple accounts by generating multiple key pairs.” The Calibra portfolio will use verification and anti-fraud procedures similar to those currently used by banks and credit card providers, as well as systems to monitor accounts in search of unusual behavior in order to prevent fraudulent activities.
The Coming Year
Meanwhile, a video shows how customers can quickly send money between people: no more difficult to share a photo. A screen appears showing how to share Libra coins, but the app also shows the equivalent in local currency. At the beginning it seems that only the transfer of funds between people is expected: later Calibra plans to expand its services to allow customers to pay bills and purchase goods or services. Wherever a Visa or Mastercard is accepted, it will be possible to use Libra: for the main technology companies and financial institutions that support the project, this could mean access to a huge number of customers, and it is not difficult to imagine why the project is despite its enormous ambition, it could really be successful. But from here to launch, it is not said that Amazon or Apple do not develop alternative payment systems; it is not certain that the central banks welcome the idea of a decentralized currency; and it is by no means certain that States and Organizations will allow Zuckerberg to become even richer and more powerful than it is today.