Facebook has revealed details about its Libra cryptocurrency, which will allow users of the social network par excellence to exchange money with almost zero commissions. You can buy online or from authorized retailers using the ‘wallet’ app, including Calibra, which Facebook will launch together with the cryptocurrency in 1st half of 2020. And that will be included in WhatsApp and Messenger.
How does Libra from Facebook work?
The Zuckerberg company today released a “white paper“, where it illustrates the corporate intentions regarding Libra and how the blockchain of its cryptomoney will work.
Facebook will not fully control Libra, but will have a vote on the board of directors, which will also include Visa, Uber and Andreessen Horowitz. All companies on the board have invested ten million dollars in the company.
The Libra association will promote the Libra blockchain (which will remain open-source, according to Facebook) and will try to adopt the Move writing language. Furthermore, it will press for more companies to accept Libra as payment.
Calibra, the subsidiary company behind the wallet app, will guarantee the privacy of users, ensuring that your Facebook account data is never associated with those related to blockchain payment. So Facebook will not earn money by selling advertising on this product, but on the interest of the money deposited in the money reserve that serves to maintain the value of stable Libra (therefore more like a central bank than as a usual cryptocurrency).
Who will be part of the Libra association
Unlike other cryptocurrencies, Facebook intends to guarantee the stability of Libra by joining together with large partners who, collectively, should ensure that the value of the cryptocurrency is as stable as that of the dollar or the euro.
To do so, it requires strict standards to become part of the company. Server space, a dedicated internet connection of at least 100mbps, an engineer dedicated only to server maintenance, cutting-edge security.
Furthermore, member companies must be worth at least one billion dollars on the stock exchange, or reach $ 500 million in traffic with customers. They must reach at least 20 million people a year and be recognized in the top 100 companies in their sector.
Facebook aims to reach 100 members by the end of the year. For now, big names in the banking world have joined, such as Visa, Mastercard, but also Paypal. But also companies in different fields such as Spotify, eBay, Vodafone, Uber and Iliad.
The members of the association will then elect 5 to 19 representatives, who will be part of the board of directors. Each company or group, including Facebook, may have a maximum of one vote, or one percent of the votes, within the Libra Association.
This should ensure that Facebook (or Google, if interested in joining the competition association), will not be able to manage the global cryptocurrency market (as they already do for online advertising).
All these guarantees will also serve to stabilize the value of Libra. It is not yet decided, but it should be something close to the value of a dollar.
How does the Libra Blockchain work?
Every payment made with Libra will remain permanently written in the Libra Blockchain: a cryptographically authenticated database, which is designed to hold 1000 transactions per second.
The database is operated and controlled continuously by the founding members of the Libra Association, who have invested 10 million for this privilege. This should ensure that there are no problems like the one that caused millions of dollars to be lost in Quadriga cryptocurrencies a few months ago, since there is no single founder who can die without leaving the server password written.
When a transaction occurs, if two-thirds of the nodes linked in the blockchain recognize the legitimacy of the transaction, then the transaction is written to the registers. Obviously, the operations already written in the Libra register cannot be changed.
If hackers attack more than a third of the servers, the association will interrupt the transactions to understand the extent of the damage.
The transactions will not be entirely free. A small fraction of a cent will be charged for each exchange, in order to pay for server maintenance costs. For consumers, this percentage will be practically nil, but overall it should cover transaction management costs.
Everything will be written with Move, a new language that was launched, to get developers ready for the launch of 2020 books.
Will the Facebook cryptocurrency take hold?
Today it is difficult to determine the success of such an ambitious operation. Facebook has experienced a huge decline in confidence over the past four years. And it is more than understandable that many private users will be afraid to trust a project of such vast scope. But the fact that the use of a cryptocurrency, for the first time, will be available on smartphones of practically anyone (who doesn’t have WhatsApp or Facebook on the phone?) Could really change things.
For sure, many large companies are launching on the Facebook train for this venture. In the face of those who want to unbundle Facebook: the Zuckerberg company is ready to devour another huge slice of the world market.