There is no news in the fact that Facebook changed the way people look at the internet. What once was just a small platform rapidly became a business juggernaut, with a revenue of US$70.7 billion. Nevertheless, the empire is still hungry for more- which is clear given the plans of launching a digital currency called Libra. The first white paper was published back in June 2019. However, plans were modified along the way, especially to circumstances involving regulatory and legal aspects.
As the influence of the platform is spread worldwide, in addition to their huge capacity to provide cashflow into the idea, the original idea would be able to compete for face-to-face with currencies like the US dollar or EUR. Recently, the Libra Association has already launched a new whitepaper for Libra V2.0.
In this article, we present an in-depth overview of the Facebook coin Libra and what its impact promises to be.
What Is the Facebook Coin Libra?
The Facebook coin is still a proposal even to this day. The plan is to launch a permission blockchain digital currency. The project, currency, and all the transactions are to be managed by the Libra Association.
Also responsible for the cryptographic technology behind the project, the Libra Association is a membership organization established by Facebook that includes several companies from various industries. Amid these companies, there are giants from the payment sector, technology, telecommunications, venture capital, and even nonprofit organizations.
According to their brand-new V2.0 white paper, four key aspects define the new project. Their mission is to:
- Offer single-currency stablecoins, in addition to the multi-currency coin (the original plan would feature only this last possibility).
- Enhance the safety of Libra’s payment system by structuring and maintaining a robust compliance framework.
- Abstain from a future transition to a permissionless system, while maintaining its key economic properties.
- Build strong protection set into the design of the Libra Reserve.
Facebook Coin Technical Infrastructure
Unlike Bitcoin (BTC), Facebook’s Libra won’t rely on mining at all. At the first stage, only members of the Libra Association will be capable of processing Libra’s transactions.
The plan was that as time goes by, the system would begin transitioning to a permissionless PoS (Proof-Of-Stake) model. This phase was planned to begin within five years, counting from the project’s launch.
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However, the personnel involved behind the stage has already admitted that there isn’t a solution to deliver the scale, stability, and security needed to support the colossal structure of Libra using a permissionless network.
One aspect that remained intact in the 2.0 version compared to the original project is the MOVE. Planned to be a statically-typed programming language compiled by bytecode, MOVE is the Libra blockchain’s proposed smart contract. It is also the custom transaction language, making the project unique in terms of both technical and operative innovation.
Monetary Infrastructure – The Facebook Coin Price And Other Financial Aspects
Originally planned to rely on a multi-currency system backed by several currencies, Facebook’s Libra is now oriented in another way- according to the V2.0 whitepaper. Now the project offers:
- A multi-single currency stablecoin (LibraUSD, LibraGBP, LibraEUR, LibraSGD).
- A multi-currency token, called Libra (LBR), backed by USD, GBP, SGD, and EUR.
The initial reserve will be provided by members of the Libra Association. It’s an important aspect, given that Facebook’s Libra is being designed to sustain its value against volatility (which is unlikely when it comes to most cryptocurrencies). This reserve now has an amount of approximately US$ 270 million, but this value is expected to reach a colossal US$ 1 billion before the launch.
This unique multi-currency token system will be defined entirely by the Libra Association in consultation with regulators, central banks, and international organizations. It includes the IFM (International Fund Management), under the guidance of its main regulator, FINMA (Financial Market Supervisory Authority).
Facebook Coin Native Wallet
Usability is another cornerstone of Libra, so the project will feature a native wallet called Novi. Originally named Calibra, Novi is being designed as a Libra-based wallet with WhatsApp and Messenger integration.
How Will It Be Possible To Buy Libra Coins?
As the plan is to make it easier for people to buy Libra coin, Facebook’s team has had discussions with digital exchanges on listing the cryptocurrency. This is a clear sign that Facebook is not planning to hold it tied exclusively for the platform’s users, but rather release it as a real currency to be bought, sold, and traded elsewhere.
As the project is still in the pre-launch stage, it is not possible to track the Libra’s price or evaluate it compared to other cryptocurrencies. However, many specialists in the field see this new system as a promising gateway to the future of digital finance. Even though the project has changed its guidelines a little bit, the main goal is still to reinvent money and the way people deal with it.
A Bit Of Controversy
So far, the project has faced some criticism and opposition from central banks and other traditional financial institutions. They questioned the implementation of a cryptocurrency as a sovereign currency, which they consider to be upheaval regarding the regulatory and legal aspects.
The French Finance Minister, Bruno Le Maire, even warned the French Parliament about legal and regulatory breaches that would turn Libra into a way to perform money laundering and terrorism finance.
In the U.S, the reception was no different. Different figures in Congress, FED (Federal Reserve), and several regulatory agencies warned about issues involving privacy, national security, trading, and monetary policy.
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Even President Donald Trump stated in his Twitter account that “If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations.”
These and other controversial events led to a route change along the way, as it is noticeable in the V2.0 white paper. Now the project employs rigid compliance and regulatory mechanisms, including Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), compliance with sanctions, and several other aspects.
Will The Facebook Libra Change The Financial World?
It is undeniable that Facebook Libra brought some impact to the global financial scenario, even before its launch. Despite the significant differences between the original white paper and the 2.0 version, the Facebook Coin is still a potential bridge to connect the current financial world to the next stage.
While the Facebook coin Libra release date was not fully revealed yet, it is projected to be launched until the end of 2020.