The world’s leading social media company says it’s ready to challenge bitcoin’s hegemony as the pre-eminent digital currency. Facebook, Inc. has just confirmed that it will indeed launch a cryptocurrency dubbed Libra in 2020, ending years of speculation regarding its cryptocurrency roadmap.
Facebook CEO Mark Zuckerberg released the Libra whitepaper on Tuesday morning provide more details regarding what the new crypto is supposed to achieve.
There are reports that FB will allow its vast user-base of more than 2 billion to purchase goods and transfer money with Libra at zero fees.
Bitcoin challenger?
(Click to enlarge)
Source: The Verge
Libra will probably draw the attention, maybe even some trepidation, of bitcoin enthusiasts. But maybe they need not get too worked up.
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Unlike bitcoin which is purely a speculative asset, Libra belongs to the so-called stablecoin category, meaning it will be backed by actual physical assets pretty much like Bitmain’s Tether in a bid to make it less volatile. Libra, though, will probably be bigger than Tether since it will enjoy the backing of no less than 27 multinational organizations including Visa, MasterCard, Coinbase, Spotify, eBay, Stripe, PayPal, Xapo and Lyft among others.
These companies will contribute to the Libra Reserve and will oversee the development and maintenance of the network once FB cedes its management by the end of the current year.
The network is likely to continue expanding with FB saying it will continue to recruit new members until the product is officially launched in a year’s time. The Libra Organization will be headquartered in Geneva, Switzerland.
Facebook's dive into cryptocurrencies sees Libra becoming a useful digital currency in poorer countries where citizens lack access to traditional banks. Eventually, the cryptocurrency is expected to evolve into a fully-fledged mainstream cryptocurrency that will support the entire financial ecosystem including online payments, banking services, loans and credits.
An important distinction from bitcoin-- Facebook is open-sourcing the Libra blockchain under the Apache 2.0 licence, meaning that anybody is free to experiment and build their own proprietary services atop the blockchain. In this regard, Libra looks more like ethereum than it does bitcoin. FB says Libra is designed to work with, not compete against, traditional financial institutions including banks and payment services providers. According to Facebook’s blockchain chief David Marcus:
‘‘You’ll see banks on this between now and next year, because if we bring on another billion people, they’ll need savings accounts, loans, and things banks are very good at.”
The Libra white paper says:
“Imagine an open, interoperable ecosystem of financial services that developers and organizations will build to help people and businesses hold and transfer Libra for everyday use. To enable the Libra ecosystem to achieve this vision over time, the blockchain has been built from the ground up to prioritize scalability, security, efficiency in storage and throughput, and future adaptability.”
Another important difference: Libra will be much more eco-friendly since it will not consume as much electricity to mine as its older brethren.
But here’s where it gets even more interesting: Facebook plans to create its proprietary cryptocurrency it has named Calibra that will run on the Libra blockchain. Instagram’s product chief Kevin Weil has told the Verge that Calibra will run on the Libra blockchain; live inside of Facebook Messenger and WhatsApp at launch but also be available as a standalone product on iOS and Android devices.
Connecting the world
Ultimately, Facebook sees Libra as another project to help it achieve its ambition to connect the world pretty much like its rather controversial Free Internet initiative.
Meanwhile, Bitcoin has been on a tear lately, with some starry-eyed punters now saying $1million BTC remains a possibility. Of course, it’s this kind of crazy volatility that makes bitcoin so popular with speculators and, by the same token, its lack thereof is likely to make Libra less attractive to this group.
By Alex Kimani for SafeHaven.com
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