On June 18, 2019, Facebook announced the developments of its cryptocurrency called "The Libra Coin" that will roll out this year (2020) to dominate the global cryptocurrency market and allow its 2.50 Billion monthly potential users across the world to make an easy financial transaction online through the libra ecosystem.
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Since then, people all over the social media, podcasts, forums, and even international news agencies are debating the pros and cons of how Facebook Libra can change the landscape of Banking, Advertisements, Industries, Businesses, and the Global Economy. As part of our scrutiny, there are many questions arisen such as: why Facebook is doing this? Is this safe? Is Libra open-sources? Is this a digital currency or a cryptocurrency? How about transparency? Can we trust Facebook? With this speculations, here are 10 facts about Facebooks Libra that you need to know:
1. Libra is Mark Zuckerberg's New Year's Resolution.
On January 4, 2018, the overachiever Mark Zuckerberg posted a list of new year's resolutions on his Facebook account. One of these lists indicates that he is investigating the different aspects of cryptocurrency and its technologies, its potential improvements, and how they can use cryptocurrency on their platform.
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May 2018, Facebook has built a new division that's dedicated to blockchain technology. This division is led by David Marcus - previously Facebook VP of Messaging Products (Messenger App) and former PayPal President. Facebook also appointed Senior Engineer Evan Cheng as Director of Engineering and former VP of products at Instagram Kevin Weil as VP of Product at their blockchain division. After several months, Facebook acquired Chainspace - a blockchain startup to absorb most of its employees into its blockchain division. At first, the cryptocurrency was called "GlobalCoin", "Facebook Coin", and even "Zucker Bucks". But on June 18, 2019, Facebook formerly announces that the official name of their cryptocurrency is The Libra Coin.
2. The Libra name and symbol were inspired by Ancient Rome.
According to Facebook, the name libra was inspired by three things: (1) Libra came from the unit of weight used by the Roman Republic on Ancient Rome. Today, Libra (uncia) is called Pounds (lb.) and its estimated value today is 12 uncia is equal to 3/4 pounds. (2) Libra evokes the French "libre" or "Free". (3) Libra reflects the astrological symbol (zodiac) which is known as the "Scales of the Balance" or constellation Libra.
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The libra symbol ≋ is a wave that represents a back and forth movement of energy the flow between people, places, and money.
3. The Libra Ecosystem is controlled and run by the new "Crypto Oligarchs" called The Libra Association.
The Libra Association is a 22 member independent and non-profit that is based in Geneva, Switzerland to oversee all libra transactions that are real. The founding members of these associations are as follows according to the libra association website:
- Payments: PayU
- Technology and Market Place: Facebook Calibra, Farfecth, Lyft, Spotify, Uber, Shopify, Tagomi
- Telecommunications: Iliad
- Blockchain: Anchorage, Bison Trails, Coinbase, Xapo
- Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, USV
- Non-Profit, Multilateral Organizations, and Academic Institution: Create Destruction Lab, Kiva, Mercy Corps, Women World Banking
To join the association, a minimum of $10 Million (this will go to the libra reserves) is required to gain one (1) vote on the libra council to determine what will happen to the coin. Each member has the option to run a validator node and they are also entitled to a share from the earnings of libra reserves investments.
Unfortunately, Mastercard, Visa, PayPal, Stripe, eBay, Booking Holding, Vodafone, and Mercado Pago pulled-out their coalition to the association due to some regulatory issues faced by Facebook around the world.
4. Joining the Libra Association is only exclusive for Big or Mega Companies.
Facebook aims to have 100 founding members before the official launch of Libra. The criteria to become a member are as follows:
- A company must have a market value of $1 Billion or greater
- Reach more than 20 million people a year
- And Be recognized as an established top 100 industry leader by a third-party association.
If a company doesn’t meet any conditions above, the applications can be approved by the libra association council if the participant would make a meaningful contribution to the network.
5. The Libra Blockchain is built from scratch.
Unlike most cryptocurrency projects that are built on top Ethereum, the Facebook blockchain division team decided to design and develop their own blockchain called "Decentralized, Programmable Database" where they claimed that all transactions and data are on their Markle Tree will have an authenticator value which is similar to the Markle Tree used by a normal Blockchain. This build is expected to do the following requirements:
- Facebook needs to scales its 2.5 Billion potential users that will require a high TPS (transaction per second), low latency (minimal delay), and high capacity storage. Currently, Libra blockchain can handle 51,000 TPS (test only) which is higher than Bitcoin's 7 TPS and Ethereum 15 TPS.
- The security should be implemented correctly on Libra Core. This includes source control, open-source library dependencies, build systems, release management, funds, financial data, and your Facebook account information.
- Low transaction fees (gas) during normal operations.
- And a flexible blockchain ecosystem that can power the economic and governance policies that support its financial services.
6. The Libra Blockchain is Private and Centralized.
According to the libra blockchain whitepaper, libra is currently a "permissioned blockchain" model - also known as the Close Ecosystem. This model adopted and improved by Facebook has different characteristics that might concern the public- some characteristics are as follows:
- The libra blockchain can be run only by all defined participants which are the members of the Libra Association that will define the consensus and controls the governance of the blockchain. In other words, they decide who can validate transactions on their ecosystem.
- Libra is not decentralized (some call it half-decentralized), it relays on trust in the Libra Association as the de facto central bank.
- Unlike most transparent cryptocurrencies, Libra Transparency is close to the public and all transactions are not traceable. Which means all audits and logs are done by the Libra Association.
- Secure but No Anomality since Libra wallet called "Calibra" requires us to provide our personal information and a government-issued ID as part of the KYC anti-fraud process. The libra association is mandated to monitor all activities and report such activities to the authorities.
- Mining is not required.
- Scaling a large number of transactions is improved.
After 5 years, the libra associations plan to shift the current model to a decentralized blockchain called "permissionless blockchain".
7. Libra is Open Source.
The Libra Blockchain is open-source and licensed under Apache 2.0. This means that anyone (who is capable) can validate, debug, and inspect the libra source-code for any anomaly. Developers can use the source code to create new and innovative applications that will take full advantage of the libra ecosystem.
Official GitHub Channel of Libra: https://github.com/libra/libra
8. Libra is a stable coin.
The value of the Libra coin will be tied to the value of real-world assets. This means that a stable coin gets its stability by using a regime called pegged exchange rate or a fixed exchange rate where the value of libra is fixed against a currency or currencies value.
9. Libra Coin has an unlimited supply.
Unlike bitcoin with 21 Million BTC total supply, The libra association has complete control over how much libra coin there is. Once the user's supports this platform, a central bank approved by the libra association can just create or destroy a libra coin once an exchange (from fiat currency to libra coin exchange or vice versa) is done.
10. Facebook Co-Founder Chris Hughes is against Libra.
The Facebook co-founder Chris Hughes termed the new cryptocurrency (Libra) "Frightening" due to the following reasoning:
- Facebook cryptocurrency can shift the control of monetary policy from central banks to private companies (the libra association) once implemented.
- The private companies might put their interest first ahead of the public's interest.
- Once the association controls the global currency, their economic involvement can disrupt and weaken any state or nation - they can even control it.
- And Facebook has privacy issues regarding tracking user activities and more concerns.
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