Facebook recently announced it will be launching its own cryptocurrency in 2020 called the Libra coin. The coin will be available for Facebook’s two billion users under the ‘Calibra’ project.
Facebook has shared Libra’s white paper which states that its mission is to act as a simple global currency that empowers billions of people. The company stated that the internet has brought about so much for this generation, but there are still many things to improve on.
The Libra team explained that blockchain and cryptocurrencies have the potential to address some of the issues that currently surround accessibility and trust. Blockchain can bring about distributed governance, meaning that no single entity can control the network. Blockchains are also open, which means that anyone with an internet connection can participate.
The white paper reads: “We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure, and trusted framework underpins this new system. And this approach can deliver a giant leap forward toward a lower-cost, more accessible, more connected global financial system.”
What is Libra?
Facebook claims that the world needs a truly reliable cryptocurrency that can go hand in hand with a great infrastructure to deliver “the internet of money”. Libra hopes to do this and become the global currency and financial infrastructure that will empower billions of people.
Libra will be built on a secure, reliable, and scalable blockchain. It will also be backed by a reserve of assets to give the coin its intrinsic value. To promote decentralisation, the coin will also be governed by the Libra Association, an independent group tasked with evolving the ecosystem.
Unlike the majority of cryptocurrencies where prices can be volatile, Libra promises to be stable over time due to it being backed by a reserve of real assets. Short-term governance securities will be held in the Libra Reserve to back every Libra coin created, with the aim to build trust in the coin’s value.
The Libra coin will be a global, digitally native currency with the aim to bring together the attributes of stability, global acceptance, fungibility, and low inflation.
Libra is designed to be backed by the Libra Reserve and supported by a network of exchanges that will buy and sell the coin. This means that anyone who owns Libra will have trust that they can convert it into local fiat currency based on an exchange rate at any time – similar to exchanging one fiat currency for another when planning to go abroad.
Unlike some fiat currencies that are backed by gold, Libra will be backed by a collection of low-volatility assets. These will include bank deposits and short-term government securities from reputable central banks.
The currency will be built on the Libra Blockchain. The blockchain will be open source, meaning anyone can build on top of it. The goal of the Libra Blockchain is to have billions of people depend on it for their financial needs.
It wants to serve as a solid foundation for all financial services, including Facebook’s new global currency. Facebook wanted to create a new blockchain that is able to scale billions of accounts that require high transaction throughputs and low latency. It also needs to be highly secure to ensure the safety of all data and funds. The final requirement is that the blockchain needs to be flexible. This is so it can power the ecosystem and all future innovation in the financial sector.
The Libra coin is still in its infancy, but already the coin is aiming to create better, cheaper, and more accessible financial services. Make sure you keep up to date with Coin Rivet to hear all about this new and exciting digital asset.