Finally, Facebook has released its official whitepaper for Facebook Libra Cryptocurrency a simple global currency and financial asset which empowers the global digital cryptocurrency adoption.
Facebook has decided to introduce easy to use a digital global currency which will be based on the Blockchain technology and can be used anywhere by anyone.
But with the Introduction of Facebook Libra Cryptocurrency, it opened the path for future adoption of other digital currency and it seems to be the transforming face of the new era of the economy.
This guide is to highlight every possible aspect of the Libra, how it works, is it really decentralized, who control the price of Libra coin and how it is going to be used like every single aspect in detail.
We will discuss all in 7 Key Points where we try to identify the potential growth possibility of Libra coin in the digital Cryptocurrency industry.
I tried to scratch from every possible aspect which is been already highlighted by Facebook in their official announcement.
What is Facebook Libra Cryptocurrency
Facebook Libra Cryptocurrency is a Blockchain based digital Cryptocurrency which will be backed by the Centralized currency reserve like USD.
Means this will be like a stable coin Tether, which price will be less volatile, unlike bitcoin. Every Libra coin issued by Facebook will be backed by the equal amount of central reserve.
Libra won’t be managed by Facebook alone but they are planning to have other 100 representatives from companies or the nonprofit organizations.
Which means not only Facebook Govern the Libra coin but there will be another body which will govern the Libra Cryptocurrency.
The idea to create Libra is to create a global currency which can be used by everyone to buy anything at any corner of the world and to minimize current transaction costs and time levied by current financial systems.
Currently, around 1.7 billion of the world population is un-banked and aim of Libra is to provide them this decentralized digital financial system, which will be easy to use without any physical support like banks.
Currently introduced blockchain network are trying to pass the governance and making less transparency in their functioning but Facebook Introduced to build the trust by making transparency in governance.
How Libra Will be Governed?
Libra will be governed by an independent nonprofit organization Libra Association where the aim of Facebook to have at least 100 nonprofit or independent organization.
The headquarter of Libra association will be in Geneva, Switzerland.
Where Libra association will be responsible for all future development and growth planning for this new global digital currency.
Libra will have their council for which each member will work as one member one vote, so in future, if they are planning to take any decision then it requires 2/3 of their voting approval.
Currently Libra has its nearly 30 founding members and they are working on adding more up to 100 and like typical cryptocurrency validator.
All these 100 members will be work as a validator of the transactions and will be incentivized accordingly.
It has all from business, Nonprofit organization, multilateral organizations, and academic institutions.
To become a founding member you must eligible to fulfill their basic terms and conditions as explained here in their official announcement.
It has nowhere specified but I have seen at some places that all these founding members will give around 10 million dollars to become the member or validator node of Libra blockchain technology.
This funds will be used initially to kick start the governance of the Libra coins and Facebook will have the same right or authority in the Libra association like its Peers.
Libra association will be the only authority responsible for creation or burn of the Libra coin as if there is any buyer than New coins will be mint and sold in exchange of fiat currency.
In case any reseller wants to sell back to the association than those coins will be burned as there is no money left to back those coins.
I hope you got the idea more on how Libra association will work now focus on Blockchain network and how it works?
What is Libra Blockchain Network?
There will an introduction of a new blockchain network called Libra blockchain on which the whole concept of Libra coin will works.
Libra blockchain network will be using a new programming language called Move which will be very easy and simple to build smart contract upon the Libra blockchain network.
It will make sure that there will be no duplicacy of the assets and security and safety will be the highest priority of the Libra blockchain network.
Till date, we have heard about Proof of stack and Proof of work mining mechanism to validate the transaction in the network, but Libra will work on the LibraBFT consensus protocol.
Which make sure to not fall network even 1/3 of the node validators got compromised and they are claiming current speed will be approx 1000 transactions per seconds.
Well like Bitcoin blockchain network you and I cannot be the block producer or node-validator as the validators will be the one which are the members of Libra association only.
Which somewhere make this fully centralized blockchain network governed by a body and they can decide the future of the Libra coin.
Libra blockchain network code will be an opensource code and can be used by anyone and using Move you can create your smart contract upon Blockchain network.
Well, Libra blockchain network also ensures transparency and will display every transaction in the open blockchain network like Bitcoin to trace the integrity of the records.
It will be pseudonymous and allow users to hold one or more address which ensures no link with their real-world identity.
How does Libra Coin Will work?
Libra coin will be the digital asset, which we will be used as a global currency and the Libra association will make sure that its price will be less volatile.
They are planning to back up Libra coin with standard reserve assets like government bonds, golds or any less volatile central currency.
You can convert Libra coin to any fiat currency or central currency like USD, EUR, GBP or any local currency based on that current exchange rate.
To transfer money from one place to another and to hold your digital asset you need a wallet like Cryptocurrency wallet.
Hence they have introduced a new wallet called Calibra wallet. This wallet will be easy to integrate with application like WhatsApp and Facebook messenger.
Which means like earlier you were sending Emojis or GIF to friends now you can send money in just a few seconds with Whatsapp and Facebook Messengers.
This wallet will be verified like you do verification for your bank account, so while creating a wallet you will be asked to provide any government ID proof.
Your asset with Calibra will be private and secure which ensure that none of your funds will be stolen and your every transaction will be private with you only.
Calibra is a subsidiary of Facebook but they ensure that your financial data will be not shared with Facebook except in exceptional case.
Calibra may charge a few transactions fees but that will be lower as compared to the current wired or bank transfer and will be very quick to process in seconds.
How Facebook is Going to Make Money?
Well, no service in the world is free even to run that service will require money or support of the people.
Libra association is responsible for the introduction of the new products around Libra blockchain network and Libra coin.
To get services for those products user have to pay money to Libra association like Calibra wallet, which will minor have transaction fees to process any transaction on the network.
Every Libra coin released in the market will be exchanged for central currency and that money will be invested in government bonds, golds or many other assets which will generate interest for the Libra association.
There are few other indirect ways for Facebook is the wide adoption of Facebook as active user payment gateways, which will be like mobile banking for everyone.
Calibra is a subsidiary of Facebook Inc and will be responsible for payment process and integration of the Libra coin with the Facebook platforms.
Future Growth of Libra or Cryptocurrency?
While referring to the stats collected by the statista currently worldwide facebook has around 2.38 Billion active users.
Facebook is also managing other applications like Facebook messenger, Whatsapp, Instagram and maybe in the future more.
Blockchain technology after the introduction of Bitcoin has currently approx 35 million active wallets around the world.
Which means the introduction of a cryptocurrency by Facebook will ensure an increase in the reach or knowledge about cryptocurrency to at least 2.38 Billion active Facebook users.
Currently, around 1.7 billion people which is close to 1/3 of the total population is living without traditional financial systems.
Out of this 1.7 billion at least 1 billion are the active mobile users and out of that around 50% are also using the internet.
This introduction of Libra cryptocurrency for mobile banking which is free from any need of financial institute and easy to use using the mobile devices will change this whole ecosystem.
Well, this introduction of Libra coin may create problem to the current banking systems as it is minimizing the cost of transactions and processing time will definitely attract every user to onboard quickly.
For me, the future of Libra coin looks bright and with the adoption of Libra, it is obvious that the whole Cryptocurrency and Blockchain technology will get new recognition.
Pros and Cons of Libra and Ripple, Stellar
Still, Libra coin is supposed to be introduced in the Q2 of 2020, which has now started to be abused by the other financial institutions.
The only concern at this moment which I can see is Libra is not fully decentralized and will be managed or monitored by the 100 members central authority Libra Association.
The mint or burn of the supply will be in hand of the Libra association and I don’t think there will be any price movement of the coin as it is like a stable coin.
From My point, it is just the fiat currency in the form of the digital asset where instead of Paper or plastic currency you will be using digital currency.
As crypto investors, there is no point to invest unless you want Libra coin to spend on buying goods if it has been accepted at that level.
On another side, it is going to be a big move for those 1.7 billion unbanked people to have them a platform where they can exchange good for a common currency.
Libra can also benefit everyone by setting up a global currency which can be used to exchange for any currency.
You can buy goods, rent a car, can do the shopping and pay for your restaurant bills, etc with just one simple click and no transaction fees
With the Introduction of Libra coin and their strong partner’s vision to make this as the global currency to solve cross border payment systems and the faster transaction speed can create problem to Ripple and Stellar network.
If with Facebook current audience and Libra strong trust among people got enough success to grab everyone attention than Ripple and Stellar might lose its possible wide adoption.
Ripple and Stellar are true cryptocurrencies but their prices are volatile like other cryptocurrencies.
Ripple is governed under Ripple Lab however Stellar is governed by a nonprofit organization, so we have to wait for future to see which one is going to with the race.
My View on Facebook Libra Cryptocurrency
It is obviously a very big move by a global worldwide most famous social media company Facebook Inc.
Worldwide active users of Facebook will be introduced with a kind of digital cryptocurrency currency only 35 million active users are having blockchain wallet.
This Libra coin can introduce or onboard more people in blockchain industry and can transform the era of banking or financial institutions.
Most important is to reach for 1.7 billion unbanked people now onwards they will have some digital asset to transact in exchange of goods.
Well, I am quite optimistic about Libra coin and blockchain technology what do you think about it let me know in the comment.