Facebook has finally unveiled what is arguably one of the worst kept secrets in the world of crypto — Libra, a new stable cryptocurrency looking to finally bring digital currencies to the mainstream. The new technology looks to reshape the way people shop and spend, while allowing the 1.7 billion unbanked people across the globe to properly manage their finances for the first time.
With that in mind, let’s take a brief look at the key takeaways from the Libra announcement:
1. Libra is More Centralized Than Many Cryptocurrencies
To begin with, it appears that there will be at least 28 companies including Uber, Farfetch, Spotify and eBay tasked with ensuring transactions are completed without a hitch, and enforcing the security of the network. This is in stark contrast to popular cryptocurrencies such as Bitcoin and Ethereum, which are secured by tens of thousands of individuals known as miners.
This essentially means that Libra is controlled by a small number of large, wealthy operators, rather than being truly decentralized like most cryptocurrencies.
2. Global Expansion is on the Horizon
Facebook has clearly announced its intention to make Libra available in as many countries as possible. With an apparent interest in serving those without proper access to financial infrastructure, known as the “unbanked,” indicating it has a particular focus on regions including Latin America, southeast Asia, and Africa.
However, expect the cryptocurrency to launch in Europe and the US first, before rolling out to further countries gradually after release.
3. It is a Type of Stablecoin
It is widely thought that the retail adoption of cryptocurrencies has been largely hindered by their volatility since their price can often fluctuate quite considerably. To overcome this, Libra will have mechanisms in place to ensure its value remains largely stable over time.
However, unlike most other stablecoins which peg their value to US dollars, Libra is backed by a basket of assets which are provided by its node operators. Initially, these will be four fiat currencies; EUR, GBP, JPY, and USD, but may expand to other asset classes in the future, such as commodities and stocks.
4. Personal Information is Mandatory For All Accounts
As a cryptocurrency launched by one of the largest corporations in the world, Libra will enforce identity verification requirements on all new accounts. This step is an effort to both protect users and retailers against fraud and comply with the stringent anti-money laundering and Know Your Customer (KYC) regulations being implemented in many countries.
5. Libra is Purchased with Fiat Currencies (Dollar / Euro / Pound)
According to the current version of the project Whitepaper, users will be able to acquire Libra in two major ways. The first will be by converting their fiat currencies into Libra at a specified exchange rate using the Libra app. Secondly, users will be able to acquire Libra from several cryptocurrency exchange platforms, which are yet to be announced.
6. It Launches in 2020
As it stands, the project is still in the relatively early development stages, being developed by Switzerland-based non-profit the Libra Association. Facebook currently has the goal of launching the Libra blockchain within the first half of 2020, but has not yet provided details when the platform will be available for public use.
7. Transactions Will Be Fast
Like physical cash that can be transferred from person to person in an instant, Libra is designed to ensure the transfer of Libra is similarly fast. This means there should be little to no waiting for transactions to confirm, unlike other cryptocurrencies like Bitcoin and Ethereum which can often take several minutes or more to finalize.
8. Transactions will be low-cost
Cryptocurrencies are renowned for allowing users to transfer value across borders for just pennies. Facebook’s Libra appears to be in keeping with this trend, promising low-cost international transactions, helping those without proper access to financial infrastructure easily move their money around.
As of yet, Facebook has not revealed exactly how cheap transactions will be, but did remark that it is low enough to be used for everyday payments such as food and travel.
9. Smart Contracts are Coming
Facebook’s new cryptocurrency will be running on a new programming language known as “Move,” which was designed to ensure the blockchain remains extremely secure, while also being flexible enough to be used to implement custom transactions and smart contracts.
Though these features likely won’t be present at launch, it may not be long before we see the first dApps (decentralized apps) running on Libra. This could mean that third-party apps and games might be in the pipeline.
10. Use Libra to Purchase Products and Services
One of the things that make Libra stand out as a promising prospect is the sheer number of partners it will launch with. To name just a few, Mastercard, PayPal, Visa, Spotify, Uber, eBay, Farfetch and Vodafone are all on-board with the project, meaning the cryptocurrency could find significant support at launch.
Beyond this, Facebook hopes to have around 100 members as part of the Libra Association by the time the blockchain launches next year.
For more information on Libra, including the benefits of using the cryptocurrency, head to BeInCrypto.
- Words: Daniel Phillips and Max Furr