Is Facebook’s Cryptocurrency ‘Libra’ The Future?


Facebook Cryptocurrency Lbra
Image Source: Shutterstock

Is Facebook’s Cryptocurrency ‘Libra’ The Future?

Libra has not even released but it is already stuck in a web of regulations, doubts, and skepticism from a plethora of communities including the governments, banks, and the cryptocurrency leaders. In a time where the general public holds blurry outlines about cryptocurrency, Libra has only added to the confusion of regulators and mass.

In such times, one of the prominent questions is “Is Libra The Future?”.

Before we move on to answer the question, let’s figure out what Libra is and what its whitepaper states.

Some FAQs Around Facebook Libra

What is Libra?

Facebook has created its own border-less cryptocurrency built on its own blockchain known as the Libra blockchain. To value the coin, Facebook has created Libra reserve. For every Libra created a collection of currencies and other assets will be serving as collateral. The process is supposed to form trust in its intrinsic value.

Read Also: Facebook’s GlobalCoin and Project Libra: Explained in a Nutshell

What do you need to get started?

As of now, you cannot do anything. Facebook has only released the whitepaper (a roadmap describing the whole operation of its coin). Upon release, you will have to use Calibra, a Libra based wallet also created by Facebook. You can exchange fiat currencies in exchange for Libra on Calibra. To register, you will need a government-issued ID. This step will help tackle fraud and ensure that users are real.

Where will you be able to use Calibra?

Facebook has developed a standalone app that can be downloaded in the App Store and Google Play. Since it is Facebook, it will also have integration in WhatsApp and Messenger. Sending money will truly be as easy as sending a photo.

What can you use Calibra for?

Calibra is meant to be used by everyone for almost every possible transaction. Money can be transferred between people around the globe anytime, almost instantly. As Libra does not fluctuate like other cryptocurrencies, it is safe to use for as a store of value. Everyday transactions can be performed on Calibra with ease.

Will Calibra charge less?

Libra aims to lower or cut the transaction fees, so it will be comparatively really less and transparent even when transferring money internationally.

Is Calibra available in your country? What countries is Calibra available in?

Libra is trying its best to make it available to almost everyone, anywhere in the world. Specific details of countries are still not available but we can expect that it will cover most of the nations.

You might also like reading this: India: Facebook’s Libra Launch Might be Restrict Due to RBI’s Policy Concern

Can you use your local currency in Calibra?

Calibra is made for Libra, that means every transaction made using Calibra is in Libra. However, you can convert your local currency into Libra and add top-up your wallet. Moreover, you can convert the Libras into your local currency anytime you want. You will also see the exchange rate when topping up or withdrawing your wallet.

How will Facebook prevent fraud?

As mentioned above, all the users will be verified with a government-issued ID. That significantly drops the rate of fake accounts on Calibra. Two-factor authentication will further tighten security. Facebook and WhatsApp account information will help verify the identity as well. Calibra will also have reporting and dedicated customer service built in the app. If a fraud still takes place, you will get a full refund.

You might also like: Bitcoin Still King As 98% Americans Show No Interest In Libra

Can you still use Calibra if you don’t have a Facebook, WhatsApp, or Messenger account?

Yes. The standalone app will allow users who do not have a Facebook, WhatsApp, or Messenger account to register on it.

What’s the relationship between Calibra and Facebook?

Calibra is a new vertical of Facebook Inc, it is the subsidiary of Facebook. Note that Calibra operates independently.

Can businesses use Calibra?

In the first version of the Calibra app, peer-to-peer payments will be supported. Small merchants can use small features such as QR codes to accept payments in Libra. Over the course of time, there will be many new other features introduced for businesses.

Libra Whitepaper in a Nut Shell

Libra is a border-less cryptocurrency based upon the Libra blockchain technology. Libra Association will take complete care of Libra. The coin is completely backed by the Libra reserve and only holds value equivalent to that in the reserve. The reserve is a collection of currencies and other assets that will serve as collateral.

The peer to peer system is a private permissible blockchain which is constructed with the hope of becoming publicly decentralized eventually. A new programming language named “Move” has been used to engineer this master plan. As of technical specifications, it uses a consensus algorithm from VMWare known as HotStuff. It has neglected the proof of work as it is slow and would hinder the idea of growth in the future.

As of now, there are around 28 partners. By the time of launch, Facebook aims to have at least 100 partners. Recent reports state that major players like Uber, Mastercard, and Visa have invested $10 million and we can expect the same fee to partner with Libra.

To the question of decentralization, Facebook has made Libra an independent subsidiary of itself. Situated in Geneva, Switzerland, the Libra association will operate completely independent. Moreover, every decision made inside of Libra association will be based on the number of votes of the members, giving the least power to each shareholder.

The Libra association is an integral part of Libra as it will be responsible for its operation. From the mining of coin to the resolution of queries, everything will be under its control.

To handle security and prevent fraud, Facebook will require a government-issued ID proof for registration and enable two-factor authentication (relief for FaceID users). The blockchain is already a secure network.

Is Libra the future?

Libra is an ambitious project by Libra association. To determine whether it is the future we need to look at how it compares to the existing technology. Libra offers to be a global digital currency and it is in direct competition to banks.

Let’s see how it compares to most of the existing cryptocurrencies.

  • Key Differences between Libra and Bitcoin
Parameter LIBRA BITCOIN
Use A stable medium of exchange. Same as Libra but can be used as investment and store of value.
Volatility Low High. Prone to price swings.
Blockchain Libra Network. Permissioned. Bitcoin. Public and Permissionless.
Throughput 1,000 TPS (claimed) 3.87 TPS (All time high, as of Feb 2019)
Latency 10 seconds (claimed) 8 minutes (average)
Consensus Algorithm Modified BFT (Byzantine Fault Tolerance).  PoW – Proof of Work.

Relatively slower.

Programming Language Move – created by Facebook C++
  • Key Differences between Libra and XRP
Parameter LIBRA XRP
Use A stable medium of exchange. Same as Libra. Additionally, can be used as an investment. Primarily made to make global transactions faster.
Volatility Low High. Prone to price swings.
Blockchain Libra Network. Permissioned. RippleNet. Semi-permissioned.
Throughput 1,000 TPS (claimed) 1,000 TPS
Latency 10 seconds (claimed) 3.5 seconds (average)
Consensus Algorithm Modified BFT (Byzantine Fault Tolerance).  RPCA (Ripple protocol consensus algorithm) 
Programming Language Move – created by Facebook C++
  • Key differences between Libra and Ethereum

 

Parameter LIBRA ETHEREUM
Use A stable medium of exchange. Same as Libra. Additionally, can be used as an investment and for decentralized apps.
Volatility Low High. Prone to price swings.
Blockchain Libra Network. Permissioned. Ethereum. Public and permissionless.
Throughput 1,000 TPS (claimed) 15-20 TPS
Latency 10 seconds (claimed) 15 seconds (average)
Consensus Algorithm Modified BFT (Byzantine Fault Tolerance).  PoW (Proof of Work) 
Programming Language Move – created by Facebook Solidity.

As we can see that Libra takes over some of the cryptocurrencies in terms of technical aspects. We cannot determine its comparison with all the cryptocurrencies because there are more than 2,000 of them.

The trump card of Libra is Facebook’s huge userbase of 2.4 billion people monthly. According to Jameson Lopp, “Libra coin is not a threat to Bitcoin. If anything, it will help a lot of people take one logical step closer to the finale.” He shared this meme along with the tweet.

However, Libra has been stuck in the web of regulations from various governments. Here is how every government has reacted to the launch of Libra.

UNITED STATES OF AMERICA

  • 18 June 2019: Representative Maxine Waters, Chairman of the House Financial Services Committee, summoned Facebook to halt any ongoing development of Libra until they evaluate Libra and Calibra completely and discuss potential risks. Facebook did not respond immediately.
  • 2 July 2019: US Congressional Committee has officially sent out letters to Mark Zuckerberg, CEO of Facebook, Sheryl Sandberg, COO of Facebook, and David Marcus CEO of Libra. They request a moratorium on Libra.

UNITED KINGDOM

  • 18 June 2019: Facebook’s Libra cryptocurrency payments initiative could be subject to the “highest standards” in global regulation, said Mark Carney, the governor of the Bank of England.
  • 25 June 2019: The United Kingdom Treasury in collaboration with the Bank of England and other major UK’s financial regulators are using synergistic opinions to scrutinize Facebook’s newly revealed cryptocurrency project, Libra.
  • 1 July 2019: UK lawyer “Dan Neidle” investigated the tax issue that Libra can possibly impose on UK users. This would be a hurdle towards mass adoption.

FRANCE

  • 18 June 2019: The French Finance Minister Bruno Le Maire, who has been supportive of blockchain endeavors in France, called for a regulation on Libra. He raised concerns regarding security, terrorist funding, and privacy.

INDIA

  • Economic Times’ report suggests that Libra may not be available in India. The report comes in light of India’s alleged plan of banning cryptocurrencies.

CHINA

  • China with its strict regulatory policies may never allow Libra.

INDONESIA

  • Indonesia’s central bank showed its concern by asking Facebook to review its Libra plan again.

G7 COUNTRIES (France, Germany, Italy, Japan, the United Kingdom, the United States, and Canada.)

  • G7 countries gathered to form a task force to review Libra. The G7 comprises leading world economies France, Germany, Italy, Japan, the United Kingdom, the United States, and Canada.

JAPAN

  • Bank of Japan’s deputy governor Masayoshi Amamiya warns Libra to comply with regulations on money laundering and risk management while speaking to Reuters. He said, “As for Libra, we must bear in mind that the potential global user-base could be enormous.”

SINGAPORE

  • Singapore’s central bank, the Monetary Authority of Singapore wants more information on Libra as reported on 27 June 2019.

RUSSIA

  • “No one is going to introduce a ban. A large number of businesses ask when it will finally be possible to legally conduct an ICO [initial coin offering] transparently. This will definitely be regulated, permitted, and that is about it,” said Moiseev, Deputy Finance Minister. He added, “The use of cryptocurrencies to pay for goods and services will always be prohibited in Russia”. Facebook Libra will get the same treatment.

UNITED STATES OF AMERICA

US Congress has sent out letters to Libra officials.

UNITED KINGDOM

Libra will face the highest regulations.

FRANCE

Raised concerns around money laundering, terrorist funding, and privacy.

INDIA

Economic Times says Libra may not come.

CHINA

Strict crypto policies may not allow Libra.

G7 COUNTRIES (France, Germany, Italy, Japan, the United Kingdom, the United States, and Canada.)

Form a task force

JAPAN

Warns Libra to comply with regulations on money laundering and risk management.

SINGAPORE

Wants more information

RUSSIA

Treat it like any foreign currency. Illegal to pay for services via crypto.

With so many jurisdictions taking their take on Libra, it appears quite tough for Libra to get out of the regulations’ web easily. The next question is, will Libra make it to the daylight? Nobody knows the correct answer to that. We have to wait and see how things unfold.

Summary
Is Facebook's Cryptocurrency 'Libra' The Future?
Article Name
Is Facebook's Cryptocurrency 'Libra' The Future?
Description
Libra has not even released but it is already stuck in a web of regulations, doubts, and skepticism from a plethora of communities including the governments, banks, and the cryptocurrency leaders. In a time where the general public holds blurry outlines about cryptocurrency, Libra has only added to the confusion of regulators and mass.
Author
Publisher Name
Coingape
Publisher Logo
Disclaimer The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Author: Abhinav Agarwal

A blockchain enthusiast, my expertise extends to marketing and advertising through which I was able to help a few notable startups in generating initial traction. Follow me on Twitter at @abhinavagrwl94 and reach out to me at abhinav[at]coingape.com

Post your comment...
Abhinav Agarwal 98 Articles

A blockchain enthusiast, my expertise extends to marketing and advertising through which I was able to help a few notable startups in generating initial traction. Follow me on Twitter at @abhinavagrwl94 and reach out to me at abhinav[at]coingape.com

Follow Abhinav @