After months of anticipation, Facebook has just unveiled its cryptocurrency, dubbed Libra. There is a lot of information to unpack, and The Block has distilled the announcement into most important points to save our readers time.
1. “Low-volatility” cryptocurrency
Through a separate entity called the Libra Association, Facebook has announced the launch of “low-volatility” cryptocurrency Libra. The cryptocurrency is powered by the Association’s native smart contract blockchain platform called Libra Blockchain that’s designed to be “secure, scalable, and reliable.” The Association said it is mainly working on addressing two problems with the cryptocurrency; banking the unbanked and facilitating low-fee money transfers globally.
2. Governed by non-profit
Libra’s governing body, the Libra Association, is a non-profit based in Geneva, which will eventually have 100 geographically diverse founding members. The current founding members include Uber, PayPal, Visa and Silicon Valley investment powerhouse Andreessen Horowitz (a16z), among others. No member will control more than 1% of the blockchain network, the Association said.
3. Plans to transition to permissionless
Libra is starting on a permissioned blockchain, meaning (unlike Bitcoin) only founding members will have access to the network. But, there are plans for Libra to transition into a permissionless network over time, meaning “no single party will be able to unilaterally change the rules of the network.” The Association says that for the Libra Blockchain to operate as a “true public service,” the network eventually has to be permissionless. Note: Libra Blockchain currently uses Byzantine Fault Tolerant (BFT) consensus protocol and is based on VMware’s HotStuff framework.
4. Pseudo-anonymous transactions
Much like public cryptocurrencies, Libra’s all non-custodial transactions will be pseudo-anonymous. It means that the cryptocurrency’s transaction amount, timestamp, and public blockchain addresses will only be visible to members on the network. The Association added it will not hold personal data on people who use the blockchain. Products such as custodial wallets can complete transactions off-chain and will likely require customers to comply with Know Your Customer (KYC) regulations.
5. Libra’s reserves
Reserves, which back Libra, will consist of a collection of “low-volatility” assets like bank deposits and government securities in currencies from stable central banks like USD, GBP, EUR, and JPY. Libra is “not pegged to a single currency and does not have a fixed value in any real-world currency.”
6. Security token offering (STO)
Libra will also issue a security token called Libra Investment Token as a way to fund incentive programs and cover operating costs. They will be only available to accredited investors as securities. Holders can earn potential profits from interest on the reserves.
7. Costs to run a node
Enterprises who serve as validator nodes have to make an initial minimum investment of $10 million worth of Libra Investment Tokens issued by the Association. It is estimated by the Association that running validator nodes will incur annual costs of approximately $280,000. However, NGOs, Multilateral Organizations, social impact partners (SIPs), and universities do not need to make an investment to join the association, but they do have to support the running of their node.
8. FinCEN registered entity
Facebook has created Calibra, a Financial Crimes Enforcement Network (FinCEN)-registered subsidiary to ensure “separation between social and financial data and to build and operate services on its behalf on top of the Libra network.” Calibra registered with FinCEN as a money services business (MSB) in February 2019, gaining permission to operate in all 50 U.S. states as well as 9 commonwealth and territories. Calibra’s MSB registration number is 31000141265767.
Developers building on the Libra Blockchain will have a responsibility to comply with the laws and regulations in the jurisdictions in which they operate. Libra Blockchain itself will not be regulated.
10. Launch in 2020
Libra cryptocurrency and the underlying blockchain network are set to launch next year. The testnet will be released in the coming weeks. The developers will be able to read, build, provide feedback, and take part in a bug bounty program.
The 10 most important things you need to know about Facebook’s new cryptocurrency, Libra written by Yogita Khatri @ https://www.theblockcrypto.com/2019/06/18/10-most-important-things-you-need-to-know-about-facebooks-new-cryptocurrency-libra/?utm_source=rss&utm_medium=rss&utm_campaign=default June 18, 2019 Yogita Khatri