Cryptocurrency Libra Facebook – overview, features, advantages and disadvantages, prospects

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Libra (Russian Libra, formerly Facebook Coin) is a cryptocurrency initiated by the Facebook social network, which was later joined by Booking, Uber, PayPal, Visa and others. The main purpose of the project is to create a simple financial asset suitable for the worldwide adoption of cryptocurrencies.

If earlier cryptocurrency was for many a concept on the “dark side”, then with the introduction of Facebook Libra, opportunities open up for its mass adoption and the beginning of a new era in the economy.

The Libra rate is planned to be maintained at a fixed level determined by the main basket of world currencies – the dollar, euro, pound sterling and yen. The new cryptocurrency began testing in June 2019.

NameLibra Facebook (Russian Libra)
TickerCryptocurrency
NetLibra Blockchain
StatusTesting
Official walletCalibra Wallet
Providing a reserve assetYes
White Paper (Documentation)https://libra.org/ru-RU/white-paper/?noredirect=ru-RU#introduction
Sourcehttps://developers.libra.org/
Websitehttps://libra.org/
Twitterhttps://twitter.com/libra_
Facebookhttps://www.facebook.com/LibraAssociation
Consensus AlgorithmLibraBFT
Project launch year2019
Programming languageMove
Independent regulatory bodyLibra Association
Members of the Libra AssociationMastercard, Mercado Pago, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa, Booking Holdings, eBay, Facebook / Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc., Iliad, Vodafone Group and others

Mission and components

The developers aim to create a reliable cryptocurrency that could form the basis of the worldwide financial network. Much attention is paid to intuitive control of finances through a smartphone. In other words, transferring funds should be as easy as transferring messages or photos.

Libra is made up of three components that will interact with each other as a whole:

✅ Reliable, scalable and secure Blockchain technology.

✅ A reserve of monetary assets that will act as a guarantor and ensure the price of the currency.

✅ The Libra Association is an independent organization that oversees the development of the system as a whole.

The coin will run on its own Libra blockchain. Open source software is planned to be provided. Hence, anyone can use it to create their own financial products.

Libra Asset Purpose

The main means of payment within the platform will be the LIBRA token. The main requirement for it is easy accessibility so that people can freely use it and pay in different places. The exchange rate can only be stable if people know that they can pay it off if necessary.

One of the differences between Libra and other cryptocurrencies is the presence of a guarantor in the form of a certain amount of real financial assets. Each coin is backed by securities and bank deposits. Reserves are managed in such a way as to prevent cryptocurrency volatility. At the same time, the key advantages of all cryptocurrencies remain: transaction speed, reliable data encryption, and hassle-free cross-border transfers.

Where does the money for the reserve come from

The reserve receives funds from two sources:

  1. from users of Libra tokens;
  2. from investors investing in Libra tokens.

Founding members will receive rewards in tokens from the Association, and this fact stimulates the spread of cryptocurrency among ordinary users, software developers and company owners. Any purchases of tokens by network participants increase the reserve and, accordingly, the reliability of the currency.

What is the Libra blockchain network

Libra blockchain will use a new programming language called Move, which will make it as easy as possible to build smart contracts. Move will track the likelihood of duplicate assets and prioritize the security of all operations and data.

The consensus protocol created to work is called LibraBFT; it differs from the usual Proof-of-Stake and Proof-of-Work. LibraBFT ensures that the network does not crash even if a third of the validators are compromised. The declared speed of transactions within the network is 1000 per second.

Also, the Libra blockchain network provides transparency, like Bitcoin, that is, anyone can see the status of any transaction. Users will be able to use pseudonyms using one or more addresses and thereby completely interrupt any connection with a really identified person.

Finally, to protect information about transactions, Libra uses the so-called Merkle trees – verified data structures designed to quickly track unwanted changes in existing information. Many other blockchain networks see the chain as simply a collection of blocks, and Libra is trying to make the blockchain a single information structure that quickly records the history of payments. This implementation will benefit applications that read data from the blockchain, and will speed up their work at times.

How is network security organized

Libra Blockchain allows any user to track their transactions, otherwise an attacker will be able to convince him that he transferred money, although in fact he did not. Libra prevents double-spending attacks with the LibraBFT algorithm, developed over many years of research. It belongs to the category of algorithms that is called the task of the Byzantine generals. The bottom line is that even if several computers fail due to an error or attack, the network will continue to work stably.

The main ingredients to ensure safety in Libra are:

✅ Reliable validation nodes. If 2/3 of the validation nodes are working normally, then the blockchain will also work continuously. Initially, one hundred founders from different countries and industries will act as validation nodes, providing a powerful and distributed infrastructure with resiliency.

✅ Safe software that eliminates node vulnerabilities. Software must include innovative solutions, good engineering practices, and time-tested methodologies. Libra developers are currently exploring a number of new techniques to protect the network from attacks that can provoke a denial of service. Move, a new smart contract language, contributes to the creation of the most secure programs for managing tokens.

✅ Responding to threats. Includes security measures against potential attacks. If it happens that the network goes down due to the failure of more than 1/3 of the nodes, then the processing of transactions from the Libra reserve will be stopped until the installation of a software update that solves the problem.

✅ Protecting user privacy. Libra does not participate in payment processing and does not store personal information about customers. Transactions are created by users themselves, and information about them is stored in validation nodes. Transactions do not in any way refer to the identity of the customer in the real world.

✅ Community transparency. One of the main advantages of Libra. Any member of the network will be able to confirm transactions and check the operation of nodes. It is planned to launch the Bug Bounty program, designed to find errors in software under the guidance of information security specialists.

✅ Among other things, Libra will practice cooperation with law enforcement agencies. Due to the openness and availability of the network, its main points must operate in accordance with applicable legal requirements. In addition, it will allow law enforcement agencies to intervene in cases of misconduct against Libra Blockchain clients.

How will Facebook capitalize on the new currency?

Nobody does anything for free, especially since it will take the efforts of hundreds of people to launch the project. The Libra Association is responsible for introducing new cryptocurrency and blockchain-related products. To use the services of these products, the user must fund the Calibra wallet – a wallet with minimal transaction fees.

Each Libra coin issued will change to traditional currencies; and those, in turn, are invested in stocks, bonds or gold – any assets of interest to the Association.

In addition, Facebook is engaged in several side developments, in particular, the introduction of a semblance of mobile banking based on a social network. Calibra is a subsidiary of Facebook Inc, and it will be responsible for the interaction of cryptocurrency with FB services and the implementation of transactions.

Advantages and disadvantages

Pros

✅ The possibility of introducing a global currency that solves the problem of cross-border payments.

✅ Potential opportunity to buy goods, order services, rent a house or a car, pay restaurant bills without commissions and as quickly as possible.

✅ Easy exchange for traditional or any other currencies.

✅ The powerful company behind the cryptocurrency guarantees much faster development and adoption than the similarly functional Ripple and Stellar.

✅ Stable value, unlike many other cryptocurrencies. In general, experts predict that Libra will give the world another stablecoin.

✅ A huge number of partners and interested companies. By the time of launch in 2020, it is planned that there will be at least 100.

Cons

❌ It makes no sense for crypto investors.

❌ Incomplete decentralization. The development is controlled by the Association.

❌ Increased digital risks associated with account hacking. Things get more serious when it comes to real assets.

❌ Residents of China, Cuba and Egypt will not be able to use the Calibra wallet.

Expert and government views

LIBRA currently faces serious opposition from the ruling structures. The American authorities do not stop putting pressure on him and demand to stop work on the project. There are several reasons for this attitude:

✅ The new means of payment is likely to reduce the demand for the dollar and thereby undermine the US economy.

✅ There is insufficient control by regulators, which is also dangerous for the financial stability of not only the States, but the entire world.

✅ Potential problems with monetary policy, trading, data privacy and national security.

✅ There is a risk of hacker attacks.

The members of the Libra team are trying to dispel these doubts and say that they have everything under control.

As for experts and crypto enthusiasts, in this environment the initiative was perceived rather positively. For example, Anton Kravchenko (CEO of Xena Exchange) devoted a whole stream to the event, where he walked through the main pros and cons of the project.

In his opinion, Facebook is acting competently, attracting large corporations to its side, from Paypal to Uber. The creators of the cryptocurrency could not help but know that the US Congress will oppose the development of Libra; but the more partners there are on the side of the project, the more difficult it will be to hinder its development. Anton Kravchenko also believes that Libra will be a quality stablecoin, superior to all existing ones. Probably, soon many currency pairs with the participation of the new token will appear on the exchanges, all coins will be traded in relation to it.

Libra will not replace Bitcoin for the reason that Bitcoin is a decentralized network, while Libra is a centralized blockchain. However, the coin will definitely have a positive impact on the cryptoindustry. The claims that it poses a threat to the banking sector are also not substantiated, since Facebook does not and will not have a number of mechanisms available only to banks, such as printing money or bonds.

Perspectives

The largest (by trading volume) crypto exchange Binance is already negotiating with Facebook to list Libra. The initial stage of official negotiations has already passed. At the moment, listing for the coin is not relevant, since at first it will be located on a private blockchain and will not look for external liquidity. However, in the future, entry into the secondary market is inevitable. Listing is always in the best interest of any cryptocurrency.

It looks like users won’t have to wait long. Taking into account the interest in the currency from large financial players, adoption will be fast, followed by listing on all major platforms. For example, ShapeShift wants to integrate Libra next year. Therefore, in the foreseeable future, it will be possible to buy Libra through most exchanges and wallets.

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