If you are into cryptocurrencies, the chances are that your newsfeed and timeline were flooded with the news of Facebook Libra coin, or the GlobalCoin. People all over the forums, podcasts, and social media spent a lot of time debating irately about the pros and cons. It has been called everything, ranging from a deliberate attempt to control cryptocurrencies by a single enterprise to a tool that will help cryptocurrencies become mainstream and more accessible to the general population.
While cryptocurrencies can be used everywhere, from various online stores to online casinos with Spiele Gratis, and even some real estate transactions, their potential hasn’t yet been fully utilized.
Facebook Libra Cryptocurrency: A Brief Timeline
As most of us know, the year 2018 was not precisely on Facebook’s side. The Cambridge Analytica scandal first rocked the company. The private data of more than 50 million users were compromised, and the incident could be listed as one of the worst data privacy breaches in history. The extracted data was then used to build psychological summaries to affect elections all around the world.
Following the incident, CEO Mark Zuckerberg was forced to attend the Congressional hearing. As a result, shares went downhill by a staggering 20%. In short, the company lost approximately $120 billion in revenue.
However, they started planting the seeds of Facebook Libra in the middle of the year. It was soon revealed to the world that the company is establishing a blockchain division that will be run and managed under the supervision of David Marcus. He also oversaw the creation of Messenger. The idea behind the blockchain technology came into being four months after Mark Zuckerberg stated in his New Year resolution that he wished to study deeply about the positive and negative aspects of cryptocurrencies.
Finally, the news came into being in December 2018 that Facebook is building a cryptocurrency that makes it easier for them to transfer money on WhatsApp. The feature will be focused on India since the country has more than 400 million WhatsApp users. To ensure that the currency is not as volatile as traditional cryptos – Stablecoin. By the end of June 2019, Facebook formally announced the crypto and released its whitepaper. The company plans to launch the coin around 2020.
What Is Facebook Libra?
According to the company’s whitepaper, Facebook cryptocurrency Libra simplified global money and financial infrastructure that is capable of empowering billions of people around the world. Facebook Libra has five features:
- Smart contract coding is done via Move programming language
- It makes use of the LibraBFT consensus mechanism
- An independent association will govern it
- A reserve of assets will back the Stablecoin
- It will be built on a reliable, scalable, and secure blockchain
Libra Charter Currently Signed by 21 Organizations
Facebook has managed to sign up 21 organizations officially to its Libra Associations, after the departure of several high-profile associations like Stripe, eBay, PayPal, MasterCard, and Visa from the controversial crypto coin project. According to the press release, those organizations that have signed the Libra Association’s charter include names like Xapo, Vodafone, Uber Technologies, Coinbase, Spotify, Ribbit Capital, and Andreessen Horowitz. The Libra Association has also named its board of directors and formed the Association of executive teams during the same conference held in Geneva, Switzerland.
The social media giant is currently looking forward to David Marcus. The other members of the Libra Association include Patrick Ellis (General Counsel, PayU), Matthew Davie (Chief strategy officer, Kiva), Andreessen Horowitz, and Kathryn Haun (General partner, VC Firm). Former PayPal employees Kurt Hemecker, Dante Disparte, and Bertrand Perez will also be taking their places in the senior management team in the Association.
The Libra Association will be leading a controversial project. The Association has also noted that more than 1,500 associations are interested in joining the initiative. Right now, only 180 entities have been able to meet the criteria set by the Association.
The entity needs at least two-third vote by 21 board members to join. The governance of the token would be overseen by the members of the Association, which consists of more than 100 organizations that can vote on technical matters. The symbol would also serve as security, thereby allowing investors to receive interest from flat currencies backed to digital assets.
Why Did Facebook Libra Lose out on Its Initial Members?
Facebook crypto took a significant hit when five of its founding members dropped out. Financial services giants MasterCard and Visa, payments provider Stripe, and online marketplace eBay decided that no longer wished to be associated with the Libra Association. The company has confirmed that Mercado Pago, an online payments platform, has also left the Association. These departures followed PayPal’s withdrawal a week before; they all dealt a severe blow.
All the five companies had expertise when it came to transfers and payment technologies, which could have been a key component to the success of Libra’s cryptocurrency. According to several experts, it has been predicted that cryptocurrency would fail without the help and involvement of major payment companies. They are the ones that could bring in settlement networks, global acceptance, trusted payment brands, deep payment expertise, and relationships with every significant regulatory, government, and financial institutions around the world. The departure came after mounting criticism of the project, which was revealed in June and almost immediately invited skepticism from non-profits, regulators, and politicians.
Will Facebook Have Direct Control over the New Cryptocurrency?
Facebook will not have direct control over the new cryptocurrency. Instead, it will be one of the members of the Libra Association via Calibra. It has been hoped that the Association will grow to 100 members soon, most of which contribute a minimum of $10 million to get the project working. Each member will have the same vote in the Association based in Switzerland. Hence, Facebook will not have any more say than the rest of the members when it comes to the decisions of the Association and marketplace rules.
How Is Facebook Libra Different Than Other Cryptocurrencies?
To understand the differences between Libra and other cryptocurrencies, we first need to know what the similarities between them are. In this case, we can take the example of ether and bitcoin. Like them, it exists only in digital form and cannot be used as a coin or note.
Also, all transactions are recorded on a blockchain, or a software ledger, that confirms the transfer. This blockchain will only be managed by the founding members in the early stages but will work as an open system in the future. However, unlike other cryptocurrencies that are not backed by anything and can swing wildly on either side, it will be backed by real assets and have a Facebook Libra price; this format is known as Stablecoin.
At first, the plan was to use some assets to anchor Libra’s value. However, the Association did not reveal what the assets are; instead, they indicated them as government securities and bank deposits from reputable and stable central banks. Currently, the community seems split over Libra.
While there are a lot of positive reviews and thoughts penned by experts, the cryptocurrency has also faced a lot of backlashes, as well. Right from initial members leaving to gaining new ones, Facebook is on a line to start something that could potentially change the way the world works. However, the social media giant first has to deal with the events and consequences of significant data leakage.
Let us know what you think about such Facebook Libra news in the comments below!
Thomas Glare (Author)
Passionate computer science geek, interested in cryptocurrencies, online gaming, technology, and electric cars. Having studied in Belgium during his post-grad efforts, Thomas is also an avid traveler. He loves writing.