News that Facebook is issuing an encrypted digital currency has finally come to life. Back in May 2018, Facebook announced the creation of its blockchain technology division, and it seems to have quickly expanded the business, Posting five blockchain-related jobs on its recruitment page last December.
On June 18th Facebook announced the official announcement of the libra white paper on the cryptocurrency project, declaring that Libra’s mission was to build a simple, borderless currency and financial infrastructure that served billions of people.
The Libra White Paper argues that the world needs a global digital native currency that combines the characteristics of the world’s best currency: stability, low inflation, global acceptance and interchangeability. Libra aims to help meet these global needs and extend the impact of money on people around the world.
Facebook has formed the Libra Association, a nonprofit group with 27 other partners, to oversee Libra and its development efforts. Libra, the global digital currency being developed by the company, will launch next year, as well as a basic blockchain network to support the currency.
Facebook’s partners include venture capital firms, nonprofits, cryptocurrency companies, large enterprise finance, telecommunications and technology service providers, including Coinbase, Mastercard, Visa, eBay, PayPal, Stripe, Spotify,Uber, Lyft and Vodafone.
These partners need to contribute money to the Libra Reserve to ensure Libra’s intrinsic value, rather than volatility like Bitcoin.
If Libra succeeds, it will represent one of the most important launches Facebook has ever made, for the company and the world. Libra offers compelling alternatives to existing banking systems, especially for people in developing countries. Libra may also ensure that users cannot get away from Facebook’s services, a top priority the company needs to address as U.S. and overseas regulators call for a break-up.
Libra is not a speculative asset like bitcoin, but a digital currency backed by asset reserves. In the future, Facebook executives say Libra will be used as a payment system for online and offline services. Initially, Facebook envisioned Libra as being used primarily to transfer money between individuals in developing countries who lacked traditional banking channels, but its ultimate goal was to create the first truly mainstream cryptocurrency. This decentralised form of global payments is as stable as the dollar, can be used to buy almost anything and can support a range of financial products, from Banks to loans to credit.
Anthony Pompliano, founder of Morgan Creek Digital, says companies like Facebook have billions of users, which will further drive large-scale applications of digital currencies.
Facebook, of course, has a business motive built on Libra’s blockchain, and is launching its own Calibra subsidiary to execute its plans. Over time, Facebook will consider using Calibra to build new financial services, such as credit lines.
“It’s going to be a very complicated job, not just breaking new ground, but coming up with a new form of decentralized management because no one company can control it.” said David Marcus, Facebook’s blockchain project director. Marcus worked at PayPal for years before managing Facebook Messenger.
That’s why Facebook says it is opening the Libra blockchain source code today under Apache 2.0 license, which means anyone can use the code for free and build products on it to experiment with.
Facebook and other members of Libra are planning to recruit more partners to build networks, and Marcus says it will raise money in the private sector to encourage people to quickly start using Libra and Libra-based technologies.
In addition to the obvious economic benefits, Facebook tries to link Libra to its global mission to connect the earth. It said that providing free and low-cost banking services to the 1.7bn people, or 31 per cent of the world’s population, who do not have access to modern financial services, could have huge benefits for their well-being.
Facebook says it wants to work with the financial industry in this area, not compete directly with it. Facebook also plans to slash the cost of money transfers and transactions paid through Calibra, a welcome move.