Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

Libra, Facebook’s cryptocurrency

Libra (Facebook) – Intro

Libra, <strong>Facebook</strong> <strong>Crypto</strong> blockchain wallet.

In the latest weeks, if not months, there have been several rumours about Facebook entering the blockchain world

In summary: it happened, Facebook entered the market and the official White Paper was released.

Technically speaking, Facebook founded LibraAssociation, an organization that entered in the blockchain world with its cryptocurrency and wallet.

But what is going to happen now? That’s the question that many ask themselves.

With the announcement, the name of the cryptocurrency, Libra, was defined. Moreover, the website of the official Librawallet has been published: www.calibra.com. The latter will be the main wallet, but others, the so-called third-party wallets, neither linked to Facebook or Libra, will get into the market.

The dates: the system is currently under testnet procedures, so it will not be fully available for the public. Instead, it will be ready in the first quarter of 2020. It is because the developer team can find anomalies or loopholes and fix these problems before the full availability. 

Parts involved in Libra

Libra Association consists of 28 participants and growing, but it’s only the start. Facebook expects to bring together 100 firms before half of 2020.

The reason is easy to say: everyone can adhere to the association, as long as it meets minimum requirements that will be explained shortly after. These are the current parts:

Libra Association

Payments: Mastercard, PayPal, PayU (Naspers fintech branch), Stripe, Visa.

Technology and markets: Booking Holdings, eBay, Facebook / Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.

Telecomunications: Iliad, Vodafone Group.

Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited.

Venture Capital: Andreessen Horowitz, Iniziative innovative, Ribbit Capital, Thrive Capital, Union Square Ventures.

No-profit and multilateral organizations, academia: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking.

Every participant had to pay 10$ million to adhere (“minimum amount”) and possibly becoming a validation node inside the blockchain system. It confers them a vote in the LibraAssociation board, thus enjoying also the right to a share of dividends proportional to their investment.

In other words: if Librareserve (the users pay in fiat-currency to acquire Libracoins) profits from its interests, the participants will earn dividends in proportion to their initial financial commitment. 

Minimum requirements:

1. at least half rack on a server;

2. 100 Mbps or higher dedicated internet connection;

3. full-time website reliability engineer;

4. enterprise-level security;

5. firms: meet at least two of the three following requirements;

1$ billion or 500$ million in account balances of the clients;

reach 20 million people every year;

be recognised as a first 100 firm in a sector by a group as Interbrand Global o S & P.;

6. cryptocurrency investors have to have more than 1$ billion assets managed;

7. Blockchain firms need to be in activity for at least one year, have enterprise-level security and privacy policies and hold at least 100 million in assets;

8. only a third of the founding members may come from the Crypto sector;

9. access possibility for research organizations as universities and no-profit companies that meet three out of four of the following requirements:

have been working in the financial inclusion field for at least five years,

reach different countries and many users,

being a top 100 of Charity Navigator,

50$ million budget.

Every member will receive only one vote or 1% of the total vote in the association board. This arrangement was introduced to detach Facebook from Libraso that one doesn’t become the domain of the other. It ensures the decentralization and avoids (on Facebook side) the additional privacy violations controls. 

Objective: scalability, velocity

At state of the art, Librablockchain is Permissioned, meaning that only the companies that meet the minimum requirements above mentioned can enter the association and build the consensus that allows the governance of the blockchain itself. By not being fully decentralised, it is more vulnerable to attacks, but this problem may be solved with the introduction of the Proof-Of-Stake, as planned by the development team. It would create a permissionless system, reducing the barriers to entry and keeping intact the speed objective

Currently Librais a blockchain (the ledger is authenticated through cryptography) of the following type:

2/3 of the nodes need to agree on the legitimacy of the transactions so that these can be written in the blockchain,

– easing in recognition of changes inserted in the blockchain through a Merkle tree structure in the code,

5kb transactions,

1000 tps with 40 Mbps nodes, SSD with a capacity of 16 TB,

1000 checks per second for four billion wallets.

Remind that currently bitcoin is considered to be able to carry out seven tps (transactions per second) and Ethereum fifteen, both permissionless blockchains, both based on proof of work (in different ways).

What if an attack would risk compromising the system? What would happen? Since transactions are irreversible, inside Librais introduced the transaction system, allowing to acknowledge the damage and solve the problem updating the software.

Regarding the transactions, these are expected to have a low cost, a fraction of a cent covering the energy needed for the deal (like Ethereum).

This fee is low for customers, the users, that don’t use the system for a high number of daily transactions. In the event of spam or DDoS attacks, these fees are high enough to make their weight felt since these attacks imply thousands of deals with the related fees. It will work as a deterrent for attackers.

Libra engine

Currently, Librais based on an open source with Apache Licence 2.0:

– “Rust” is the programming language that allowed the construction of the core,

– “Move” is the language chosen by Libra, but it is still under development: the objective is to enable every programmer to write Move-friendly apps.

The objective of Move is to allow the transiting of the coins from a wallet to another without the need to duplicate them, not even accidentally: carry out the Smart Contract author objectives, without any involuntary, or not, bugs.

LibraAccount.pay_from_sender ( recipient_address , amount)

Until Move it’s ready, developers have “Move IR” to create modules and transaction scripts for Libra: humanly readable and translatable into Bytec Move code that is written inside the blockchain.

The risk of entirely open source: possible scammers could have success with their apps, claiming that these are correctly working as the “good ones” and that are safe to use since these are inside the Libraecosystem. However, if consumers get robbed by these crooks, Facebook should handle user’s anger. 

Even if Facebook technically is one of the founding fathers of Libra, in the eyes of the users, it is clear the power relations that it has. Therefore they consider it responsible for any problems as described above.

Mark Zuckerberg:

“It is decentralised, meaning that it is managed by several organizations instead of just one, making the system fairer overall. It is available for those who have an internet connection and has low fees. It is protected by cryptography that contributes to keeping your money safe. This is an important part of our vision of a social platform focused on privacy, where it is possible to interact as in private life, from messaging to safe payments.”

It seems that Facebook will not immediately monetize from this sector, waiting for the right moment. 

“Over time, we hope to offer additional services for people and companies, like paying bills by pressing a button, buy a cup of coffee by scanning a QR code or cycling with local public transport without the need for money or metro pass”. This is what the Calibra team wrote. It resembles the Chinese app  WeChat, doesn’t it?

Libraengine was not built on sharing the transactions on Facebook. That’s why its use for advertising and other kinds of retargeting is not expected, while data will be used to trace crooks when, for example, directly requested by the police.

Features

the company reassumes its key characteristics in:

Proprietary app for the creation and management of the wallet: Calibra. IOS and Android compatible;

third-party apps compatible with the whole system;

– additional features for Whatsapp and Messenger to link them inside the ecosystem;

– accelerated payment system, especially for sellers: QR code;

– possibility to pay in shops that use methods like Square;

refund of lost coins (when possible) in case of account violation or scam;

chat service 24/7;

– “Calibra manages all the keys on your behalf“: no need for a cryptographic key or long and complex passwords;

incentives for developers and sellers: Libracoins for validator nodes that obtain enrollment and usage of Libra;

percentage incentives on transactions for most active accounts. Those who will be active for more than one year and who will be able to attract customers with Know-Your-Customer method (identity recognition process and anti-fraud processes);

the possibility to keep the shares or pass them in the form of discounts for users. Imagine eBay or Spotify offering discounts for paying with Libracurrency. Wallet developers may offer free tokens if the user completes a hundred transactions in a year.

Alex Norström, Spotify CBO

“A challenge for Spotify and its users has been the lack of easily accessible payment systems, especially for those located in financially disadvantaged markets. By entering in LibraAssociation, there is an opportunity to reach the total addressable market of Spotify better, eliminating friction and enabling large-scale payments.”

General considerations

It is clear that a company like Facebook has seriously taken into consideration the classes of people that would benefit from a global coin like Libra, in addition to the great difficulties that people themselves suffer today:

workers or migrants;

residents or workers abroad;

– those who have problems in receiving the salary or payments due to third parties;

– those who are weak towards the holders of traditional financial services;

Librahas the potential to help money exchange, for example, between parents and their children or other familiars;

– help people to keep their money even if they are robbed of their physical properties;

And one could add even more. When Facebook and Librasucceed, therefore collecting money in the Calibra wallet, it will be clear that the number of users that use the service will be enormous. Users will be paying for their transactions and receiving money from the companies they work for

Facebook and the other founding fathers of LibraAssociation may consequently gain big dividends on the interest generated

Best case scenario, when Librawill become stable and fast, companies will be pushed to increase their advertising investments on the Facebook platform

What if instead the platform would be hacked? What if it shows itself as unreliable?

By this time, all users will undoubtedly reap its consequences. They will certainly be the users of the Facebook social network.

Just think: using Libra, an open source system, potential malicious developers will be able to build apps aimed at taking possession of users’ data, known as sensitive data, as well as digital currency in their wallets. The Cambridge Analytica incident remembers us something. 

The latter is a deliberate provocation. The intent is not to badmouth a new technology since every technology in history had its challenges, problems to solve and difficulties to overcome. 

The blockchain world is extremely competitive nowadays, full of obstacles, but populated by brilliant minds that face challenges problems every day to transform them into opportunities. They don’t hide from constructive criticism but use it to perfect their ideas and make the apps more secure and scalable for everyday use. 

So the problem doesn’t concern the instrument, in this case, the blockchain, but in use made of it relative to the destination environment.