Facebook Libra Cover Image

Give Me 10 Minutes, I’ll Give You The Truth About Facebook Libra

Facebook Libra is a permissioned blockchain digital currency launched this month.

If it is getting too geeky, lets try to understand the basics first……..

What is a Blockchain ?

A blockchain is a decentralized & distributed ledger system where people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. 

Here every transactions are broadcasted, and every users (technically referred as node) creates their own updated version of events.

This innovation in information registration and distribution eliminates the need for a trusted party to facilitate digital transactions of any kind.

How Blockchain works ?

What is Permissioned Blockchain ?

A permissioned blockchain is a private network that needs permission of the Network administrator to join via invitation. In this type of network participant and validator access is restricted.

What is Digital/Crypto Currency ?

A cryptocurrency is a exchangeable digital asset, generated on a blockchain network that only exists online.

It is basically an incentive generated on the blockchain network.

It incentivize the participant and validators who validate transactions on the network using their computer resources. They uses cryptography to verify and secure transactions .

There are well over thousand different cryptocurrencies in the world. Bitcoin, Ethereum and XRP are some of the popular cryptocurrencies.

How Facebook Libra is different from other cryptocurrencies?

Technically, Facebook Libra is not a cryptocurrency rather it is a digital currency built on the foundation of blockchain technology.

Their mission statement reads :

Libra is a simple global currency and financial infrastructure that empowers billions of people.

Facebook Libra is made up of 3 parts :

  1. It is built on a secure, scalable, and reliable blockchain (libra blockchain).
  2. Backed by a reserve of assets designed to give it intrinsic value
  3. It is governed by the independent Libra Association tasked with evolving the ecosystem.

What is Facebook Libra Blockchain ?

The Libra Blockchain will be decentralized, consisting of a collection of validators that work togetherto process transactions and maintain the state of the blockchain.

These validators also form the membership of the Libra Association, which will provide a framework for the governance of the network and the reserve that backs the coin.

Initially, the association (and validators) will consist of geographically distributed and diverse set of Founding Members.

These members are organizations chosen according to objective participation criteria, including that they have a stake in bootstrapping the Libra ecosystem and investing resources toward its success.

Over time, membership eligibility will shift to become completely open and based only on the member’s holdings of Libra.

Who are the members of Facebook Libra Association ?

  • Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
  • Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc
  • Telecommunications: Iliad, Vodafone Group
  • Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limit
  • Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Venture
  • Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Libra Cryptocurrency Protocol

The Libra Blockchain is a cryptographically authenticated database maintained using the Libra protocol.

The database stores a ledger of programmable resources, suchas Libra coins. A resource adheres to custom rules specified by its declaring module, which is also stored in the database.

A resource is owned by an account that is authenticated using public key cryptography. An account could represent direct end users of the system as well as entities, such as custodial wallets, that act on behalf of their users.

An account’s owner can sign transactions that operate on the resources held within the account

Facebook Libra Protocol

How does a Transaction on Libra Blockchain looks like ?

A transaction is a signed message containing the following data:

  • Sender address: The account address of the transaction sender. The VM reads the sequence number, authentication key, and balance from the Libra Account.T resource stored under this address.
  • Sender public key: The public key that corresponds to the private key used to sign the transaction. The hash of this public key must match the authentication key stored under the sender’s LibraAccount.T resource.
  • Program: A Move byte code transaction script to execute, an optional list of inputs to the script, and an optional list of Move byte code modules to publish.
  • Gas price: The number of Libra coins that the sender is willing to pay per unit of gas in order to execute this transaction.
  • Maximum gas amount: The maximum number of gas units that the transaction is allowed to consume before halting.
  • Sequence number: An unsigned integer that must be equal to the sequence number from the sender’s Libra Account.T resource. After this transaction executes, the sequence number is incremented by one.

Facebook Libra Coin & Reserves

Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra.

That means anyone with Libra has a high degree of assurance they can convert their digital currency into local fiat currency based on an exchange rate, just like exchanging one currency for another when traveling.

Instead of backing Libra with gold, though, it will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks.

As the value of the underlying assets moves, the value of one Libra in any local currency may fluctuate.

However, the reserve assets are being chosen to minimize volatility, so holders of Libra can trust the currency’s ability to preserve value over time. The assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets.

Key differentiator between Libra and other Cryptocurrencies

The assets behind Libra are the major difference between it and many existing cryptocurrencies that lack such intrinsic value and hence have prices that fluctuate significantly based on expectations.

Libra is indeed a cryptocurrency, though, and by virtue of that, it inherits several attractive properties of these new digital currencies:

  • the ability to send money quickly,
  • the security of cryptography,
  • and the freedom to easily transmit funds across borders.

Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem.

Libra Cryptocurrency Price

The cryptocurrency is just launched formally very recently in Geneva.

The bad news is that Facebook and the Libra Association have announced they would not start trading or accepting deposits for Libra until they satisfy U.S. regulators concerns.

Facebook has also hired several Washington lobbyists to help alieve regulator and political concerns over Libra.

So we need to wait until the regulators are satisfied with the propositions Mr. Zuckerburg had to make later this month.

Facebook Libra Whitepaper

People who want to read the White paper here are the link :

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Also check out some of my post on social media on Facebook Libra here :

About the author

Santosh

Hi, I'am Santosh, an aspiring blogger with an obsession for all things tech. This blog is dedicated to help online entrepreneurs to find the right tools for their online business.

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