Facebook’s relationship with cryptocurrencies is what you can call a love-hate relationship. At first, Facebook hit hard on ads related to cryptocurrencies. In January 2018, it initiated a blanket ban on ads that promote cryptocurrencies and ICOs.
In June of the same year, Facebook decided to update its policy, this time allowing “ads that promote cryptocurrency and related content from pre-approved advertisers”, but continue to prohibit ads that promote binary options and initial coin offerings”.
Then, a gesture of goodwill finally came, when in May 2013, Facebook rolled back their previous policies. Despite this, announcing its own cryptocurrency is surprising.
What is Libra?
Libra is a cryptocurrency that will allow people to send money and buy things with very low fees (nearly zero). Moreover, you’ll be able to use Calibra wallet not only through its own app but through WhatsApp and Messenger as well.
On July 18th Libra released its white paper, where you can read how the platform will work. To help you with understanding this white paper, we decided to write some key takeaways from it. Let’s dive in.
Takeaway #1: Libra has its own programming language called Move
Libra has created its own programming language – Move, for developing smart contracts. In its smart contracts, the platform limits how much users can do on the protocol at first. Also, it enables smart contracts to be directed at any pool of assets.
Takeaway #2: Libra Blockchain is public and third parties can inspect it
Libra Blockchain isn’t anonymous but pseudonymous. Yes, account numbers aren’t tied with real-life accounts, but still, it offers no privacy protection. According to its white paper:
“The Libra protocol does not link accounts to a real-world identity. A user is free to create multiple accounts by generating multiple key-pairs. Accounts controlled by the same user have no inherent link to each other.”
Takeaway #3: Libra Blockchain isn’t permissionless
Unlike bitcoin and Ethereum, Libra isn’t permissionless. Instead, an association which includes 28 members manages Libra. Some of the members include Facebook (naturally), Calibra, centralized organizations such as Coinbase, Visa, and Mastercard, and a couple of non-profit organizations such as Kiva.
Takeaway: #4: The Libra is based in Switzerland
Switzerland is famous as a crypto-friendly country. Still, the decision to headquarter the company in Switzerland and not in the United States raised some surprise. Especially since most of the organizations involved in the project are US-based. However, it seems that Libra decided to enjoy the benefits of a crypto-friendly environment.
Takeaway #5: Libra isn’t decentralized yet, but it tends to become in the future
Yes, you can’t call Libra decentralized in a way you call the other cryptocurrencies. Despite many of its technical aspects are similar to bitcoin, Libra is permissioned. That means that only members of the association can mine its blockchain, which makes Libra Association a central and managing authority.
However, Libra doesn’t plan to stay permissioned. Association’s plans are to include more members and to move to a permissionless model within five years.
Takeaway #6: It’s a stablecoin
The Tether (USDT) is pegged to the US dollar and therefore its a stable coin. Libra will be pegged to the US dollar and
a number of government-backed fiat currencies. This enables the possibility of instant global legitimacy and acceptance as the Libra will not be pegged to a single nation’s fiat.
Reactions to Facebook’s cryptocurrency are different. On the one side, one of the largest companies in the world creating cryptocurrency can only help its adoption. But, on the other side, opinions are that Libra is centralized while decentralization is one of the most important benefits of cryptocurrencies. Meanwhile, we’ll have to wait and see how things will go.
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