What is Libra?
I´d say the only way you do not know what Libra is would be if you have been living under a rock. But in case you have been, Libra is Facebook´s new creation.
It´s a medium of exchange; you will exchange your fiat currency for Libra tokens, and that would facilitate sending and receiving money to and from anywhere in the world.
This process will cut off intermediaries making transactions fast and easy. Additionally, you will be able to buy products and services wherever Libra is accepted worldwide.
With that said, Libra has taken its chance into calling itself a cryptocurrency, trying to catch the crypto momentum, yet, it is far from crypto as it could be.
I have no intention in talking down on Libra, this is a big advancement for the financial industry.
Thus, I believe it may be a huge door to the legitimate cryptocurrency system. Eventually, it will lead people (massively) into cryptocurrency, sort of like AOL led people to the internet.
People are speculating how this could be the end of fiat currency. Could this be the beginning of the end?
Centralized x Decentralized
Libra and Bitcoin use blockchain (distributed ledger) to record transactions connecting users. Both projects propose the creation of money over sharing data across the internet.
That´s pretty much where the similarities end. Unless you want to count the fact that Libra also has a white paper… nah.
Bitcoin is decentralized, in other words, it doesn’t have a central authority no one will have control over your assets.
Anyone can join the system whenever they desire, and you do not need to trust them. This is what we call a trustless system. You do not need to trust anyone for the system to continue to work well and securely.
Therefore, your assets, your transfers of value are still safe and secure on an open-source system..
The Libra project is the complete opposite of that. It is centralized, which means you must trust a central authority with your money because they are in control.
The tokens will operate on a private blockchain, similar to a digital dollar because it will function like a fiat currency, but virtually.
Fundamental differences in the architecture of the two:
Basis Value: Scarcity. Fixed Supply. Demand sets the price.
Read Access to Ledger: Anyone can download the blockchain and see/read transactions. Transactions use random, unique numbers to identify sender and recipient on the ledger.
Write Access ledger: Permissionless. Anyone with commonly available hardware, an internet connection, and free software can add/write transactions to the ledger.
Basis Value: One must trust the issuer. Supply is adjusted by a consortium of corporations to match several other assets held in reserve and maintain stable value even when demand shifts.
Read Access to the ledger: same as bitcoin.
Write Access to the ledger: Permissioned. Only authorized members of a consortium of a corporation can add transaction to the ledger.
What is their goal?
Bitcoin and other cryptos came into existence to give people control of their money. Eliminating third-parties and expanding the possibilities of how and where people would like to transfer their values. Needless to say, this became a secure, fast and easy way to transfer assets.
Mother crypto seeks to address the consolidated power of mediators in traditional systems and the danger it professes: corps and governments can arbitrarily block people from engaging in the economy.
Libra´s goal is to serve as a solid foundation for the financial needs of billions of people, including the unbanked:
“For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women.” — Facebook´s Marketing Documentation
The project makes the transfer of value easier and faster when compared to traditional financial systems. However, it doesn’t eliminate the central authority. It seeks to address the inefficiency of intermediaries in traditional systems and their lack of interest in catering to people who they may consider irrelevant to their bottom-line goal.
Facebook´s new currency is concentrated on creating a stable coin, low inflation currency backed by a reserve. Fiat currencies such as the dollar and the Euro will also support Libra. It will be pegged to a basket of assets ranging from bank deposits to short team government securities, like an ETF.
Furthermore, Facebook will be offering low fee transactions of Libra to incentivize customers to use the tokens to transfer money.
This new medium of exchange has significant use-cases. It is solutionizing long-lasting issues while displaying extraordinary credibility through the validation of well-known organizations.
They are coming to the market with a lot of powerful corporations supporting them up including, Mastercard, Visa, Uber, Lyft, Booking Holdings, and so on. Because of this, Libra has the potential to achieve the main adoption in no time.
“We see a huge opportunity for financial inclusion. Of the 1.7 billion people who don’t have bank accounts, one billion have a phone which could probably support this system.” — thought expressed by Peter Lewis, an Associate with Mercy Corp, one of the joint-partner companies in the Libra Consortium
We cannot talk about Libra without mentioning Calibra. It is a blockchain-based digital wallet for Libra. 2020 will be the launch of both the wallet and the token.
This is what Calibra will look like:
By its characteristics, Libra is not a cryptocurrency, but more like an advanced innovative future of banking.
However, it is stirring a fierce fight with the US Government, but why?
Simple, Libra might cause significant changes to the financial system we know. This means the US dollar, the global power currency, might be in danger of losing its authority.
The US House of Representatives requested Mr. Zuckerberg and his associates to put a stop to this project confirming the hypothesis above.
Along with the request, the letter stated that Libra raises serious privacy, trading, and national security. As well as the monetary policy concerns for Facebook´s 2-billion users, furthermore, as for the investors, consumers, and the global economy.
Libra may not be a cryptocurrency, but sure is a powerful tool just as its subsidiary, FACEBOOK.
Please share your thoughts and comments.
Disclaimer: Our team works hard to bring you the best content in the cryptocurrency market, but it is only our point of view and not legal advice, and may be divergent from other opinions, so please do not make any decisions without concluding studies of your own to understand the profit possibilities and uncertainties involved at your own risk.