2018 was a traumatic year for Facebook, mainly due to the Cambridge Analytica scandal. But, as you know, it is in the most difficult moments that great ideas come to life. That may be why, in the middle of the dark and stormy night that was 2018, Facebook sowed the first seeds of Libra.
- May: the birth of a Blockchain division is announced within the company.
- December: Facebook says it is creating a cryptocurrency to transfer money via WhatsApp, mainly aimed at the Indian market, where the largest number of WhatsApp users is concentrated (something like 400 million).
- June 2019, Facebook finally releases Libra’s Whitepaper and plans to launch it by 2020.
The disruptive potential of the Libra project
The scope of this project could be very significant compared to other crypto projects. Facebook already has 2.38 billion users, while Bitcoin still has “only” 2.5 million.
Facebook already has our attention, it just has to effectively shift it to something new.
But let’s try to understand more, because Facebook’s plan involves other data and other factors.
First, the choice of India as the main target is also due to the fact that it is one of the countries with the most people without a bank account (worldwide there are 2 billion). The whitepaper’s mission is to bring affordable financial services where institutions and opportunities are lacking.
Is Libra the new Bitcoin?
But how exactly is Libra going to work? Is it going to be like Bitcoin?
No, Libra will be much more similar to Tether, in fact, it will be a stablecoin, a coin anchored to a fiat. Stablecoins are cryptocurrencies whose value is tied to the value of the dollar or euro or yen, so as to avoid one of the great disadvantages of crypto, volatility.
Libra, in particular, will have a reserve composed of low volatility assets such as bank deposits and short-term government bonds coming from reliable central banks.
Calibra will allow you to exchange money from your smartphone and will also be compatible with Mastercard, Visa, Paypal and Stripe. The conversion of fiat money into Libra to fill your Calibra wallet (and the other way around) will only be possible on external exchanges, as Facebook has not yet developed a real exchange.
Libra’s blockchain has also been custom made, so much so that it is not a classic blockchain, as it has been defined as a “decentralised and programmable database”.
In fact, kind of like Ethereum, Libra’s infrastructure has its own smart contract language and transactions run on “gas”.
Libra has therefore been studied to favour its adoption and to satisfy everyone: it gives security as it is a stablecoin, it is Ethereum-friendly, it promises low fees.
Another smart choice by Facebook was for Libra to be initially a permissioned platform, like Ripple, in which not everyone can participate, instead some sort of selection of the validators is made. This, in order to make the network secure during the delicate initial phases of the launch and to avoid possible management problems.
Libra promises, however, to become permissionless as soon as possible, thus calming the spirits of the paladins of digital democracy.
The impact of Libra
What, then, will be the outcome and response of the public to this crypto-turn by the most used social network in the world?
As we searched for an answer, we recalled how much users complained in past years, bothered every time Facebook changed some small feature, that sent us a poke to the comfort zone with a different graphics or with a new chat sound. We hope that people won’t close themselves off in the same way against an innovation that could only go to their advantage.
How many will snub it without hesitation and how many will be willing to give at least a peek at what Libra has to offer?
Even if a slice of people are going to remain oblivious for a long time, the flow of new recruits into the world of digital and crypto finance could still be overwhelming, so as to start a second crypto revolution.