Crypto Investors Hold Their Breath As Facebook Releases Libra’s White Paper

After a long period of silence, Facebook has finally released the white paper for their new cryptocurrency titled Libra. On June 18th, the new blockchain based infrastructure received its first white paper.

Date: 
June 20, 2019
Read time: 
2 minutes

Crypto Investors Hold Their Breath As Facebook Releases Libra’s White Paper

Author: Ilija M.
Date: 
June 20, 2019
Read time: 
2 minutes

After a long period of silence, Facebook has finally released the white paper for their new cryptocurrency titled Libra. On June 18th, the new blockchain based infrastructure received its first white paper.

After a long period of silence, Facebook has finally released the white paper for their new cryptocurrency titled Libra. On June 18th, the new blockchain based infrastructure received its first white paper.

While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.

The paper outlines Facebook’s plan to make Libra a globally available stablecoin. It is intended to work on the native and scalable Libra blockchain. Current plans are to back Libra by a set of Facebook’s assets designed to give Libra a value in and of itself, as to decrease the price volatility to which all crypto is prone.

Facebook has stated that these assets will be composed of a variety of bank deposits and government-sourced securities. These will be stored in the appropriately titled ‘Libra reserve’ every time that a unit of Libra is issued.

As to further proof it from tempering, the new crypto will be run by a Switzerland non-profit consortium titled The Libra Association. Currently, this consortium has some of the biggest names in online business among its founders. Including, but not limited to, PayPal, eBay, and Coinbase.

The Libra Association is supposed to hit the 100 member mark around the time of Libra’s launch, which has been projected for early 2020.

Looking at the white paper, we note:

While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.

The association will also have a governing body above itself, called the Libra Association Council. At the start, the council’s members will be the same as the association founders. Every one of the founders will be expected to invest at least $10 million once Libra has launched. For every time a founder invests $10 million, they’ll get a vote on the council, stated Facebook.

On the other hand, Facebook has also unveiled the Libra Investment Token. It is meant to be separate from Libra, and be purchased and traded among the association’s founders and higher-profile investors.

Because Libra is not rooted in any fiat currency, it will be impossible to always trade it in for the same amount of fiat, per the whitepaper. To combat this, Facebook says that the reserve assets will do a sufficient job of minimizing volatility in the currencies exchange rate.

Facebook has also announced their plan on how to ensure decentralization. All of the reserve assets will be held in geographically distinct locations, by a network of custodians. Furthermore, the reserve will face management from the association, which is the only entity capable of producing new Libra, or destroying overflowing units.

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Facebook assures that new Libra will only be minted after resellers have already bought the coins from the association with an amount of fiat sufficiently large to cover their value. In order to burn the Libra, the resellers will be forced to sell the token back in order to receive the assets.

The whitepaper was also outspoken on this topic:

Since authorized resellers will always be able to sell Libra coins to the reserve at a price equal to the value of the basket, the Libra Reserve acts as a ‘buyer of last resort.’”

Facebook has also emphasized that the software support of the Libra blockchain will stay open source. This is done in the interest of an interoperable ecosystem of financial services, it also has the side benefit of broadening inclusion.

The exposure of the new coin is speculated to be unprecedented, with Facebook’s many platforms, ranging from WhatsApp to Instagram, having a concurrent userbase of over 2.7 billion users every month.

Posted by Ilija M.

Crypto investor, entrepreneur, and writer. Ilija has been dealing with cryptocurrency since the early days of bitcoin and hasn't looked back since. These days, he spends his time traveling, while managing his investment portfolio and educating people on cryptocurrency as a way to pass the time, and make ends meet.

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