This week, the tech giant Facebook made headlines when it announced its ambitious cryptocurrency programs Libra and Calibra that would create Digital Wallet for billions. As expected, the announcement got tech analysts and digirati buzzing about the possibility of a move that could “transform the global economy.” In this article, we look at a few factoids about Libra and Calibra.
Libra is not Facebook’s digital currency alone
Facebook teams played a key role in the creation of the Libra Association and the Libra Blockchain, working with the other Founding Members. While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019.
Once the Libra network launches, Facebook, and its affiliates, will have the same commitments, privileges, and financial obligations as any other Founding Member. As one member among many, Facebook’s role in governance of the association will be equal to that of its peers.
The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards. After the initial headlines made the rounds, technology analysts began highlighting a few facts about the digital currency and Libra organization.
- Facebook won’t fully control Libra, but instead get just a single vote in its governance of the Libra organization
- The Libra Association is an independent, not-for-profit membership organization headquartered in Geneva, Switzerland.
- The founding members of the Libra association each run one of the validator nodes that form the network that operates the Libra Blockchain. One of the association’s directives will be to work with the community to research and implement the transition to a permissionless network over time.
- This initial group of organizations will work together to finalize the Libra Association’s charter and will become the association’s Founding Members upon its completion. Besides Facebook there a number of founding members of the Libra Association that have invested at least $10 million each into the project’s operations.
Who are Libra association’s founding members?
The initial group of organizations that will work together on finalizing the association’s charter and become “Founding Members” upon its completion are, by industry:
- Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
- Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, MercadoPago, Spotify AB, Uber Technologies, Inc.
- Telecommunications: Iliad, Vodafone Group
- Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
- Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
- Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
How does Libra use Blockchain techniques ?
The Libra currency is built on the “Libra Blockchain” that aims to provide a simple global currency and financial infrastructure that empowers billions of people. The unit of currency is called “Libra.” Libra will need to be accepted in many places and easy to access for those who want to use it. In other words, people need to have confidence that they can use Libra and that its value will remain relatively stable over time.
Libra Blockchain is made up of three parts that will work together to create a more inclusive financial system:
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
More details can be found on Libra Blockchain technical paper.
Calibra, Facebook’s Digital Wallet for the cryptocurrency
Announcing its move on Libra Blockchain, Facebook also detailed out plans to create 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.
Today we’re sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020.
When it launches, Calibra will have strong protections in place to keep your money and your information safe. We’ll be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior. We’ll also offer dedicated live support to help if you lose your phone or your password — and if someone fraudulently gains access to your account and you lose some Libra as a result, we’ll offer you a refund.
Opportunities for startups and other businesses
Facebook is leading the Libra initiative and is expected to use its large user-base for the outreach. Libra project also has payment giants like Visa and Mastercard that gives it the financial muscle and outreach. A few opportunities that could evolve include
- Payment processing and management – Businesses that accept Visa and MasterCard payments may be able to signon for Libra payment options too.
- Transfers – It is likely that users may be able to transfer money between and across their digital wallets. For example, some amounts may be stored as crypto-currency, while converting others to make regular payment like other currency
- International money transfer – if one assumes that Libra is considered a crypto currency, individuals may be able to transfer from US$s to Euros or Indian rupees instantly. This will be a great boon for the global expatriate community that still relies on banks, moneygram and currency exchanges.
- Currency for unbanked – As per some estimates, nearly 1.7 billion adults remain unbanked globally. Several NGOs including Creative Destruction Lab, Kiva, Mercy Corps and Women’s World Banking are already involved in the Libra Association,
- Smartphone Apps – The Libra effort is also likely to target WhatsApp’s 1.5 billion active monthly users. Facebook also owns WhatsApp.
- Getting involved – If you are a researcher or protocol developer, an early preview of the Libra testnet is available under the Apache 2.0 Open Source License, with accompanying documentation.