Facebook’s Libra cryptocurrency whitepaper dropped this week, sending shockwaves through the Bitcoin and altcoin community.
Is Libra the thing that pulls blockchain certification kicking and screaming into the mainstream, for the benefit of one and all? Or is it the final nail in the coffin of a cryptocurrency experiment just a decade old?
Here are 10 key takeaways from the newly released Libra whitepaper.
1. Founding Members Are Finance and Tech Giants
While plans for Libra involve the eventual setup of a decentralized governance model, it’s starting with several “founding members.” Those include Mastercard, Visa, Facebook, PayPal, eBay, Bitcoin exchange giant Coinbase, and more.
By 2020, the team hopes to have set up the Libra Association – a community-driven entity which oversees the blockchain certification’s development.
While that sentiment may sound noble, one should consider the cost associated with having a say in Libra’s future…
2. $10 Million Buys You a Node – And One Vote in The Libra Association Council
Libra’s founding members all have a $1 billion market cap or hold $500 million in customer balances. | Source: Facebook/Libra
Immediately overtaking Dash as the most expensive masternode coin, Libra demands its node operators stake $10 million worth of Libra Investment Tokens as security. The whitepaper describes the process of running a node:
“To be such a node, an entity needs to make an investment of at least $10 million in the network through purchasing Libra Investment Tokens… Each $10 million investment entitles one vote in the council, subject to a cap.”
That’s good news for blockchain certification security – with so much at stake, node operators are incentivized to do the right thing for the sake of the entire ecosystem. However, the high buy-in price also reduces possible candidates down to a tiny list of the financial elite.
By 2020, the Libra Association is expected to have 100 members – equating to $1 billion being staked on the blockchain certification.
3. Only Business Worth More Than $1 Billion Will Be Founding Members
To be included in the initial group of Libra’s founding members, businesses must meet a $1 billion market value requirement – or hold more than $500 million in customer balances.
Those companies must “reach greater than 20 million people a year nationally.”
Finally, they must be recognized as a top-100 industry leader by a respected authority, such as the Fortune 500, S&P Global 1200, etc.
Amendments are made for “newly emerging industries,” but every applicant must still convince the council that their participation would provide a “meaningful contribution” to the ecosystem.
4. A Bespoke Blockchain That Will Scale to Billions of Users
Facebook’s crypto project Libra should scale to billions of users without a hitch. | Source: Shutterstock
To meet the needs of billions of customers, Facebook built its own blockchain certification based on the Byzantine Fault Tolerance (BFT) consensus algorithm. Libra could achieve the scalability that the current crop of blockchain certification projects have sought in vain for years – as per the documentation:
“Able to scale to billions of accounts, which requires high transaction throughput, low latency, and an efficient, high-capacity storage system.”
Typical whitepaper promises? Or has the necessity of creating a Facebook-centric currency driven developers to create something entirely new?
5. You Can Cash Out Libra to Any Fiat Currency
Every national currency integrated into Facebook’s system will be completely interchangeable with Libra, according to the whitepaper. But that doesn’t mean their respective values will be interchangeable.
In other words, the value of the Libra will still fluctuate like any other currency when exposed to the open market. The solution posited by Libra is to back the coin with “low-volatility assets.”
Speaking of which…
6. The Cryptocurrency Will Be Backed by Bank Deposits
Facebook’s token will be backed by bank deposits. | Source: Shutterstock
The Libra will be a “pegged” cryptocurrency, but not to gold, the dollar, or any other traditional peg. Rather, several “low volatility” assets have been identified to act as the financial backbone behind the digital coin:
“…it will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks.”
In another slap in the face to hardcore crypto enthusiasts, the Libra will be tangled up in the very financial infrastructure Bitcoin was created to circumvent.
7. Decentralization Will Increase Over Time
While the founding members of the Libra Association belong to the financial and technological elite, apparently that won’t always be the case.
The transition from corporate oversight to community governance is expected to take five years:
“An important objective of the Libra Association is to move toward increasing decentralization over time. As discussed…