I've never seen so many articles on my crypto news feed all revolving around the same topic. There must have been 20 of them.
This was one of the better ones. Most of the articles focus on whether Bitcoin needs to worry about Project Libra or if it will actually help crypto. Others talk about how LBR isn't actually a cryptocurrency. Thankfully I was able to find at least one that actually summarized the content of the whitepaper. lol
Libra (LBR) is a cryptocurrency built on top of the Libra Blockchain. It is fully collateralized by the Libra Reserve, which is a basket of cash deposits (corresponding to several fiat currencies) and low-volatility cash-equivalent assets such as "government securities in currencies from stable and reputable central banks."
According to the official Libra white paper, initially, this will be a permissioned blockchain that uses LibraBFT, a Byzantine Fault Tolerant consensus protocol, which makes it "extraordinarily difficult for an attacker to compromise 33 separately run nodes that would be required to launch an attack against the system."
At the mainnet launch, the Libra Blockchain will be secured by 100 validating nodes.
The white paper also notes that as with other major blockchains, transactions will be pseudonymous:
“Transactions do not contain links to a user’s real-world identity... This approach follows the norm of pseudonymous transactions adopted by other major blockchains. This approach is familiar to many users, developers and regulators.”
I find this interesting. They are going to try and obfuscate the public facing transnational data while personally knowing everything that is going on due to the KYC required for buying in/out. However, it makes me wonder if you could use Libra fully anonymously.
Imagine paying your friend $1000 to send you 1000 Libra. As long as you don't ever cash out any of that money to your own identity you'd remain completely anonymous.
Each member has invested at least $10 million to be part of this governing consortium.
Ben Maurer, Facebook’s blockchain technical lead, told CoinDesk that although initially only those founding members can run a validator node, Facebook is hoping that eventually node participation will be open to everyone, i.e. a lot more decentralized:
Interesting...
Each investment of $10 million gets a member one vote (no member is allowed to have more than 1% of total votes).
Users of Libra "do not receive a return from the reserve." Instead, the interest income from the funds in the Libra Reserve will be spent in two ways:
- "to support the operating expenses of the association", such as "investments in the growth and development of the ecosystem, grants to nonprofit and multilateral organizations, engineering research"; and
- "to pay dividends to early investors in the Libra Investment Token for their initial contributions."
Okay, now this is super interesting. All the INTEREST on this banked fiat pegging Libra to a stable value is going straight to investors and development.
And how do banks get the most interest from fiat reserves? Fractional reserve lending. Therefore, most of the collateral that pegs Libra's stability will exist as a secured loan that takes the form of some asset or another (car/house/etc).
At best we can likely assume that only 20% of that fiat is going to be held liquid in a bank. If a global recession strikes the economy and those secured loans don't get paid back the entire system could fail. (Assuming the value of the underlying asset's collateral deteriorates.) Hell, maybe this debt will even be issued as credit cards... which would make the entire system even more unstable.
In addition to sniping all the interest for themselves, Project Libra will also obviously monetize the datamine. They'll find spending patterns among groups of people and throw targeted advertising at them... things like that. It's no wonder why so many corporations are clamoring to be a part of this project.
Calibra is a wallet for Libra. It is available both as a standalone mobile app (which means you do not need a Facebook account) and also from within Facebook's Messenger and Whatsapp. It will allow you to send/receive money (Libra) to/from other people; top up (which means converting your local currency into Libra); and withdraw local currency (which requires conversion from your Libra to fiat).
It is these conversions that will surely have the KYC/AML rules in place. All the more reason to wonder if Libra really can be used anonymously if you never enter or exit the system using KYC.
In the future:
“Implied in this project is that wherever the Visa or Mastercard logo are accepted, Libra would follow suit. In so many ways it’s a great leap forward for cryptocurrencies and, in many respects, a mainstreaming of this asset class.”
"Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent."
I trust you.
This is what cryptocurrency is all about: trusting the people in charge.
Disclaimer: consent is opt out by default. Trollolol.
Conclusion
This is actually an exciting project. Sure, it is the antithesis of decentralization and what we are trying to achieve. We are honor bound to hate it. However, we are also honor bound to hate fiat, central banking, corporations, governments, etc. etc. Yet, all of us still use and are affected by these centralized agencies.
Libra will not compete with the cryptosphere. It can only strengthen it. Libra is in competition with banks (and hopefully Ripple). Libra will be the ultimate form of centralized crypto with a built-in audience of BILLIONS.
This is all part of the process of finding the middle ground. Once the middle ground is discovered it will shift more and more toward decentralization because that's where the value is. Until then grab some !popcorn and enjoy the ride. It's going to be a bumpy one.