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Facebook Announces Libra Cryptocurrency & Calibra Digital Wallet


Facebook Announces Libra Cryptocurrency & Calibra Digital Wallet

Today, Facebook made their scheduled announcement around plans for a “global currency… powered by blockchain” with a planned launch of the first half of 2020. To explain the plans they have launched two websites: for the digital currency and for the digital wallet.

Libra Digital Currency

From Libra:

According to the Libra white paper: “Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.”

Libra consists of three parts:

  1. Technology: It is built on a secure, scalable, and reliable blockchain – the software that implements the Libra Blockchain is open source — designed so that anyone can build on it;
  2. Stablecoin: It is backed by a reserve of assets designed to give it intrinsic value – a basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created;
  3. Governance: It is governed by the independent Libra Association tasked with evolving the ecosystem – an independent, not-for-profit membership organization, headquartered in Geneva, Switzerland, to coordinate and provide a framework for governance for the network and reserve and lead social impact grant-making in support of financial inclusion.

These are the founding members of the Libra Association (target is 100 members by the time the currency launches):

  • 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

The Libra blockchain itself is being built with three requirements in mind:

  1. Able to scale to billions of accounts, which requires high transaction throughput, low latency, and an efficient, high-capacity storage system.
  2. Highly secure, to ensure safety of funds and financial data.
  3. Flexible, so it can power the Libra ecosystem’s governance as well as future innovation in financial services.
    • It is built using the new “Move” programming language, which will allow for smart contracts
    • More information can be found in their technical white paper
    • The Libra testnet is currently open for developers.

The Libra currency is “designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra.” Libra is not a “peg to a single currency” (i.e. not a USD stablecoin — more on the Reserve policy here).

Calibra Digital Wallet

Users will be able to transact with Libra via Facebook Messenger, WhatsApp, and Calibra (with 365/24/7 support in app):

Although the Libra Blockchain is “pseudonymous and allows users to hold one or more addresses that are not linked to their real-world identity,” in order to use the Calibra wallet, users will need to sign up by verifying identity using a government issued ID.

One of Libra’s goals is to help bank the unbanked, many cannot get banking due to not having a government issued identity.

Businesses will be able to accept Libra by:

The first version of Calibra will support peer-to-peer payments and a few other ways to pay such as QR codes which small merchants can use to accept payments in Libra. Over time there will be many others including in-store payments, integrations into Point-of-Sale systems, and more.”

Facebook has had many issues with data privacy and security over the past year. Calibra has made a Customer Commitment to keep transaction activity safe and private, so we will see if this is Facebook’s way of regaining trust and building a new system that learns from the one that previously failed users.

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