Libra (cryptocurrency) — Crypto News

4 min readJun 27, 2019

Libra is a proposed permissioned blockchain virtual currency, put forward by the American social media conglomerate Facebook. The project, currency and transactions are to be managed and entrusted to the Libra Association, a membership organization founded by Facebook’s subsidiary Calibra and 27 others across payment, technology, telecommunication, online marketplace, venture capital and nonprofits.

As of June 2019, the currency and network do not yet exist. Some rudimentary experimental code has been released.

History

Facebook vice president David A. Marcus moved from Facebook Messenger to a new blockchain division in May 2018 First reports of Facebook planning a cryptocurrency, with Marcus in charge, emerged a few days later. By February 2019, there were more than 50 engineers working on the project.

Confirmation that Facebook intended a cryptocurrency first emerged in May 2019. At this time it was known as “GlobalCoin” or “Facebook Coin”.

Libra was formally announced on June 18, 2019.

A first version is projected to be released in 2020.

Currency

The plan is for the Libra token to be backed by financial assets such as a basket of currencies, and US Treasury securities in an attempt to avoid volatility. Facebook has announced that each of the partners will inject an initial US$10 million, so Libra has full asset backing on the day it opens.

Libra service partners, within the Libra Association, will create new Libra currency units based on demand. Libra currency units will be retired as they are redeemed for conventional currency.

Initial reconciliation of transactions will be performed at each service partner, and the blockchain’s distributed ledger will be used for reconciliation between service partners. The intent is to help prevent everyone but members of the Libra Association from trying to extract and analyse data from the distributed ledger.

In contrast to cryptocurrencies such as bitcoin which use permissionless blockchains, Libra is not decentralized, relying on trust in the Libra Association as “a de facto central bank”.

Implementation

Blockchain consensus

Libra will not rely on cryptocurrency mining. Only members of the Libra Association will be able to process transactions via the permissioned blockchain.

Libra hopes to transition to a permissionless proof-of-stake system within five years, though their own materials admit that no solution exists “that can deliver the scale, stability, and security needed to support billions of people and transactions across the globe through a permissionless network.”

Software

Libra’s source code is written in Rust and published as open source under the Apache License with the launch on 18 June 2019.

Elaine Ou, an opinion writer at Bloomberg News, tried compiling and running the publicly released code for Libra. As supplied, the software did little more than allow fake coins to be put in a wallet; almost all of the white paper functionality is not implemented, including “major architectural features that have yet to be invented.” Ou was surprised that Facebook “would release software in such a state.”.

Move

Move is the Libra blockchain’s proposed smart contract and custom transactions language. It is planned to be a statically-typed programming language, compiled to bytecode.

The project gives this example of a Move peer-to-peer transaction script in the Move white paper:

public main(payee:address, amount: u64) {let coin: 0x0.Currency.Coin = 0x0.Currency.withdraw_from_sender(copy(amount)); 0x0.Currency.deposit(copy(payee),move(coin)); }

Libra Association

Facebook had previously established the Libra Association to oversee the currency, founded by 28 members in Geneva, Switzerland:

Payments: Mastercard, PayPal, PayU, Stripe, Visa Inc.
Technology and marketplaces: Booking Holdings, eBay, Facebook’s subsidiary Calibra, Farfetch, Lyft, MercadoPago, Spotify, Uber
Telecommunications: Iliad SA, Vodafone
Blockchain: Anchorage, Bison Trails, Coinbase, Xapo
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 association hopes to grow to 100 members with an equal vote, while Facebook expects to “maintain a leadership role through 2019”.

Reception

The project has faced criticism and opposition from central banks. The use of a cryptocurrency and blockchain for the implementation has been questioned.

Regulatory response

On June 18, 2019, Maxine Waters, Chairperson of the United States House Committee on Financial Services Committee asked Facebook to halt their plan to the development and launching of Libra citing a list of recent scandals. She said, “The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies”.

Privacy concerns

Industry observers have speculated whether Libra will provide meaningful privacy to its users. Facebook’s plan is to let its subsidiary Calibra manage Libra for Facebook users, and Facebook executives have stated that Calibra will not share account holder’s purchase information with Facebook without authorization. However, the system is also planned to include a friend-finder search function, and the use of this function will constitute permission for Calibra to combine the account holder’s transaction history with their Facebook account.