Facebook has eventually revealed details of its cryptocurrency platform, called Libra. In this blog post we will try to analyze, what does it bring to the cryptocurrency world and whether there are enough organizational and technical preconditions for it to be adopted.
We all have witnessed the rise and fall of Bitcoin and altcoins, we have seen enough to be skeptical about yet another cryptocurrency.
So how is it different and why Libra has to become a worldwide payment tool?
The most significant reason why Libra is to be successful is believed to be not a technical one, but rather related to Facebook's ability to reach its audience of 2.38 billion users. First applications to adopt the cryptocurrency will be Facebook Messenger and WhatsApp.
Another reason is that Facebook isn’t going to control the cryptocurrency, but will have just 1 vote in governance among other investors, which have shown their interest and have invested into it $10 million each. There are such big names, as Visa, Mastercard, Stripe, eBay, Uber and others (28 companies so far).
These companies have sufficient reach and resources to adopt the cryptocurrency and blockchain technology, to give another breath to it.
Libra cryptocurrency will be a stablecoin, as claimed by Facebook. Thus Libra holders can be sure that the value of their assets won’t blur or disappear over time. Libra cryptocurrency value will be tied to a basket of short-term government securities based on international currencies, such as the dollar, pound, euro, and others.
Libra blockchain will handle 1000 transactions per second. That is huge compared to the Bitcoin’s 7 or Ethereum’s 15 transactions per second.
Such throughput is achievable by limiting the number of peers capable to verify the transactions. In Libra network those peers are presented by the founding companies, 28 companies so far.
Libra is built as a permissioned blockchain, where only known peers take part in transaction validation and consensus achievement. Such implementation isn’t decentralized enough and implies the related risks of data to be changed or the inability for some peers to perform a transaction (censorship).
The final destination for Libra is to become a permissionless blockchain based on Proof-of-Stake algorithm.
Despite Libra implementation isn’t a fork of Ethereum (like JPMorgan’s Quorum) it is built considering all today’s experience and issues related to the Bitcoin and Ethereum implementation.
Similarly to the Ethereum, there is a form of a Smart Contract supported, so alongside the transaction within the network there can be the custom business logic executed leading to the global state change.
Such custom logic is to be written using Move programming language, introduced by Libra. You should consider it as Solidity for Ethereum. The only reason there is another language instead of Solidity is that developers have taken into account all the related security incidents which have ever happened with Smart Contracts and created a language that is designed with safety and security as the highest priority.
The goal for Libra is to provide a stable currency to the world built on a secure and open-source blockchain, backed by real assets and governed by independent organizations.
Libra developers haven’t gone their own path but rather leveraged on today’s bright ideas implemented within an Ethereum network. Libra is supported by the huge corporates within different business domains, including the financial ones. All of that provides the hope for the blockchain technology to be adopted widely and to be moved to another level, where the government takes a pro-active part.