An Insight Into The Libra Cryptocurrency
The company understands that any privacy concerns with its new digital currency might significantly affect its uptake by the public. Therefore, Calibra will be run as a separate entity and will ensure that social media data is never linked with a user’s digital transactions. This means that Facebook will never use your financial information while using this cryptocurrency for ad targeting.
Libra Association and Calibra will have their headquarters in Switzerland where privacy and business laws are favorable. They promise to deliver a stable virtual currency (backed by a basket of currencies) that makes use of safe, fast, and secure blockchain technology. Here’s a look into the Libra Association.
What is the Libra Association?
The Libra association is a guild of companies that are Founding Members of this digital currency. Currently, there are 28 companies in this association, but the plan is to have a total of 100 members who will act as the validators of the Libra currency. Every entity in this organization will get one vote when it comes to making decisions relating to Libra. No member will have more than 1% of the total vote.
The business enterprises inside the Libra Association are expected to earn interest on their Libra Investment Tokens. The companies will be buying tokens worth $10 million upon joining the association and are expected to increase their investment to $100 million by the time is released to the public in early 2020.
The 28 organizations currently in this are from different business sectors, including investments, telecommunications, social media, e-commerce, travel, music, ride-share, non-profit, blockchain, and payments.
The companies from the investment sector include Andreessen Horowitz, Creative Destruction, Thrive Capital, Ribbit Capital, Breakthrough Initiatives, and Union Square Ventures. Coinbase, Xapo, Anchorage, and Bison Trails are companies from the blockchain sector.
From the media, we have Vodafone and Iliad as telecoms. Facebook and Calibra from the social media sector. The e-commerce entities in the association include Farfetch, eBay, and Mercado Libre, and the payments sector is represented by Mastercard, PayU, PayPal, Stripe, and Visa.
From the travel sector, there’s Booking Holdings. Uber and Lyft are from the ride-share industry. There are also several non-profit organizations in this association, such as Kiva, Mercy Corps, and Women’s World Banking.
Criteria for Joining the Libra Association
Currently, there are only 28 members in the Libra Association out of the proposed 100. Therefore, the association is looking to take in more members to solidify the digital currency’s position as one of the best cryptocurrency offerings. There are different criteria for the entities in various business sectors to join.
For a business entity looking to join this Founding Members association, they need to have a market value of more than $1 billion or have customer balances exceeding $500 million. They also need a customer base of about 20 million people a year across the globe. And finally, be recognized by any third-party association such as Fortune 500 or SandP Global 1200 as an established top-100 industry leader.
Any business entity that meets any two of the above criteria gets the approval to join the organization. Once approved, the enterprise must be ready to make a $10 million worth initial minimum investment in Libra Investment Tokens provided by the association. Moreover, the new entities will have the option of running their self-hosted blockchain nodes, which they will be directly managing. On the other hand, the enterprise can choose to have their blockchain nodes be cloud service hosted where a cloud service provider will run it.
Blockchain Companies and Crypto-Focused Investors
Blockchain companies and crypto-focused investors looking to join the Libra Association are getting some leeway when it comes to criteria requirements. This is because the blockchain industry is still in its infancy. Despite this leeway, the members of this sector cannot exceed more than a third of the total members.
Enterprises in this category will need to have at least $1 billion of assets under their management. Furthermore, the company’s infrastructure will need to have been in operation for not less than 12 months. The business entity should also have enterprise-level privacy, infrastructure, and security. Additionally, the company must be staking or have in their custody assets worth more than $100 million for its clients. Organizations in this category that do not meet some of the criteria mentioned above but are deemed by the association to have meaningful contributions can be exempted and allowed to join.
Academic Institutions and Social Impact Partners
Academic institutions and social impact partners, such as non-profit organizations are also allowed to join the Libra Association. A non-profit organization must show a willingness to serve both the underbanked and unbanked through the use of blockchain technology.
Such an organization has to have been working on poverty alleviation within the past five years. Additionally, it must have put initiatives in place that would facilitate digital financial inclusion.
The entity has to be operating globally and display a credible and recognized level of trust. Moreover, it must have a proven track record for its social impact initiatives. If it’s a charity organization, it must have at least a $50 million annual operating budget.
An academic institution, on the other hand, has to among the top-100 ranking by QS World University Rankings to join the association as a Founding Member. Additionally, the institution’s computer science department has to be among CSRankings top 100 departments globally.
Academic institutions and social impact partners do not have to purchase any token investments after their approval. Despite this, they still have to take care of their blockchain nodes running costs, which is estimated to be $280,000.
Let’s discuss more of the advantages and disadvantages of the Libra crypto.
Expected Pros of the Libra Virtual Currency
Stability is the key issue that’s going to put Libra straight on top of other virtual currencies. Libra is backed by some of the biggest companies in the world, and they are making considerable investments to guarantee its stability. The million-dollar Libra Investment Token purchased by Libra Associates is expected to make Libra more stable than its unbacked counterpart cryptos. Bitcoin, for example, has been through some bubble burst, leaving investors in financial mayhem. Facebook is drawing lessons from such fallouts.
Therefore, unlike its sister cryptos that rely on market confidence, Libra is going to be stable in all economic scenarios.
Fiat deposit → creates Libras.
Withdrawals → burns Libras.
Ease of Use
Did you know that Zuckerberg took a tour to Kenya to understand the secret behind runaway M-Pesa’s success? East Africa’s number one money transfer platform makes no use of specialized software but just some simple protocols that are easy to carry out. Moreover, Zuckerberg is keen on getting Libra to be as simple as that, unlike Bitcoin and Ethereum, that need computer-savvy nerds. It’s going to live on your smartphones without some specialized software requirements.
A Global Community of Users
Given the reach of Facebook, their cryptocurrency will likely be used by a massive global community. When launched to the public, it will be easy for Libra to become the most widely used cryptocurrency on the planet. This means that it will be more convenient to use this digital currency as most people and businesses will accept it all around the world.
Curbing Digital Threats
As already mentioned, Facebook launched Calibra to ensure social media data doesn’t sip to the crypto data. Then there’s the other proposed way to handle hacks by cutting off any part of the Libra blockchain affected in case of a severe cyber-attack. This will ensure that the attack does not spread to the entire system. The company will also be carrying out system security checks and upgrades from time to time to close loopholes.
It’s not going to be free to transact using Libra, but it’s going to be cheaper than any other digital transaction mechanism around, thanks to the assets of the Libra Association. For average daily users, this is something to be happy about, secure, safe, and cheap online transactions anywhere anytime. For example, if you are paying for a ride-share service like Uber or Lyft or shopping online, you won’t notice the fee.
However, for large money transactions, the fee has been set high to deter criminals from taking advantage of Libra to facilitate their illegal activities, which brings me to the cons of the crypto.
It may be subject to business manipulation
The truth is that businesses solely exist to make money. Libra is a currency that will be managed by an association of businesses. Without any government regulation, this digital currency can be subject to manipulation by the companies when they are looking to make more money.
In a bid to regulate this cryptocurrency, governments may come in and put up unfavorable laws. These laws may make it hard to use Libra cryptocurrency.
As of the moment, the Libra cryptocurrency is yet to hit the market, most of its pros and cons are just speculation. The U.S. Senate will hold a special sitting next month to deliberate about this digital currency. A lot is likely to change between now and early 2020 when Libra will be released to the public.
When the digital currency is released to the public, you will be able to pay for ordering a ride-share service like Uber or Lyft effortlessly. You can also do your shopping on e-commerce sites like eBay, Mercado Libre, and Farfecth with Libra. Holiday booking via sites like Booking Holdings will also be made using this digital currency.