Facebook Libra

Logo Libra

Brief timeline

  • March 2018 Cambridge Analytica scandal
  • May 2018 Facebook established a blockchain division
  • December 2018 News that Facebook is building a cryptocurrency
  • June 2018 Formally announced Libra and released whitepaper
  • 2020 Launch

Why?

Reaching Out to the unbanked

  • 2 billion people don’t have a bank account
  • 20% of unbanked adults receive wages in cash
  • India, target market for Libra, has 190 million unbanked folks

Why?

Unbanked

How?

  • Mobile phone users in 2019 is 5.135 billion
  • Internet users in 2019 is 4.021 billion
  • Social media users in 2019 is 3.196 billion
  • Facebook alone has 2.38 billion monthly active users

Extremely likely that Facebook will be able to convince their user-base to adopt Libra

How? - Coordination

A B
A (10,10) (0,0)
B (0,0) (10,10)

What?

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

What?

5 essential components/features:

  • Built on a secure blockchain
  • It is a stablecoin, backed by a reserve of assets
  • Governed by the independent Libra Association
  • Uses the LibraBFT consensus mechanism
  • Smart contracts through “Move” programming language

What? - The Libra blockchain

  • Not really a blockchain in the traditional sense
  • Doesn't has blocks as core data structure.
  • “decentralized, programmable database” instead
  • Libra, like Ethereum, works on a gas model

What? - Stablecoin

  • Backed by the Libra Reserve
  • Backed by real assets
  • Causes store of value (no or little volatility)
  • Reserve assets will be used to
    • Cover costs of the system
    • Ensure low transaction fees
    • Pay dividends to the investors (The Libra Association)

What? - Libra Association

  • The governing entity of the Libra blockchain
  • Headquartered in Geneva, Switzerland
  • Validates the network’s nodes
  • Governed by the Libra Association Council, comprised of one representative per validator node
  • Approval via a 2/3rd majority vote

Partners

partners

Partners

  • A lot of regulations and heightened scrutiny
  • Negative comments about how everything is setup
  • Causes some major partners to leave

PayPal, Visa, Mastercard, Stripe, eBay, and Mercado Pago

Future?

Future

  • Will it be successful?
  • Will it ever see the day of light?

Chinese CBDC

Central Bank Digital Currency

Yen

Chinese CBDC

  • Revealed in August 2019
  • Unlikely to be blockchain-based
  • Two-tier structure
    • Central bank issuing currency to banks
    • Banks circulate the currency amongst their customers
  • 100% backed by central bank deposits

Why two-tier structure?

  • PBOC doesn’t want to become consumer-facing
  • Banks can leverage existing infrastructures
  • If targeted directly, the scale of the infrastructure would be too large

Other reasons?

  • Plan is to have “controllable anonymity”...
  • Government could likely take a look at transactions
  • Integration social credit system
  • ... maintain power?