Facebook Coin is Nothing Like Bitcoin

On the surface, the Facebook Coin, AKA libra Coin looks like a direct challenge to bitcoin. I can assure you this is nothing like bitcoin. Facebook coin is powered by a group of the most important tech companies, communication networks, and payment processors in the world.


The Libra currency is so opposed to the decentralized and privacy-centric vision of the Cypherpunks that Satoshi himself may even re-emerge to fight it. With that said, it does offer a healthy alternative to the current banking system and it does promote financial inclusion. The danger is not in the initial implementation of Facebook’s new currency, it’s in the power they will attain over time by becoming the world’s bank.


The Libra coin is designed to be a low-volatility digital currency that is “secure, scalable and reliable”. The coin will derive its stability through a collection of low-volatility assets like bank deposits and government securities in central bank currencies like USD, GBP, EUR, and JPY. The coin itself will not be “pegged” so there will be opportunities for arbitrage among major exchanges.


Facebook is marketing their coin as addressing two global problems,

The high cost of global money transferBanking the unbanked.

Facebook will have a consumer-facing custodial wallet for holders and users of the Libra coin. This was set up as a regulated subsidiary in order to separate social and financial data.

the libra blockchain looks like a direct challenge to all the existing native protocols struggling to support smart contracts

The cryptocurrency will be run on a native blockchain protocol developed by Facebook and governed by a non-profit association based in Geneva, Switzerland. The Libra blockchain will not be regulated, which is clearly no accident, and developers building on the blockchain will have a responsibility to comply with laws and regulations in the jurisdictions in which they operate. The Libra blockchain will be an accounts based system, enabling smart contracts written in a native programming language, similar to Ethereum.


The Libra Blockchain has lined up a number of internet-powerhouse supporters including the likes of Mastercard, Paypal, Visa, eBay, Uber and Spotify. The foundation eventually hopes to have 100 geographically diverse founding members such that no single member can represent more than 1% of the vote – including Facebook. Enterprises who serve as validators on the network must invest a minimum of $10 million worth of Libra tokens.

Underneath I expect that project Libra is the ultimate Trojan horse into the Web 3.0 stack

Project Libra is raising money through a security token offering (STO) to fund incentive programs and covers operating costs. This will only be open to accredited investors. The potential return for investors comes in the form of interest on the reserves – which will be invested by the foundation.


Summary

The project is essentially a consortium blockchain with the world’s most important tech companies, communication networks, and payment processors. Aligned with the common goal of exploiting the consumer, the Facebook-led consortium will challenge banks (and other value transfer services) on a global scale. On the surface, the libra blockchain looks like a direct challenge to all the existing native protocols struggling to support smart contracts. Underneath I expect that this is the ultimate trojan horse into the Web 3.0 stack that we are so passionately and diligently contributing to. 

Bitassist is a research and advisory that translates complex blockchain data into meaningful insights. Click here to stay up to date with the latest crypto-asset market insights.

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