Facebook’s cryptocurrency, and the company's long-rumored, vast ambitions in the crypto space, are real.?
On Tuesday, the company announced Libra, a decentralized cryptocurrency that will allow users of Facebook and WhatsApp to easily send each other money and make online purchases.?
The news, however, is far bigger than that, transcending Facebook itself in several aspects. Read what it all means in our deep dive, here.?
Libra isn’t just Facebook’s project. It’s backed by the Geneva, Switzerland-based Libra Association, a non-profit organization with a long list of founding members who will jointly make decisions over Libra. Besides Facebook, the list includes Mastercard, Visa, PayPal, Stripe, eBay, Uber, Lyft, Spotify, Coinbase, Xapo, Andreessen Horowitz, Union Square Ventures, Mercy Corps, and Women's World Banking, among others.
Libra's official logo.
Image: Libra association
These corporations and organizations, which will be joined by others in the future (the goal is for the member list to ultimately have 100 names), will jointly make decisions over the direction of Libra, and Facebook tells me it will not have special preference over other members.?
Libra, the stablecoin
Libra itself is a stablecoin — a special type of cryptocurrency that remains fairly stable compared to the value of another fairly stable real-world asset, such as the U.S. dollar. Unlike most stablecoins today (USDC, TUSD and DAI are examples), the value of Libra will not be pegged to the value of a single fiat currency (like the U.S. dollar), but its value should never go up and down by 10% on a daily basis as it sometimes happens with cryptocoins such as Bitcoin and Ethereum.?
Libra will be fiat-backed, meaning that there will be a $1 worth of bank deposits and short-term government securities guaranteeing for every $1 worth of Libra.?
Important traits of Libra coin: Global, inclusive, easy to use.
Image: Facebook/Libra Association
The main driver behind the project, Facebook claims, is to create a new global currency that will include the 1.7 billion people who are still unbanked. Key features are low cost of transactions, ease of use, security and support by numerous strong backers who will drive adoption.?
Libra, the blockchain
Libra is based on an entirely new blockchain, a heavily modified version of VMWare's recently announced HotStuff. It's complex stuff (again, I've gone into more detail here), but the very short version is that it's similar to Bitcoin in that it's a digital currency, and similar to Ethereum in that it's a smart contract platform. It's faster than both (potentially allowing for thousands of transactions per second) but also less decentralized, as it currently only allows approved partners to run a node, which is a backbone of the network. ?
The Libra Blockchain will be open-source, and once it's launched, which should happen in the first part of 2020, everyone will be able to use it and build products on top of it. Facebook expects that most services and products built on top of Libra will be finance-related.
Calibra: Facebook's wallet for Libra
One of the first applications built on top of the Libra blockchain will be Calibra, a cryptocurrency wallet that will allow users to receive and send Libra. In contrast to Libra, the stablecoin, and Libra, the blockchain, Calibra (the company) is a subsidiary of Facebook, and the development of Calibra (the wallet) will be under Facebook's control.?
An early look into Calibra, Facebook's Libra wallet.
Image: Facebook/Libra Association
Kevin Weil, the VP of Product for Calibra told me that Calibra will let users send and receive money "instantly, for little or no cost, to anyone in the world, or any business in the world."
The most important aspect of Calibra will be its integration with Facebook's Messenger and WhatsApp. It will allow users of those apps to easily sign up, top up their wallets with funds, and send, receive and pay with Libra, all from within the apps. Calibra will also be available as a standalone app for iOS and Android.?
Signing up for Calibra will require KYC (know your customer) verification, meaning that users will have to upload some sort of government-issued ID before they can start using the service. Kevin Weil told me the onboarding process will be as simple as possible, "almost chat-like." Important: Facebook claims that Calibra will "not share account information or financial data with Facebook, or any third party without customer consent."
On the security front, Calibra will have built-in fraud protection, password recovery, and multi-factor authentication. One Calibra feature that cryptocurrency wallets typically don't have will be 24/7 customer support.?
Kevin Weil told me, however, that it's "super-early" for Calibra and that Facebook's still got a "ton of work to do" before Calibra can go public. To be notified when Calibra becomes available, you can sign up over at calibra.com.
