The world’s largest social network Facebook announced the launch of its cryptocurrency Libra on June 18, 2019. This announcement immediately sparked many negative reactions, while the virtual currency is not yet launched on the crypto market. Despite these few demonstrations, cryptocurrency is eagerly awaited by cryptotraders.
Libra, the new cryptocurrency
Facebook’s development of cryptocurrency has fueled a lot of rumors online. These rumors were finally lifted with the company’s official announcement of the arrival of its virtual currency.
What is Libra?
The Libra consists of a cryptocurrency, that of Facebook. It is more precisely a stablecoin. The American company aims to make cryptocurrency accessible to the general public around the world. It promises that Libra will be accessible on many trading platforms around the world.
The Libra consists of a cryptocurrency, that of Facebook. It is more precisely a stablecoin. The American company aims to make cryptocurrency accessible to the general public around the world. It promises that Libra will be accessible on many trading platforms around the world.
The specificities of Libra
Virtual currency has some similarities with other cryptocurrencies. Just like Bitcoin transactions, Libra transactions are recorded in a distributed blockchain ledger. Remember that blockchain technology is the subject of a webinar in the blog Wallcrypt . Virtual currency stands out from its competitors by its performance. The number of transactions per second of Bitcoin and Ethereum is around 10 to 15, while that of Libra is around 1000.
Unlike Bitcoin, Libra is very energy efficient. Traditional cryptocurrencies exhibit high volatility. As a stablecoin, Libra has a stable price. The company insists that its digital currency is very easy to use. This simplicity is the motivation for adopting this new payment method.
Facebook partners in the cryptocurrency project
The standalone Calibra app is the official cryptocurrency wallet. It will be available in the App Store and Google Play. The wallet is also available on Facebook’s Messenger and WhatsApp applications. Facebook benefits from numerous partnerships with:
- MasterCard, PayU, Stripe, Visa and PayPal payments
- Booking, Spotify, Uber, eBay, Farfetch, Mercado, Lyft and Facebook / Calibra technologies
- Telecommunications: Vodafon Group and Iliad
- Blockchains: Anchorage, Coinbase, Xapo Holdings Limited, Bison Trails
- Capital Ventures: Breakthrough Initiatives, Union Square Ventures, Thrive Capital, Andreessen Horowitz
How does Libra work?
Libra presents a unique way of operating when it comes to validating nodes, anonymity of transactions and stability of the value of cryptocurrency.
Validate transactions
Validating nodes belong to authenticated actors who are trustworthy. Proof of work is the consensus generally used by the majority of cryptocurrencies, including Bitcoin. Libra is based on proof of authority. This consensus is summed up by the need for permission to perform transaction validation.
Libra uses a programming language called Move which uses smart contracts. The platform also makes use of applications that run on the blockchain and initiate transactions, depending on a certain condition, such as specifying the amount to be exchanged.
The anonymity of transactions
When it comes to anonymity, Libra has some similarities to Bitcoin. The protocol does not offer any mechanism for protecting user data. It is easy to determine the origin and destination of transactions. To compensate for the anonymous nature of transactions, Facebook offers: pseudonymity. The company also offers to perform analyzes to detect illegal and fraudulent activity within its platform.
Facebook has taken advantage of the Ethereum fee calculation mechanism called “gas prices.” The calculation is based on the complexity of the transaction and varies according to supply and demand. This method improves the use of the blockchain during periods when it has low activity.
Ensure the stability of the stablecoin
The majority of stablecoins are backed by a single currency or asset, such as the dollar or the euro. Conversely, Libra relies on a multitude of asset reserves that ensure the stability of the value of the cryptocurrency. The digital currency is pegged to the value of the euro, the dollar and many other assets in the Libra reserve.
The Libra reserve consists of bank deposits and government securities which could increase. The reserve is managed by the Libra association. The latter has 28 founding members. To become a member of the association, you need to invest a minimum of $ 10 million. The payment of this sum gives the right to a Libra Investment Token. It is a specific token that carries a portion of the future interest accrued by the reserve.
Cryptocurrency attracts the wrath of opinion leaders
Following its official announcement, the cryptocurrency has already generated negative protests against it. The boss of Tracfin and the French Minister of Economy and Finance warn against the use of this virtual currency.
Bruno Dalles’s concern
Bruno Dalles, the boss of Tracfin (an anti-money laundering unit of the Ministry of the Economy) denounces the illegal drifts likely to hit this digital currency. The politician explains his concerns about the risks of cryptoassets in money laundering and anonymity.
The boss of Tracfin invites the company Facebook to contact the Prudential Control and Resolution Authority to make the necessary regulations. The director also warns users against the capture of personal financial data by the American firm through the use of its cryptocurrency.
Bruno Le Maire’s warning
The Minister of Economy and Finance Bruno Le Maire believes that the cryptocurrency Libra could not become a sovereign currency. The minister asks Facebook to guarantee its virtual currency so as not to be misused for criminal purposes, such as the financing of terrorism.
The minister is worried about a possible collection of massive amounts of user data by the company through its cryptocurrency. Remember that using cryptocurrency and registering for Calibra (the Libra wallet) require KYC verification. This method worries the minister more, as the KYC asks for an official identity document. This data could be used for marketing purposes. It is sure that governments will be able to launch actions against stablecoin.
Read the articles on LIBRA:
Les echos site: EXCLUSIVE Xavier Niel invested in Facebook’s cryptocurrency project
Le monde site: With the libra, Facebook wants to shake up currencies
The Express site: Libra, the cryptocurrency of Facebook, makes Tracfin tick
Journal du coin website: Finance Minister Bruno Le Maire warns Facebook: Libra will not be a sovereign currency
Theconversation.com site: Facebook creates its own business ecosystem with its Libra cryptocurrency
Site http://h16free.com : Cryptomonnaie : le Libra sera libre comme les démocraties populaires sont démocratiques et populaires…
