Facebook Inc. has just revealed the name of its digital currency. It is called Libra and not GlobalCoin.
The social media giant had announced unofficially last week that it will share its whitepaper today and it is making good on the promise by doing so.
So, the company finally said that its move into cryptocurrency is to go beyond ‘social networking and move into e-commerce and global payments’.
Perhaps to enamour us with the new token, David Marcus, Facebook’s executive behind the project did some storytelling. According to him, “Libra” was inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom”.
“Freedom, justice and money, which is exactly what we’re trying to do here,” he added.
The company looks to target over 1 billion unbanked population who need access to easy, fast and secure means for sending and receiving payment from anywhere in the world.
This is very basic and the expected statement. However, there are some major revelations in the official announcement of Libra.
First is that the company will be based in Geneva (this was exactly what we reported while the rumour about GlobalCoin was flying around). The digital currency derived its name from the Geneva-based firm called Libra Networks LLC.
As to how Libra intends to work, well, Facebook plans an end-to-end integration of the digital currency with its products (or subsidiaries). The company plans to have a wallet called Calibra. The tokens will be stored in Calibra, however, it will be linked to its core products such as Facebook, WhatsApp and Instagram.
To rally global interests in its new digital currency, Facebook has ‘bought’ the interests of major payments giants, telecoms bluechips and adjunct service providers in the global financial system. See for yourself- Mastercard Inc, Visa Inc, Spotify Technology SA, PayPal Holdings Inc, eBay Inc, Uber Technologies Inc and Vodafone Group Plc.
Looking at the coterie of its partners, it is clear that Libra would be Europe and American-focused at least for the first few months or years given the diverse and mostly confusing postures of various countries as regarding the use, acceptance, legality as well as the regulatory frameworks on virtual currencies.
And to show how aggressive the company is, Facebook said it plans to have over 100 partners on the network by 2020.
However, there is a caveat for these elites ‘members’ of the Libra Networks. According to Facebook’s requirements for the existing and would be partners, every member must be ready to invest a minimum of $10 million to join the ‘network’.
Now to come to the meat of this exciting news from Facebook.
First is that Facebook’s Calibra wallet will follow due diligence, know your customer (KYC), and AML procedures that are already existing in various jurisdiction. While this sounds very understandable, it is somewhat against the fundamental principle of digital currencies.
In Facebook’s word- ‘Calibra will conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that are common among banks’.
This means Libra is not in any way, a decentralized crypto and it far from it. Although, to be fair to Mark Zuckerberg, he never claimed it is. Also if all the tech and payment giants on the list are anything to go by, Libra could be the most ‘ centralized’ and ‘controlled’ digital currency to ever exist.
However, in case you are doubting our conclusion that Libra is a centralised digital currency, here is what Facebook said in the whitepaper:
“Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value. The Libra Reserve will be administered with the objective of preserving the value of Libra over time.”
Both there are still skepticism on the part of Libra’s partners. Although industry experts said it is typical of big tech giants to usually downplay a major move. However, their responses are very instructive.
Sri Shivananda, Paypal’s chief technology officer said in an interview with Reuters that the project is still in its “very, very early days,” and there were conversations in progress with regulators.
Mastercard’s Lambert characterized Libra similarly, noting much needed to happen before the launch.
If the project receives too much regulatory pushback, he said, “we might not launch,” he said.
Before you read you close this page, and perhaps you are a Nigerian, there is something to cheer you on as you await the final launch of Libra. Libra’s website actually used the picture of Balogun market in Lagos as its first image describing the new cryptocurrency’s principle.