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Facebook's high-profile encrypted currency, Libra, understands its ambitions and obstacles

via:CnBeta     time:2019/6/19 18:52:24     readed:298

In addition, Facebook has set up Calibra, a subsidiary, to develop services such as transfers and payments for Libra. Calibra will also launch a digital wallet next year for WhatsApp and Messenger, two of Facebook's major communications applications. Libra networks also accept third-party wallets.

In addition to low-cost and convenient transfers, Zuckerberg mentioned that Calibra could provide more business and personal services in the future, such as shopping, billing and bus fares.

What is Facebook's Libra?

According to official information, Libra is a stable currency whose mission is to build a simple, borderless currency and financial infrastructure for billions of people.

Libra's main purpose is to pay, and it can also be used in many scenarios such as French currency exchange, storage, trading, etc. It is reported that Facebook has cooperated with large Internet companies in travel, tourism, Hotel ordering and other industries.

At present, Facebook's list of encrypted currency partners includes 26 companies, which are distributed in eight areas: block chains, e-commerce, payment, shared travel, telecommunications, social media and so on.

The White Paper mentions Libra's mission is to build a simple, borderless currency and financial infrastructure for billions of people. Titanium Media Editors have collated Libra's ten main points:

1. "Low Volatility" Encrypted Currency

Libra is defined as a stable currency. Libra is supported by Libra Blockchain, the local intelligent contract block chain platform of Association, which is designed to be "safe, scalable and reliable". It said that it was mainly committed to solving the two problems of encrypted currency, providing banking services for global non-bank accounts and promoting low-cost fund transfers.

2. Managed by non-profit organizations

Libra Association, a Geneva-based non-profit organization, will eventually have 100 geographically diverse founding members. The current founding members include Uber, PayPal, Visa and Andreessen Horowitz (a16z), a Silicon Valley investment giant. According to the association, no member will control more than 1% of the block chain network.

3. Planning transition to no authority

Libra is starting to license block chains, which means (unlike Bitcoin) that only founding members can access the network. But over time, Libra has planned to transition to an unauthorized network, which means that "neither side can unilaterally change the rules of the network."

4. Pseudo-anonymous transactions

All Libra's non-regulatory transactions are pseudo-anonymous. This means that the transaction amount of encrypted currency, timestamps and public block chain addresses are only visible to members of the network, and personal data of people using block chains are not saved. Products such as escrow wallets can complete off-line transactions and may require customers to comply with the "Know Your Customer" (KYC) requirement.

5. Libra's Reserve

Reserves returned to Libra will include a range of "low volatility" assets, such as bank deposits and government securities from stable central banks (such as the US dollar, pound sterling, euro and yen). Libra "is not linked to a single currency, nor is there any fixed value of real money."

6. STO

Libra will also issue a security token called Libra Investment Token as a way to fund incentives and pay operating costs. They are used only as securities by authorized investors. The holder can make a potential profit from the reserve interest.

7. Cost of running nodes

Enterprises as verifier nodes must make initial minimum investments in the $10 million Libra investment tokens issued by the association. The Association estimates that running validator nodes will incur an annual cost of about $280,000. However, NGOs, multilateral organizations, social impact partners (SIP) and universities do not need to invest in joining the association, but they must support the operation of their nodes.

8. FinCEN Registered Entities

Facebook created Calibra to ensure "separation of social and financial data and to represent it on the Libra network to build and operate services." Calibra registered with FinCEN as the Monetary Service Business (MSB) in February 2019 was licensed to operate in all 50 states and nine federal and regional areas in the United States. Calibra's MSB registration number is 31000141265767.

9. Supervision

Developers based on Libra Blockchain will be responsible for complying with the laws and regulations of the jurisdiction where they operate. The Libra block chain itself is not regulated.

Start in 2010 and 2020

Libra Encrypted Currency and the underlying Block Chain Network will be launched next year. The test network will be released in the next few weeks. Developers will be able to read, build, provide feedback, and participate in bug reward programs.

Why does Facebook publish Libra?

Facebook's entry into encrypted currencies is no secret. It has previously been reported that Facebook will focus on developing payment and block chain systems, which support encrypted currencies such as Bitcoin. Facebook's encrypted currency will be pegged to the dollar, so it may remain stable.

With the launch of Libra yesterday, this is also true to previous reports.

It is understood that Libra is managed and issued by the Libra Association. The organization was launched by Facebook and operated by dozens of organizations, including Uber, eBay, PayPal, Mastercard, VISA, Andreessen Horowitz and USV, including many well-known international companies.

So why publish Libra for Facebook?

According to public information queries, 2.5 billion people worldwide use Facebook's services, with annual revenue exceeding $40 billion. But Facebook also has its own problems, because the way of cash flow is too single, which also becomes the hidden danger of future development.

Facebook receives more than 90% of its revenue from advertising every year, according to the US Stock Research Agency. The latest quarterly report shows that of FB's revenue of $12.972 billion, advertising accounts for 98.5%.

In the previous article, we said that the main purpose of Facebook's Libra release is to pay. Payment has huge scale and huge profits.

Take Internet payment in China as an example. With less than 600 million users, China's third-party Internet payments generated about $28 trillion in transactions in 2018.

Compared with mobile payment, digital currency is a lower level direct economic system with natural trust, value exchange and payment mechanism. To pay for this cake, Facebook would not want to miss it either.

In addition to the payment business, Facebook can also cooperate with traditional financial institutions such as banks, funds, securities companies, exchanges, insurance companies, etc. to create various financial products in its own system and become users'access to financial services to earn intermediary fees.

In addition, according to Block Rhythm, organizations and companies that want to join the Libra Block Chain need to pay Facebook $10 million in membership fees and then run nodes on the Block Chain to gain access to data viewing and writing. There are 28 partners on the list that have been announced so far, which will increase to 100 in the future. Facebook can make $1 billion in revenue for this fee alone.

Libra could create a new profit model for Facebook, free it from over-reliance on advertising cash, and possibly raise Facebook to a new level in the future.

Libra has aroused discussion. What are its obstacles?

Facebook's move into encrypted currency has also attracted attention.

According to Reuters, Mark Carney, governor of the Bank of England, is open to Libra, but he also points out that the currency may face strict regulation. "Regulators will have to pay attention to the"operational flexibility"of the encrypted currency, as well as their anti-money laundering and anti-terrorist financing procedures."

Wang Yongli, a former vice president of the Bank of China, said many questions about Libra were not clear. Wang Yongli also said that the term "global currency" or "borderless currency" now refers to sovereign currencies that transcend the state, but these currencies are still the special currency of various network communities or platforms, without borders, but with chain boundaries! In the cyber world, is this really going to the center? How to ensure the efficiency of adjusting rules? Is going to the center the best choice for human society?

After experiencing the beta version for the first time, Robert Mao wrote in a friend's post that Facebook uses block chain technology to implement something like Paypal or Wechat Payment.

It is noteworthy that Ma Huateng also commented on the following: "The technology is mature, not difficult. It depends on whether regulation is allowed.

According to Titanium media, current regulation may be Libra's biggest challenge, after Steven Mnuchin, US Treasury Secretary, said his department was monitoring encrypted currencies to cut off funds used for illegal activities. How to achieve transactions on the basis of compliance has become an urgent problem for Facebook.

According to the Financial Times, Facebook has negotiated with the Commodity Futures Trading Commission (CFTC) on its proposed digital currency. If Facebook wants its encrypted currency to be traded by people unrelated to the company's platform, it will need to communicate with the SEC.

In response to regulation, Facebook also said in the white paper, "We believe that collaboration and innovation in the financial sector, including regulators and experts from all sectors, is the only way to ensure a sustainable, secure and credible support framework for this new system."

In addition, consumer privacy and financial information, the degree of decentralization, whether it will become a money laundering tool, and so on, all need further answers from Facebook.

Today, Facebook has entered the door of encrypted currency, but there are still doubts and objections to Facebook's globalized, borderless encrypted currency plan. How Libra's future will be and whether it can meet Facebook's expectations remains to be verified.

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