Facebook just released the highly anticipated white paper of Libra, its blockchain-based payment system that should bring cryptocurrencies to the mainstream in 2020.
Facebook’s cryptocurrency is a stablecoin built on the Libra blockchain to be backed by a reserve of assets and national currencies. The reserve is funded by fiat deposits and government securities that are supervised by Libra Reserve.
Further on, a not for profit institution called Libra Association which is made up of renowned private companies like Mastercard, Visa, PayPal, Uber, Coinbase and eBay will act as founding members that will provide governance for the Libra digital currency.
The aforementioned founding members are also acting as validator nodes for the Libra blockchain, each of them investing around $10 million and holding voting rights in the Libra Association Council.
In addition to Libra stablecoin Facebook will also provide the Libra Investment Token which will become available for purchase only to the founding members and investors that participated in the creation of the blockchain-based payment system.
Facebook did not mention that Libra will be pegged to a certain national currency and only specified that the large reserves protect the stablecoin from volatility.
From a technical point of view, analysts were surprised to find out that the Libra software is open source in order to encourage the emergence of an interconnected environment of financial services.
Although Libra has been created to improve cross-border payment operations on Facebook, the stablecoin will become available also to users who prefer WhatsApp, Messenger and Instagram. This means Libra will reach almost 2.7 billion users bringing cryptocurrencies into the mainstream space.
Regarding Libra’s decentralized nature, Facebook admits in the white paper that the blockchain they created is not yet decentralized or permissionless. And yet they promise that: “Together with the community, the association will research the technological challenges on the path to a permissionless ecosystem so that we can meet the objective to begin the transition within five years of the launch.” More details about Facebook’s crypto project will appear in the following weeks.