Facebook on Tuesday revealed its much-anticipated Libra cryptocurrency project, and in the process it published a corresponding white paper alongside other groups participating in the non-profit Libra Association.
The announcement is significant because it’s the first time a major technology company is implementing a digital currency, which could further legitimize the overall category.
“The existing blockchain systems have yet to reach mainstream adoption,” the white paper states. “Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.”
The document spells out various facets of the project.
- How the currency is funded: The group stresses that its Libra currency is different because it’s backed a reserve of real assets, including short-term securities from central banks. The assets will be distributed on “custodian” infrastructure located around the world. Money for the reserve will come from people who use Libra and Libra Investment Tokens that are bought by founding members of the nonprofit association. Interest on the assets in the reserve will help cover costs for maintaining the system. Only the association can create or delete Libra currency coins.
- The underlying blockchain: In general, cryptocurrencies like bitcoin and ether use a technological concept known as a blockchain, which uses a set of computers distributed among different owners and locations to keep track of all transactions on the system. The idea is that this computerized ledger makes it impossible for bad actors to manipulate the system by creating new coins, or duplicating old ones, out of thin air. The Libra currency depends on a new Libra blockchain database. This database can keep track of resources like Libra coins. The blockchain uses an implementation of Byzantine Fault Tolerance, or BFT, for its consensus protocol, which is a system whereby various “validator nodes” decide to accept or turn down a transaction. “This approach builds trust in the network because BFT consensus protocols are designed to function correctly even if some validator nodes — up to one-third of the network — are compromised or fail,” the association says. “This class of consensus protocols also enables high transaction throughput, low latency, and a more energy-efficient approach to consensus than “proof of work” used in some other blockchains.”
- A programming language: Facebook has developed lots of open-source projects over the years, and as Facebook is leading the initiative, it’s not surprising to see Facebook unveil an entire language called Move, which will enable developers to build atop the Libra blockchain. The new language code and other components of the blockchain are available online on GitHub under an open-source license. The open-source approach is “designed so that anyone can build on it, and billions of people can depend on it for their financial needs,” the organization says.
- Organizational plans: Although the organization already involves more than two dozen companies and nonprofits, it wants to rack up 100 members by the intended launch of the entire system, which will happen sometime in the first half of 2020. The group says it also wants to appoint a managing director.
- Additional information: The group points to detailed technical documents describing the blockchain, the Move language and the implementation of BFT.
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