Facebook Libra Market Analysis

Today we will be covering one of the newest and most talked about cryptocurrency tokens of 2019, and that is Facebook’s very own take on the blockchain and cryptocurrency technology – the Libra token. The purpose of this analysis is to get more in-depth about the social media company’s way of implementing the blockchain technology, what that means to the potential users, how it will function and why it can be potentially relevant to many people.

Currency name(s): Facebook Libra (LIBRA)
Genesis Block: Estimated to be released in the first half of 2020, the exact date is to be announced
Total Supply: To be announced
Algorithm: Libra BFT protocol – a unique proof-of-stake algorithm
Features: centralized for the time being, global currency, secure, scalable, open source
Website: https://libra.org/en-US; https://developers.libra.org/

What is Facebook Libra?

Much is yet to be determined and revealed about the newest addition to the cryptocurrency community and the blockchain technology – Facebook’s newest worldwide project, Libra. But there are a couple of certainties this new token has done – first of all, it has brought large corporations to use cryptocurrency and blockchain, and second of all, it has sparked interest both within the cryptocurrency community and outside of it. Naturally, once new information is released to the public, such as whether there will be a cap on total supply, whether there are any groundbreaking changes and how valuable this token is once it reaches the markets – we will cover that as well here, in our Libra market analysis.

We have seen when conducting our Libra market analysis that the basic idea behind the creation of this network is to bring the ability to utilize financial services to as many people as it is possible, and considering the number of people who have been utilizing Facebook for communication purposes, the team believes their cryptocurrency can become as widespread as the social media giant has become. Unlike the Bitcoin network, this network is initially very centralized and is led by the Libra Foundation, but it is stated in the whitepaper that once it is adopted, it will become decentralized. The token is also said to be backed by a reserve of various fiat currencies and other assets such as securities with the intent to make it a global currency the users can make payments with on the internet, without the need to convert the funds from one currency to another. That is why the cryptocurrency community sees Libra as a stablecoin similar to Tether (which we covered in one of the previous analyses, you can read about it here) – it is created to minimize volatile jumps in value as well as in price, and to act as a common currency when making payments online.

Technology

For the time being, the cryptocurrency community is kept in the unknown regarding how some parts of this network exactly operate and what the prerequisite to mine its designated token is, then how one can act as a validator within the network and how the processes will be completed in real time. However, the development team has released a whitepaper document where they outline what exactly they have set out to do. Namely, the blockchain itself will operate on a unique proof-of-stake protocol and will have designated validator nodes which will run a consensus to validate new blocks within the chain. The consensus itself is a variant of Byzantine Fault Tolerant consensus approach, which allows the network to function properly and the validator nodes to reach a consensus even in those cases when a third of the whole network is compromised.

Another novelty that the Libra network brings to the cryptocurrency community is its blockchain. Namely, blockchains such as Bitcoin’s are made of different pieces of data and make a puzzle-like structure. The Libra blockchain is, according to their published whitepaper, a single data structure. It also records transactions and blockchain states but makes it easier for applications to access it and read the data they need.

The Libra blockchain is also set to be permissioned when it launches, which is a total opposite of Bitcoin’s permissionless version of blockchain. What this means is that all miners (as Libra will be minable) must seek permission to access the blockchain network in order to mine it.

And finally, the new programming language that the Libra network will operate on, called Move, brings some new as well as some already established features. Similarly to Ethereum, the Libra network can be used to implement smart contracts within the blockchain. Also, these types of smart contracts that will be made on the Libra network will be protected from being spent twice, being cloned or having multiple owners.

The newest Libra network that is being created by Facebook definitely brings certain new approaches to the implementation of the blockchain technology, however, its intrinsic value is still tied to the fiat currencies that it relies on, and as it functions as a stablecoin, we have yet to see how the mass adoption will unravel. The network does have some very powerful backers such as Mastercard, PayPal, Visa, Lyft and Uber, but Bitcoin is still the most powerful in the cryptocurrency world, and we have yet to see how these companies will persuade their customers to use Libra instead of Bitcoin, Ethereum or any other tried and tested cryptocurrency network. But one thing is certain – crypto is becoming more adopted, and this competitiveness can only bring further improvements and innovations we have yet to witness.