Facebook has officially announced its Libra cryptocurrency, along with details on its blockchain, governance, and future goals.

In a social media post, Mark Zuckerberg discussed the surrounding structures supporting the Libra crypto, such as the Libra Association, Libra Reserve, and Calibra.

What We Know

The Libra will officially launch in 2020, but the testnet for the Libra blockchain is now up and running in beta mode.

The underlying blockchain is now operating as a permissioned system, but the overall goal is to move the blockchain to a permissionless state.

The Libra blockchain is open-source, allowing anybody to build upon it.

The Libra will be a stablecoin, which will be backed by a reserve of real assets (called the Libra Reserve), and these assets will be a basket of bank deposits and short-term government securities at the beginning.

Governance of the cryptocurrency will be overseen by the Libra Association, a nonprofit entity that is headquartered in Geneva, Switzerland.

The association itself will be governed by the Libra Association Council, which will be composed by single representatives per validator node, which can be purchased for the cool sum of US$10 million.

The current council is comprised of 27 founding members, although Facebook plans on having 100 members in place when Libra officially launches next year.

Current members of the council include companies from different sectors: payments, telecommunications, technology and marketplaces, blockchain, venture capital, and nonprofit, multilateral, and academic entities.

Some of the founding members include PayPal, Visa, Mastercard, Stripe, Iliad, Vodafone Group, Union Square Ventures, Andreessen Horowitz, eBay, Facebook, Spotify, Uber, Lyft, Coinbase, Xapo Holdings Limited, Kiva, and Women’s World Banking.

Facebook will not be in charge of the Libra Association as it will only have one seat at the council table.

The Libra Association can create or burn Libra coins, depending upon the circumstances, but the creation or destruction will be coupled with additional real-world assets being added or withdrawn from the Libra Reserve.

Interest earned on the Libra Reserve will be used to help fund the blockchain project.

Facebook has created a subsidiary called Calibra that will furnish services for the Libra, such as a wallet, although third-party wallets will eventually become available.

Users will initially be able to send Libra through Messenger and WhatsApp, which will then be followed by a standalone app, but Facebook is working with the founding companies to vastly expand the means by which Libra can be transferred from one person to another.

Calibra is regulated and has registered with the U.S. Financial Crimes Enforcement Network (FinCEN).

Calibra is a separate entity from Facebook, meaning that user data from Calibra will not be used to target Facebook users.

Bitcoin is open, borderless, permissionless, censorship resistant, publicly verifiable and immutable. https://t.co/EPncVy416y — Mati Greenspan (@MatiGreenspan) June 18, 2019

Ramifications

To say this announcement by Facebook could be game-changing is an understatement.

Facebook has over 2.3 billion users, which means that potential adoption of the new cryptocurrency could take place on a massive scale.

An important factor to consider is that Facebook has become an integral part of everyday life for many individuals, and the introduction of a stable cryptocurrency that can be easily used across the entire world within the social media ecosystem means that everyone, from millennials to grandparents, can push mainstream adoption of cryptocurrency to new heights.

Compounding the issue of mainstream adoption is the list of major companies that have signed onto the Libra, such as PayPal, eBay, Visa, Mastercard, and so on.

These companies, such as Uber and PayPal, have also become a part of the fabric of the daily lives for countless millions.

The #Libra Association is today announcing plans for a simple global currency and financial infrastructure. Find out more https://t.co/VPS7LllcNn #blockchain #cryptocurrency pic.twitter.com/mdHymhsrcH — Libra (@Libra_) June 18, 2019

The financial, organizational, and social media forces pushing the Libra are staggering, and no other cryptocurrency has had so many heavy-hitters behind them.

Zuckerberg touts that the Libra will allow the more than 1 billion unbanked individuals in the world to finally have access to financial institutions at little to no cost.

The fact that Facebook is ensuring regulatory compliance for the Libra project with government agencies should help push said national governments to finally iron out regulations regarding blockchain and virtual currencies.

One major benefit of Libra is that Calibra will operate a fraud service, which could reimburse users coins that were lost to scammers and such, thus negating one of the current negatives surrounding cryptocurrency.

Some Concerns

However, there are some features of the entire Libra project that deserve some scrutiny.

First is that while the overall blockchain is touted as being decentralized, it is still being controlled by a group that is comprised mostly of financial companies.

The Libra blockchain is currently a permissioned system, with the promise of it becoming permissionless in five years.

Anonymity is another issue. One of the hallmarks of cryptocurrencies is that they offer varying shades of anonymity.

Calibra, the wallet service for Libra, can share user data with Facebook.

The terms of service for Calibra state, “Aside from limited cases [emphasis added], Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent.”

“The limited cases where this data may be shared reflect our need to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra,” the terms of service add.

Overall, the potential upside for Libra is staggering with massive mainstream adoption, the ability to get lost or stolen coins back, avoiding volatility, and working with regulators to ensure government approval.

Images courtesy of Pexels, Pixabay, Twitter/@MatiGreenspan, Twitter/@Libra, and Wikimedia Commons/Anthony Quintano.