Facebook has revealed the white paper for its much-hyped cryptocurrency Libra, and released the testnet for its blockchain, which the company believes will kickstart the “internet of money”.
The social media network announced that Libra’s mission is to “enable a simple global currency and financial infrastructure that empowers billions of people”.
Facebook’s also revealed a crypto wallet called Calibra, which will operate as a standalone app and via a button on Messenger and WhatsApp. Calibra hopes to power peer-to-peer transfers and eventually retail payments including purchases through Instagram.
Facebook claims the Libra cryptocurrency is built on a secure, scalable and reliable blockchain, backed by a reserve of real assets.
With zero fees and almost instant transfers, Libra will be faster and cheaper than traditional payments, especially sending money overseas to make “sending money as easy as sending a photo”, according to Facebook CEO Mark Zuckerberg.
To keep Libra stable, Facebook will create a pool of $1 billion worth of international currencies and securities. “A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value,” said a release from the company. To generate this $1 billion pool, Facebook hopes to secure 100 partners to be part of the Libra Association, at a cost of $10 million each.
The Libra Association is made up of big-name companies like Visa, MasterCard, Uber, PayPal, and Vodafone, as well as non-profits which will govern the network, each of them paying $10 million to manage a node on the Libra network. This is Facebook’s attempt to decentralise the payment system.
Facebook has been quietly hiring a blockchain team over the last 18 months, led by former PayPal president and former Coinbase board member David Marcus.
Facebook has also announced that Calibra, the first product built on top of Libra, will come to Messenger and WhatsApp as early as 2020, enabling users to send, receive, and store the crypto asset.