On June 28th, 2019 Facebook announced the details of their cryptocurrency, Libra. Given the recent Facebook scandals, it was not surprising that the plan to launch Libra came under immediate attack on Capitol Hill. Before we jump to any conclusions, it is important to examine what Libra is. According to the Libra whitepaper, the mission is “to enable a simple global currency and financial infrastructure that empowers billions of people.”
This global currency is built on the Libra Blockchain, which initially is a largely centralized blockchain, with up to 100 nodes at full scale (by contrast, Ethereum currently has over 7,700 nodes). The Libra coin is said to be fully backed by a reserve of real assets such as bank deposits and short-term government securities, which will be held 1:1 in the Libra Reserve for every Libra that is created. Facebook is also creating a smart contract coding language called “Move,” that they contend will be more scalable and secure than Solidity.
The Libra Blockchain and Reserve is governed by the Libra Association, an independent, not-for-profit membership organization, headquartered in Geneva, Switzerland. The founding members are made up of organizations such as Uber, Mastercard, PayPal, Stripe, eBay, Spotify, all of whom invested a minimum of $10 million to join this association. These members run the initial 100 nodes of the blockchain, and control the supply and removal of tokens.
While Libra may sound good on paper, there are some major red flags. When compared to Hydrogen Molecule, the Libra project is centralized, incredibly expensive, and technologically unproven. Molecule is built on the open-source Ethereum blockchain and will allow businesses to add DeFi components (via APIs, integrations, and UX libraries) such as tokenization and remittance to applications at a very low cost.
To learn more, listen to our webinar “What is Facebook’s Libra and how will it impact digital money?” presented by our co-founder Mike Kane.
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