So Facebook, among others, announced a new cryptocurrency and blockchain called Libra. You’ve likely already seen the headlines. But perhaps you’re wondering what it means, what makes Libra any different than, say, Bitcoin, or perhaps you have other questions.
I did too. So I’ve rounded up a few links that helped me gain some perspective on this announcement. As with all things crypto, it is fascinating to see all of this play out.
Libra White Paper:
We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure and trusted framework underpins this new system. And this approach can deliver a giant leap forward toward a lower-cost, more accessible, more connected global financial system.
This white paper lays out the problem, the proposed solution, and even a roadmap for the future of the currency/payments system. It reads well-enough and it a good place to start.
Wired’s article on this announcement:
The Libra Association will consist at first of up to 100 founding members including Facebook, each of which will invest at least $10 million to fund the association’s operations, and receive interest earned off the reserve. (Libra’s NGO members are exempted from the investment requirement.) Each member will be empowered to operate a node on the blockchain, and have a voice in determining changes to its code and managing the reserve.
As reporters are good at, the Wired piece distills the main points of the effort as well as provides context around the crypto-market in general. Adds some flavor to the entire thing.
Ben Thompson’s excellent take:
The best way to understand Libra, then, is as a sort of distributed ledger that is a compromise between a fully public blockchain and an internal database […] This means that the overall system is much more efficient than Bitcoin, while the necessary level of trust is spread out to multiple entities, not one single company…
At this point, I’d call Libra a pseudo-distributed blockchain backed cryptocoin. Rather than network nodes being managed by anyone they are managed by “qualified” entities. And so is the underlying software.
This is yet-another-option in the crypto-market. Something sort of like other coins but different enough that it deserves to exist. Hardliner crypto peeps may take offense to any amount of oversight on something like a cryptocoin but it is bound to occur. This won’t be the last cryptocoin/payments system you see created that has institutional backing and oversight. In fact, it isn’t the first. See JPM Coin from JP Morgan.
Again, I’m fascinated by this space and I will continue to watch as the markets, coins, payment systems, blockchains, and companies spearheading this new territory evolve.