Everything you need to know – TechCrunch

Facebook has finally revealed the details of its crypto contest Libra, which lets you buy things or send money to people with almost zero fees. You will pseudonymously buy or pay off your Libra online or at local exchange points such as grocery stores, and use it with interoperable third-party wallet app or Facebook's own Calibra wallet to be built into WhatsApp, Messenger and own app. Facebook today released its White Paper explaining Libra and its test net for preparing kinks of the blocking system before a public launch in the first half of 2020.

Facebook will not fully control Libra, but instead get only one voice in its control as other founders of the Libra Association, including Visa, Uber and Andreessen Horowitz who have invested at least $ 1[ads1]0 million each in the project's business. The association will market the Libra blocking and developer platform with its own Move programming language and sign up to accept Libra for payment and even give customers discounts or rewards.

Facebook launches a subsidiary, also called Calibra, which handles its encryption conditions and protects users' privacy by never mixing your Libra payments with your Facebook data, so it cannot be used for ad targeting. Your real identity will not be related to your publicly visible transactions. But Facebook / Calibra and other basic members of the Libra Association will earn interest on money users money in what is held in reserve to keep the value of Libra stable.

Facebook's sincere bid to create a global digital currency that promotes economic inclusion for unbanked actually has more privacy and decentralization built in than many expected. Instead of trying to dominate Libra's future or squeeze tons of money out of it immediately, Facebook instead plays the long game by pulling out payments to its online domain. Facebook's director of the block chain David Marcus explains the company's motive and relationship with the core revenue source, and tells me "If more trade happens, more small businesses will sell more on and off platform, and they will buy more ads on the platform, so it will be good for our ad . "

The risk and reward of building the new PayPal

In crypto inverters, Facebook saw both a threat and an opportunity. They kept the promise to interfere with how things are bought and sold by eliminating transaction fees common to credit cards. It comes dangerously close to Facebook's advertising business that affects what is bought and sold. If a competitor like Google or a startup built a popular coin and could monitor the transactions, they would learn what people bought and could get muscle into billions spent on Facebook marketing. Meanwhile, the 1.7 billion people who lack a bank account can choose who offers them an alternative to financial services such as their online identity provider as well. It's another thing Facebook wants to be.

Nevertheless, existing cryptographic curves like Bitcoin and Ethereum were not properly constructed to scale as a prey. Their unanchored price was exposed to large and unpredictable fluctuations, making it difficult for sellers to accept as payment. And cryptocurrencies miss much of their potential beyond speculation unless there are enough places that will take them instead of dollars, and the experience of buying and using them is easy enough for a regular audience. But with Facebook's relationship with 7 million advertisers and 90 million small businesses as well as the ease of use, it was well equipped to tackle this juggernaut of a problem.

Now, Facebook will make the Libra development of PayPal. It hopes Libra will be easier to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers, and more prolonged through decentralization.

"Success will mean that a person working abroad has a quick and easy way to send money to family from home, and a college student can pay their rent as easily as they can buy a coffee." Facebook writes in his Libra documentation. It would be a great improvement today, when you are stuck by paying rent in unsafe checks, while exploiting transmission services that charge an average of 7% to send money abroad, and taking $ 50 billion from users annually. Libra can also run small micro-transactions that are worth just a few cents that are not possible with a credit card fee, or replace your prepaid transit card.

… Or it can be globally ignored by consumers who see it as too much trouble for too little reward, or too unknown and limited in use to draw them into the modern economic landscape. Facebook has built a reputation for over-engineered, underused products. It will need all the help it can get if you want to replace what is already in your pockets.

How does Libra work?

Now you know the basics of Libra. Cash in a local currency, get Libra, spend it as a dollar with no major transaction fees or your real name attached, pay them out whenever you want. Feel free to stop reading and share this article if that's all you care about. But the underlying technology, the association that governs it, the wallet to use, and the way the payments work, all have a tremendous amount of fascinating details for them. Facebook has released over 100 pages of documentation on Libra and Calibra, and we have drawn the most important facts out. Let's dive in.

The Libra Association – Crypto & # 39; s New Oligarchy

Facebook knew that people would not trust that they completely control the crypto curve they use, and it also wanted help to encourage adoption. So, Facebook recruited the founders of the Libra Association, which monitors the development of the token, the reserve of property values ​​that provide that value, and the blockchain management rules. Each founding member paid at least $ 10 million to join and possibly become an approved node operator (more later), get a vote in the Libra Association Council, and be entitled to a share (relative to the investment) of the dividend from [19659002]

The 28 soon-established members of the association and their industries, previously reported by The Block's Frank Chaparro, include:

• Payments: Mastercard, PayPal, PayU (Naspers & # 39; fintecharm) , Stripe, Visa
• Technology and Marketplaces: Booking Holdings, eBay, Facebook / Calibra, Farfetch, Lift, Mercado Pago, Spotify AB, Uber Technologies, Inc
• Telecommunications: Iliad, Vodafone Group
• Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
• Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
• Nonprofit and Multilateral Organizations and Academic Institutions: Creative D estruction lab, Kiva, Mercy Corps, Women & # 39; s World Banking

Facebook says it hopes to reach 100 founders before the official Libra launch, and it is open to anyone who meets requirements, including direct competitors such as Google or Twitter .

To join, members must have a half rack of server space, a 100mbps or over dedicated internet connection, a full site security engineer, and corporate quality security. Companies must hit two thresholds with a market value of $ 1 billion or $ 500 million in customer balances, reach 20 million people a year, and / or be recognized as a top 100 industry leader by a group such as Interbrand Global or S & P. ​​19659002] Crypto-focused investors must have over $ 1 billion in management capabilities, while Blockchain businesses must have been in business for a year, have business-class security and privacy, and custody or strike over $ 100 million in assets. And only up to one-third of the founders can by crypto-related businesses or in-person invited exceptions. Facebook also accepts research organizations such as universities and non-profits that meet three out of four receipts, including work on financial inclusion for over five years, multinational reach to many users, a top 100 designation of Charity Navigator, or anything and / or $ 50 million in the budget.

The Libra Association will be responsible for picking recruitment of several founders to act as validator nodes for blockchain, collecting funds to jump on the ecosystem, designing incentive programs to reward early adopters, and doling Out Social Grants Grants. A council representative from each member will help select the association's managing director to designate a management team, select a board with 5 to 19 top representatives.

Each member, including Facebook / Calibra, will only receive up to one vote or 1% of the total voting rights (which is greater) in the Libra Association Council. This provides a level of decentralization that protects against Facebook or another player who capsules Libra for their own gain.

The Libra Currency – A Stablecoin

A Libra is a unit of the Libra cryptocurrency represented by a three wavy horizontal line unicode character ≋ that the dollar is represented by $. The value of a Libra is supposed to remain largely stable, so it's a good replacement since merchants can be sure they won't be paid a Libra today, which is then worth less tomorrow. The weight value is linked to a basket of bank deposits and short-term government securities for a number of historically stable international currencies, including dollars, pounds, europe, swiss francs and yen. The Libra Association maintains this curve of assets and can change the balance of the composition if necessary to compensate for large price fluctuations in any foreign currency so that the value of a Libra remains consistent.

The Libra Association still puts the exact start value for Libra, but it is supposed to be somewhere near the value of a dollar, euro or pound, so it's easy to conceptualize. That way, a gallon of milk in the US can cost 3 to 4 Libra, similar, but not exactly the same as with dollars.

The idea is that you will make money in some money and keep the balance in Libra that you can use by accepting sellers and online services. You can shop in local currency for Libra and vice versa through certain wallet applications, including Facebook's Calibra, third-party wallet applications and local retailers such as convenience stores or grocery stores where people are already at the top of their mobile data plan.

Libra Reserve – One For One

Every time some boxes in one dollar or their respective local currency go, the money goes into the Libra Reserve and a similar value of Libra is coined and excluded to that person. If someone pays out from the Libra Association, Libra will give it back, be destroyed / burned, and receive the equivalent value in their local currency back. That means there is always 100% of the value of Libra in circulation collateralized with real assets in the Libra Reserve. It never runs fraction. And unliked "pegged" stable coins that are tied to a single currency like USD, Libra retains its own value – even though it should be paid out to about the same amount of a given currency over time.

When the Libra Association members join and pay a minimum of $ 10 million, they receive the Libra Investment Tokens. Their share of the total tokens is translated into the share of the proceeds they earn from interest on assets in the reserve. These dividends are paid only after the Libra Association uses interest to pay operating costs, ecosystem investments, engineering research, and non-profit grants and other organizations. This interest is part of what attracted members of the Libra Association. If Libra becomes popular and many people carry a great balance in the currency, the reserve will be huge and earn a lot of interest.

Libra Blockchain – Built For Speed ​​

Each Libra payment is permanently entered into the Libra Block Chain – a Cryptographically Authenticated Database that acts as a public online ledger designed to handle 1000 transactions per second. Blockchain is continually operated and controlled by the founders of the Libra Association, each of which invested $ 10 million or more to say in the crypto curve governance and ability drives a validator node.

When a transaction is sent, each of the nodes runs a calculation based on the existing ledger for all transactions. Thanks to a Byzantine fault tolerance system, only two-thirds of the nodes must agree that the transaction is legitimate for it to be executed and written to the block. A structure of Merkle Trees in the code makes it easy to recognize changes made in Libra blockchain.

Transactions on Libra cannot be reversed. If an attack compromises over a third of the validation nodes that cause a fork in the block chain, the Libra Association says it will temporarily stop transactions, figure out the amount of damages, and recommend software updates to resolve the fork.

Transactions are not completely free. They incur a small fraction of a cent fee to pay for "gas" that covers the cost of treating agents similar to Ethereum. This fee will be negligible for most consumers, but when they add, the gas fees will deter bad actors from creating millions of transactions to run spam and denial of service.

Move coding language – To move Libra

Libra blockchain is an open source with an Apache 2.0 license, and any developer can build applications that work with it using the Move encoding language. Blockchain prototype launches its test network today, so it is effective in developing beta mode until it is officially launched in the first half of 2020. The Libra Association is working on HackerOne to launch a bug-reward system later this year to pay security researchers to identify errors and mistakes. Meanwhile, the Libra Association has implemented Libra Core using the Rust programming language, since it is designed to prevent security issues, and the Move language is not yet fully understood.

Moving was created to make it easier to write blockchain code It follows an author's intention without introducing errors. It is called Move because the primary function is to move Libra coins from one account to another, and never let those assets accidentally be duplicated. The core contact code looks like "LibraAccount.pay_from_sender (recipient address, amount) procedure". Finally, Move will be able to create smart contracts for programmatic interactions with Libra blockchain. Until Move is ready, developers can create modules and transaction scripts for Libra using Move IR, which is high enough to be human-readable, but low enough to translate into real Move byte code written to the block chain.

The Libra ecosystem and the Move language will be completely open to use and construction, which poses a significant risk. Crooked developers can switch on cryptic beginners, claiming that their app works only the same legitimate, and that it is safe since it uses Libra. But if consumers are being torn down by these scammers, anger will surely bubble up to Facebook. Although it has been attempted to abate adequately through the subsidiary Libra and the association, many will probably always think of Libra as Facebook's crypto competition and blame it for their honor.

Using Libra In The Wild – Calibra

So how do you actually use Libra? Through Libra wallets such as Facebook's own Calibra and others who will be built by third parties, could potentially include Libra Association members such as PayPal. The idea is to send money to a friend or pay for something as simple as sending a Facebook message. You will not be able to receive or receive any real payments to the official launch next year, though.

None of the Libra Association members agreed to give details of what they want to build on blockchain, but we can take the Facebook Calibra wallet as an example of the basic experience. Calibra will launch with the Libra currency on iOS and Android in Facebook Messenger, WhatsApp, and a standalone app. When users sign up for the first time, they are taken through a knowledge of the anti-fraud knowledge of your customer, where they must provide a publicly issued image ID and other verification information. They must provide customer satisfaction and report suspicious activity to the government.

From there you can deposit money to Libra, choose a friend or seller, enter an amount to send them and add a description, and send them Libra. You will also be able to request Libra. It is also likely that Calibra will offer a faster payment method and would like to scan your or their QR code.

Privacy – at least from Facebook

Facebook manager Mark Zuckerberg explained some of the philosophy behind Libra and Calibra in a post today. "It is decentralized – that means it is run by many different organizations rather than just one, making the system more fair in general. It is available to anyone who has an internet connection and has low costs and costs. And it is secured with encryption That helps keep your money safe, this is an important part of our vision for a privacy-focused social platform – where you can interact in every way you want, from messaging to secure payments. "

By default, Facebook will Do not import your contacts or any of your profile information, but can ask if you would like to do so. It does not share any of your transaction data back into Facebook, so it will not be used to target ads, rate your news feeds, or otherwise earn Facebook money directly. Data is only shared in specific cases in aggregated, anonymised ways or due to a law enforcement request.

If you are hacked, scammed or lose access to your account, Calibra will refund you for lost coins whenever possible through 24/7 chat support. Given Calibra will probably become the standard wallet for many Libra users, this extra protection is important.

For now, Calibra will not make money. But Kevin Weil, product manager for Facebook's blockchain team, tells me that Facebook can launch other financial services through Calibra that could make money.

A global coin

If Facebook succeeds and legions of people Cash in money for Libra, it and the other founders of the Libra Association can make huge profits on the interest. And if it suddenly becomes super fast to buy stuff through Facebook using Libra, companies will increase their advertising spend there. But if Libra gets hacked or turns out to be unreliable, it can cost many people around the world money while sewing them on crypto carts. And by providing an open Libra platform, shady developers could build applications that don't capture only the personal information of people like Cambridge Analytica, but their hard earned digital money.

Facebook just tried to reinvent money. Next year we'll see if the Libra Association pulls it off.