The buzz about Libra currency has been around since 2018 when Mark Zuckerberg decided to work on improving blockchain as part of his New Year resolution. In the following year, the blockchain was christened as Libra. So let’s understand Libra cryptocurrency and blockchain.
According to Libra’s whitepaper,
“Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.“
Libra aims to solve the problem of financial inclusion. As per world bank report, there are about 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone, and nearly half a billion have internet access.
So a team from Facebook lead by David Marcus took the initiative of developing a blockchain from scratch. Libra aims to diversify the financial services by becoming a global and scalable currency. Libra team promised a secure and scalable blockchain capable of smart contracts technology. Let take a deeper dive into the bolts and nuts of Libra.
What is Libra Currency?
As stated in the white paper, Libra promises to be the “internet of money.” The problem with Ethereum and Bitcoin is that their value keeps fluctuating according to the market movement. This makes these cryptocurrencies less suitable for day-to-day use.
To solve this problem, Libra is designed to be a stable coin backed by a set of reserved assets like bank deposits and short-term government securities that will keep the price of the cryptocurrency fixed. It is called Fiat Colletreral Stablecoin.
So, every Libra coin issued will be associated with an asset that will keep the value of the currency fixed. The Libra Reserve will manage the assets. Therefore, responsible for preserving the value of Libra over time and building trust in its intrinsic value.
Who can be part of Libra?
Initially, Libra will be launched as a permission blockchain, i.e., only certified nodes will be allowed to be part of the network. That will be overlooked by the Libra Association, which is an independent, not-for-profit membership organization headquartered in Geneva, Switzerland.
However, they plan to shift from permission to a permissionless blockchain system within five years from their launch in 2020. The Libra Association consists of the following partners-
- Payments: PayU (Naspers’ fintech arm)
- Technology and marketplaces: Facebook/Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc., Shopify, Tagomi
- Telecommunications: Iliad
- 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 Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
These are the founding members of Libra. Reports say that Facebook charged $10 million from each of these backers to manage a node in the Libra ecosystem. They will exercise the same executive power as that of Facebook and have equal weightage in decision-making processes.
The consensus protocol for Libra Blockchain
The consensus algorithm used by Libra is LibraBFT (Libar Byzantine Fault Tolerance). LibraBFT aims to make the Libra ecosystem immune to compromised or malicious nodes.
LBFT is based on HotStuff, which uses an optimized version of BFT as its consensus mechanism.
LibraBFT incorporates a novel round synchronization mechanism. In each round, a leader will be selected randomly from the validators who will be responsible for proposing the next block to be created. A validator receives the proposed block and checks their voting rules to determine if it should vote for authenticating the block or not.
When the leader has received enough votes to reach a quorum, they collect these votes into a Quorum Certificate (QC) which is then broadcasted to every node present in the Libra blockchain.
This makes the Libra blockchain scalable and capable of processing up to 1000 transactions per second.
What about the smart contracts in Libra Blockchain?
To provide a safe and programmable foundation for the smart contracts in Libra Blockchain, the team has developed, Move programming language.
It has taken the approach of functional programming languages. Therefore, Move is designed with the intention of making smart contracts more safe and secure.
It enables resource type that provides digital assets the same property as that of any physical assets. This prevents problems like double spending and makes every digital asset one of its kind. It is set to make a dynamic and functional smart contract that can be scalable to millions of audience.
How will the smart contract be executed?
Just like Ethereum has EVM, Libra has MoveVM. The MoveVM executes the bytecode generated after compiling the Move code. Just like Ethereum, each smart contract has a gas fee associated with it.
The MoveVM checks for the gas fees. The gas needed to execute a smart contract is more than the provided gas limit, it stops the execution there and there and all the changes will be reverted.
However, there is an upper limit to the gas limit so that the network won’t be clogged by contracts stuck in an infinite loop.
Is there any wallet facility in Libra?
Oh yeah!! There is. The name of the wallet is Calibra. The wallet will be available in Messenger, WhatsApp and as a standalone app.
As promised, Calibra will not share financial and account data with Facebook or any third-party for targeted advertising.
Calibra provides verification and anti-fraud processes that are used by banks and credit cards to prevent fraudulent behavior.
To send funds to the Calibra wallet, a user can select from a list of partner payment providers, such as MasterCard, Visa, PayPal, and Stripe.
Therefore, Calibra will let it’s user send Libra to almost anyone with a smartphone easily and instantly. The developer community of Libra is active and is acting simultaneously with the Libra Association to make the Libra ecosystem secure and better.
In conclusion, Libra has received both positive and negative remarks from many prominent personals in the tech and financial sectors.
Only the future will unfold how functional and scalable Libra will be. What is your opinion on Libra currency? Leave a comment below.
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