Facebook Crypto Project White Paper Release Meets Strong Opposition from EU

by Albert Kim
Facebook Whitepaper Release: The Libra Project Unmasked Amid Opposition from Europe

The much anticipated Libra crypto has finally landed, and according to the coin’s whitepaper, the platform will enable users to send money or shop with almost zero fees. What’s more; users will be able to cash out their Libra online or from their favorite crypto exchange.

Spending the Libra coin will be facilitated using a third party wallet, Calibra owned by Facebook, which will be integrated into WhatsApp and Messenger. During the release of the whitepaper, the project team said it is fine-tuning the blockchain outfit before its launch early 2020.

Libra Detachment from Facebook

The most exciting part of the project is that Facebook will have no control over Libra. Instead, just like the Libra Association which has Uber, Visa and Andreesen as founding members after forking $10million each will have a single vote.

The Libra Association (LA) as stated will be in charge of promoting the open source Libra ecosystem and developer platform which rides on the Move language. It will also drive the signup process and give Libra the visibility in the payment arena through a discount or reward system.

Facebook is also introducing another arm that will be in charge of its crypto dealings; the Calibra. This subsidiary will be responsible for user privacy and has nothing to do with the user Facebook data. Users will be shielded from targeted ads, as project wp states, and their identity and transactions won’t be visible by the public.

Seeking to make Libra stable on the digital money markets, the founding members and the Libra Association will earn some interest from user funds that are stored in reserve.

Read also: Crypterium Issues the First-global Crypto Card

Libra Targeting the Unbanked Millions

The unmasking of Libra is to create a platform that the unbanked can participate through the financial inclusion vision. With the promised additional privacy and decentralization, the outfit appears set to win the hearts of many who initially doubted the project.

According to the VP of blockchain at Facebook, David Marcus, the project is long term, and Facebook is not about to squeeze Libra for short term gains:

“If more commerce happens, then more small businesses will sell more on and off the platform, and they’ll want to buy more ads on the platform so it will be good for our ads business.”

Disrupting Existing Systems

The Facebook project aims at revolutionizing how goods are services are purchased online. The strategy is to eliminate transaction fees that are charged by credit card providers. However, this will not be tied to Facebook ads that influence consumer decisions.

Facebook has seen an opportunity in the over 1.7billion unbanked people. It will offer these an option from owning a bank account but still access financial services. There is also another opportunity for Libra, bridging the Bitcoin and Ethereum gap, and work as a medium of exchange.

BTC and ETH prices are highly volatile, and this has kept merchants at bay, and like PayPal in the fiat economy, Libra will dominate in the crypto sphere. Facebook’s 90million small scale businesses and 7million advertisers give the new market entrant an upper hand.

The Facebook vision for Libra is to the first crypto PayPal. It is anticipated that Libra will be fuss-free to set up and highly efficient since it targets the unbanked and the non-tech savvy. Crypto users are interested in systems that take care of their daily needs and not the complexity of the process.

In its Libra documentation, Facebook notes:

“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee.”

There is a lot of anticipation that the Libra transactions could be the micro level, and that could be a massive milestone in the blockchain industry given the interaction on Facebook, messenger, and WhatsApp. This will challenge credit card processors and could turn out to be the most popular platform for microtransactions.

New Era in Crypto Spending

Libra is poised to start a new era in crypto spending. Users have a new way to access cash in their local currency. You can spend Libra like a dollar or Euro, and the transaction costs are near zero.  However, the Libra Association is yet to decide the value of the coin, but all indications are pointing to a value close to the US dollar.

It is also clear that Libra users will be able to trade Libra with their local currency, use it at the local store and the coin will not only be supported by the native Calibra wallet but other third-party wallet applications and have a link with mobile data top-up plans.

The Libra blockchain is designed with speed in mind. It will have the capability of processing 1000 TPS. What’s more; Libra transactions are irreversible.

Facebook Privacy Concerns

Facebook is known for its past privacy lapses, and this could become Libra’s headache. However, Mark Zuckerberg appears keen on the issue by adding that:

“It’s decentralized — meaning it is run by many different organizations instead of just one, making the system fairer overall. It’s available to anyone with an internet connection and has low fees and costs. And it’s secured by cryptography which helps keep your money safe. This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.”

The same problem has also caught the attention of the new Calibra head, Marcus, who added:

“We realize people don’t want their social data and financial data commingled. The reality is we’ll have plenty of wallets that will compete with us and many of them will not be in social, and if we want to successfully win people’s trust, we have to make sure the data will be separated.”

Facebook Backed Crypto Faces Opposition from Europe

Moments after unveiling the Libra crypto, a lot of opposition has surfaced with the French finance Chief, Bruno Le Maire warning that Libra should not be embraced as a complete replacement of the fiat currency. In an interview with Europe 1 radio, he says

“It is out of question’’ that Libra “becomes a sovereign currency.  It can’t and it must not happen.”

Libra talk took center stage during the European Central Banks annual symposium in Sintra, Portugal with Mark Carney, the Bank of England governor says:

“Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation.  We need to have an open mind” about technology that can facilitate cross-border money transfers, we will look at it very closely and in a coordinated fashion at multilateral organizations including the G-7, the International Monetary Fund, Bank for International Settlements and Financial Stability Board”.

The same sentiments have also been expressed by the German member of the European Parliament, Markus Ferber, who argues that Facebook is headed to become a “shadow bank” with its more than 2billion subscribers and the regulator should be on the lookout.

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