A few weeks ago project Libra was announced, which is known as Facebook cryptocurrency. This announcement did not just go viral, but it created a storm of different opinions about this Libra and Facebook vision of how it needs to be done. I didn't want to jump into conclusions very early so decided to wait a bit for things to settle and then share my thoughts.
Now I think it is the right time, so in the new few lines I will be answering what I think are some of the most questions about Project Libra which are:
- What is Libra?
- Who is behind Libra?
- What is the Facebook vision of Libra's future?
- Libra is Blockchain?
- Is Libra's affecting the Blockchain world in a negative way?
While answering these questions I will try to go over some of the statements they made in the Whitepaper and dive bit into that as well. Let's start diving into this question 🙂
What is Libra?
In case you already read some stuff over the internet about it, You probably think that Libra is just a Cryptocurrency and that is kinda not true.
We will need to dive a bit more into Whitepaper to understand why that is not the case and what actually Libra is...
Here is the first interesting statement.
The Libra Blockchain is a cryptographically authenticated database maintained using the Libra protocol. The database stores a ledger of programmable resources, such as Libra coins. A resource adheres to custom rules specified by its declaring module, which is also stored in the database. A resource is owned by an account that is authenticated using public key cryptography
From this, we can derive that the goal of Libra is not to just be a currency, but a protocol designed to give the ability to anyone (In the future) to create and maintain their own assets. This is done with the programmable language Move, which is going to be used to create the Programmable assets.
The interesting part here is that the actual LibraCoin is as well a "Smart Contract", which is written in Move. In case you are curious, there are some examples of how LibraCoin looks written in Move - LibraCoin.mvir and Libra account - LibraAccount.mvir
Sadly Move won't be available to the public at the start, even that it is obvious that Move will be a Core part of storing any kind of assets in the Libra protocol and for that reason, we will need to wait a bit before creating other Assets in the Libra.
In the initial version of the Libra protocol, only a limited subset of Move’s functionality is available to users. While Move is used to define core system concepts, such as the Libra currency, users are unable to publish custom modules that declare their own resource types. This approach allows the Move language and toolchain to mature
Who is behind Libra?
Probably if I go in a room full with "blockchainners" and I asked this question everyone will say it is Facebook, but that is not the real deal.
Facebook is the company that decided to initiate project Libra, but behind it, there is set of popular companies that all belong to the so-called Libra Association that is created to maintain and governance the project before it goes fully public and permissionless in the future. This is important as it adds some pressure to Facebook to do things right and means that other companies will pay a lot of attention to what is happening with the project as a failure will lead to negativity to all companies involved in Libra Association
What is the Facebook vision of Libra's future?
While everyone was way too focused on the Cryptocurrency part many didn't pay attention to the assets part I mention and they missed on the more important thing, which is stated in The Libra Association document.
An additional goal of the association is to develop and promote an open identity standard. We believe that decentralized and portable digital identity is a prerequisite to financial inclusion and competition.
There are many points made in Libra's Whitepaper about how nowadays the internet is easier to get hands-on, so definitely Facebook will try to solve the Identity Problem that is very old.
In my opinion that it will be very good if Facebook succeeds in creating Digital Identities and I believe that they are very capable of doing so, even that many companies tried and failed. One of the reasons is that Facebook already has experience with digital identities.
Libra is Blockchain?
Many people say Libra is not a Blockchain just because they saw on that there are no Blocks.
The answer to this question varies depending on what you think a Blockchain is in general. In case you think that Blockchain is "storing data in a chain of blocks" then yes, this is not a Blockchain, as there is no chaining or Blocks at all, but if you think it more in general term as DLT that is secured by cryptography, then I would say that it is a Blockchain and that it is just no that different than other Blockchains, especially Ripple which doesn't have Blocks as well.
Let me try explaining why is not having Blocks, not that big of a deal.
Usually, Transactions are batched into Blocks for a clear and easy ordering, plus reducing the need of proofs as you just need to generate Proof of Work for the batched set of Transactions and for each one of them individually. This is kinda necessary for Permissionless Blockchains, but in case Libra this is not really needed as the Transaction order will be kept and validated by the Libra Association members, which makes things easier.
Besides not having Blocks, Libra has every other characteristic you know from other Blockchains.
- Account Based model
- It is Transaction-based State Machine
- Uses a single Merkle tree to provide an authenticated data structure for the ledger history
- Byzantine Fault-Tolerant Consensus
Is Libra's affecting the Blockchain world in a negative way?
I would say No. In my view, the pictures of the Blockchain history looks something like:
- Bitcoin was created as Proof of Concept that showcased to the world that such technology is possible and that decentralization and digital money can exist without a central point. It obviously was successful, but as any Proof of Concept, it cannot be the solution as it was not designed to scale.
- Ethereum and some other Blockchains tried to build on top of that Proof of Concept and besides having Ditial Money they tried creating a Global Computer and they were successful, but still couldn't quite scale.
- Libra can be viewed as MVP (even that it is not fully decentralized right now). We can view it that way as it will be the real test to see if there is a big future in front of the Blockchain technology and Blockchain Adoption. In case that it fails, even with all the Big names behind Libra Association trying to push it and defended it from Governments, will most definitely mean that Blockchain has no future and won't be able to beat the Governments at all.
This is my opinion on those questions and some of them are probably against most of the Blockchain Enthusiasts, but I like to share my thought process and I am always open to having more viewpoints, so in case you don't agree with me, please don't be afraid to leave a comment with your opinion on the questions.
Other than that I hope you like it 🙂