Interpretation of the White Paper in Facebook: Top 10 Highlights of the Top 10, Sword Refers to Inclusive Finance

In the industry's eager anticipation, Facebook's blockchain and cryptocurrency plans are finally officially announced.

In today's Libra white paper, we can see that the biggest difference from the previous industry forecast is that Facebook's blockchain focus is not privacy construction, not international payment, but a more ambitious “inclusive finance” plan .

“Libra's mission is to create a simple, borderless currency and financial infrastructure that serves billions of people.”

“People who work abroad can send money back home in a convenient and quick way, and college students can pay rent as easily as buying coffee.”

“We want to create better and more affordable open financial services that people can enjoy regardless of their identity, regardless of location, career, rich or poor.”

In addition to these throughout the "inclusive financial" remarks, Libra has cooperated with non-profit organizations such as kiva, women's banking, and the official website of is the African picture. The word "Libra" itself stands for fairness.

In fact, in 2005, the United Nations already mentioned the concept of “inclusive finance”. After more than a decade of development, in addition to the poor bank’s “Gramme model”, high-interest “payday loans”, inclusive finance The advancement encountered various challenges.

Now, with the blockchain and cryptocurrency, the giant Facebook has a high-profile admission, how will it change and promote the global inclusive financial structure? What actions will other giants have after Facebook?

All questions can be found in this article.

Highlight 1: Libra's problems

1 The development of the Internet and mobile broadband has promoted economic empowerment around the world. However, there are still many people in the world who are outside the financial system. Those who urgently need financial services often have insufficient financial services or can be restricted.

2 The poor pay more for financial services, such as high-interest rates for payday loans, remittance fees, wire transfer fees, overdraft fees, and ATM fees.

3 Blockchain and cryptocurrency have the potential to address the availability and credibility of financial services, but due to the lack of scalability of existing blockchains, cryptocurrencies are volatile, and some projects are attempting to undermine existing systems and bypass regulation. This has led to the widespread adoption of existing blockchain systems.

Highlight 2: Libra Faith

1 More people should be given the right to access financial services and cheap capital.

2 Everyone has the inherent right to control the results of their legitimate work.

3 Open, immediate and low-cost global currency flows will create enormous economic opportunities and business value for the world.

4 People will increasingly trust the decentralized form of management.

5 The global monetary and financial infrastructure should be designed and managed as a public good.

6 Everyone has a responsibility to help advance financial inclusion, support users who follow ethical ethics, and continue to maintain the integrity of this ecosystem.

Highlight 3: Three parts make up Libra

Libra strives to create a new decentralized blockchain, a low-volatility cryptocurrency and a smart contract platform.

Libra is made up of three parts that will work together to create a more inclusive financial system:

1 It is based on a secure, scalable and reliable blockchain;

2 It is backed by an asset reserve that gives it intrinsic value;

3 It is governed by the independent Libra Association, whose mission is to promote the development of this financial ecosystem.

Highlight 4: Libra members

Members of the Libra Association include a variety of businesses, non-profit organizations, multilateral organizations, and academic institutions in different geographic regions.

Among them, there are giants such as MasterCard, PayPal, Visa and other payment giants, as well as eBay, Uber and Booking Holdings.

The rest, such as the Vodafone Group in the telecommunications field, LLiad; Ribbit Capital in the venture capital field, Thrive Capital and the non-profit organization Women's World Banking also participated in the cooperation.

In addition, in the blockchain field, the exchange Coinbase also participated in the plan.

Facebook said in the white paper that it hopes that the Libra blockchain will be able to reach 100 or so when it is targeted for release in 2020.

And Facebook guarantees that the Libra blockchain will be open to everyone, whether licensed or unlicensed: any consumer, developer or company can use the Libra network to build products on the network and pass Their services add value. This openness is the essence of Libra's spirit.

Highlight 5: Libra is actually a stable coin

It has been rumored that Facebook's cryptocurrency plan is to solve the privacy problem of users, but after the publication of the white paper, we found that Libra is actually a low-volatility stable currency anchoring a basket of assets. If the white paper is used, "Libra's mission It is to build a simple, borderless currency and financial infrastructure that serves billions of people."

As you can see from the white paper, Libra will use a package of real asset reserves (known as “Libra Reserves”) as a guarantee to ensure that tokens are stable and credible. What is currently identifiable is that it does not use gold as a support, but rather anchors a range of low-volatility assets, such as cash and government securities provided by a stable and reputable central bank.

Therefore, Libra itself will fluctuate with fluctuations in the underlying assets, but overall there will be no sharp rise and fall.

It is foreseeable that the Libra project itself will raise a large reserve fund, which will be held by the custodians with investment-grade credit evaluations around the world. These assets will generate corresponding interest. It is reported that this part Interest will be used to pay for the system's costs, ensure low transaction costs and dividends to investors in the early stages of the ecosystem, and will not be distributed to Libra users.

However, the interest distribution of the assets will be set in advance and will be supervised by the Libra Association.

Highlight 6: The first Move programming language

This time, Facebook launched the “Libra” program. In addition to many breakthroughs in the financial field, its technological innovations have more or less reflected the “dominey” of Facebook, a traditional social media giant.

According to the white paper, the Facebook "Libra" program uses the Move programming language that was previously unheard of. It is assumed that the Move language is a new programming language tailored by Facebook for the "Libra" program.

Designed to provide a safe and programmable language foundation for the Libra Blockchain.

Because the Move language has the ability to customize resource types, the customizable resource types can greatly enhance the security of digital assets.

At the same time, Move ensures that resources are never copied, reused, or discarded. Only modules with defined resource types can be created or destroyed.

Each resource has only one owner, the resource can only be spent once, and the creation of new resources is restricted. The Move language also makes it easy to automatically verify that a transaction meets certain attributes, such as a payment transaction that only changes the payer and payee account balances. By prioritizing these features, Move helps keep the Libra blockchain secure.

In addition, by mitigating the difficulty of developing key transaction codes, Move can reliably enforce management policies for the Libra ecosystem, such as the Libra currency and the network of certifier nodes. Move will accelerate the evolution of the Libra Blockchain Agreement and any financial innovations built on this foundation. It is expected that developers will be given permission to create contracts after a period of time to support the evolution and validation of Move.

In Move, the resource type of the cryptocurrency in Libra is defined as LibraCoin.T. This type has no special status and is subject to the same protection.

Interestingly, each Libra transaction contains a script for the Move transaction, which is responsible for verifying the code.

Highlight 7: LibraBFT Consensus Mechanism

In addition to innovative programming languages, Libra also uses the blockchain chain, a rare but Byzantine Fault Tolerance (BFT) consensus mechanism, and has created Libra's LibraBFT consensus mechanism.

This approach builds trust in the network because the design of the BFT Consensus Protocol ensures that the network is functioning properly even if some of the verifier nodes (up to one-third of the network) are corrupted or fail. This type of consensus protocol also enables a high-traffic, low-latency, and more energy-efficient consensus approach than the “workload proof” mechanism used in other blockchains.

In addition, Libra uses a single data structure that, in addition to long-term transaction history and state, allows users to read any data from people and time nodes, and can use a unified framework to verify the integrity of the data.

Finally, the Libra blockchain also follows the principle of anonymity, allowing users to hold one or more addresses that are not related to their true identity.

Highlight 8: Facebook "masters" the Libra Association?

The Libra Association plays a pivotal role in the entire project. In addition to the allocation of asset interest, the Libra Association's functions include Libra blockchain operations, coordination of various stakeholders (network verifier nodes), and management of reserve assets. Wait.

Currently, members of the association are not disclosed, only members are made up of the certifier nodes of the Libra network. Initially, these nodes are global companies, socially influential partners (SIPs) and academic institutions, and ultimately will include any entity that runs a verifier node and holds sufficient Libra benefits.

Specifically mentioning Facebook, it will maintain a leadership role in the association until the end of 2019, and on behalf of Facebook to build and operate services in the Libra network is a regulated subsidiary that was previously disclosed by the media – Calibra.

Interestingly, the entire association is also striving to find a distributed concept. For example, the association is managed by the Libra Association Board of Directors, and the Board of Directors is composed of a representative appointed by each verifier node. The association's activities are regulated and constrained by the reserve management policy. And the policy can only be changed with the consent of a majority of the members of the association.

Highlight 9: Managed Wallet Calibra

As a result, Facebook will launch a digital currency hosting wallet Calibra, which is fully managed by Facebook and users will not manage their private keys. This may be the primary way for future users to manage and use the token Libra.

Calibra performs strict KYC certification and users need to use an ID card to sign up for an account. The website states that "authentication is very important to comply with the law and prevent fraud."

Calibra supports both iOS and Android versions, and integrates two of its apps, WhatsApp and Messenger. Users can use Facebook and its two other apps, WhatsApp and Messenger, to associate and log in.

Interestingly, whether it's linking to another platform or signing up for a new account with an ID card, it points to the fact that Calibra wants to get the user's privacy and data as much as possible, which is completely contrary to the spirit of cryptocurrency.

Highlight 10: Libra's 2020 plan

Currently, Libra has completed the Libra white paper, completed the information release homepage, opened up the source code of the Libra blockchain and launched Libra's initial test network.

Libra's scheduled release date is in the first half of 2020, prior to which it will be completed: the security, performance and scalability of the Libra blockchain; promoting the development of the Move language and establishing a path for third parties to create smart contracts; Reserves establish operational procedures and ensure high transparency and auditability; expand the Libra Association Board of Directors and act as the initial certifier node for the Libra blockchain. Recruiting a managing director for the Libra Association.

If you want to achieve inclusive finance, you can also apply to become a Libra partner.

Question 1: Is Libra really a "cryptocurrency"?

It depends on how we define the "cryptocurrency".

Libra is a cryptocurrency if it is defined as a cryptocurrency based on the way the transaction is signed or approved.

According to the white paper, Libra uses the consensus algorithm HotStuff developed by VMWare. However, if you look at the dimensions of network governance, then Libra may not be a cryptocurrency. At least, in the view of Bitcoin purists, Libra may not be counted as a real cryptocurrency.

However, from the perspective of network governance, Libra is decentralized to some extent. In the beginning, the Libra blockchain would be a “licensed network”, meaning that only the founding members of Libra Investment Tokens could handle the transaction. However, as the network becomes more open and no one can handle the transaction, then from a technical point of view, Libra will be closer to the ideal encryption token.

Note: Libra Investment Tokens and Libra are two different tokens.

A network that does not require permission has many benefits, preventing concentration of power and creating large monopolies that can cause other members to be denied access. However, its flaws are also obvious, the transaction speed will be slow, and it will not expand. In general, the more network nodes that participate, the slower the speed, which is an obvious problem for cryptocurrencies that require global consensus participation. Of course, this is also a common problem facing the current cryptocurrency.

Question 2: Who is hosting Libra's token reserve?

According to the white paper, for each newly created Libra cryptocurrency, there is a basket of bank deposits and short-term government bonds of relative value in the Libra reserve to build trust in its intrinsic value.

However, the white paper does not disclose more detailed information, such as who will host the reserve assets. For potential users, how their anchored asset reserves are managed is a very critical piece of information that determines Libra's value.

Because, unlike Bitcoin, Libra is the “real” asset that anchors the real world. Without transparent and compliant funding and custody, trust and security will not be discussed.

Question 3: What does it mean for cryptocurrencies such as Bitcoin ?

Although Bitcoin and Libra are not directly related, the two are fundamentally different, but as a global 2 billion active users, the world's largest social network directly enters the cryptocurrency field, which is bound to bring a wave to the entire industry. Attention and incremental funding are admitted.

Question 4: What does it mean for WeChat and Alipay?

Facebook is not operating in China, and so far, there are no members of the Libra Association's 28 members from China. In addition, China adopts capital controls to strictly control the use and trading of cryptocurrencies.

At the same time, Alipay and WeChat payment giants have provided a very mature mobile payment experience for Chinese users. Chinese users have entered the financial system and the digital economy ahead of time. Therefore, Libra should not eat into the WeChat and Alipay markets.




Text / 31QU editorial department

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