Facebook's release of the new cryptocurrency Libra has attracted a lot of global attention, and there have been mixed reviews from different perspectives such as traditional finance, blockchain, and technology.
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From the perspective of blockchain technology, Libra has no bright spots compared to the recent eye-catching cosmos, polkadot, nervos, diffinity, conflux, Algorand and other public chain cross-chain projects.
However, from the perspective of the cryptographic revolution of social and economic changes, Libra is a major innovation in the development of cryptocurrency, mainly not technological innovation, but institutional innovation at the economic level.
1. Libra is the result of the evolution of cryptocurrency
From bitcoin to competitive coins, to Token, to USDT, to Libra, this is a profit-driven, spontaneous process that provides a variety of cryptocurrencies that meet different market needs. Overall, it is the evolution of generalized cryptocurrency.
Habitually, we translate "Cryptocurrency" into "cryptocurrency", which is wrong. "crypto" is translated as "password" or "cryptographic", "encrypto" is "encrypted", corresponding to "decrypto", ie decryption. Moreover, cryptocurrencies such as Bitcoin do not use cryptographic information encryption and decryption functions, but use their "signature" and "verification" functions, and have nothing to do with "encryption". Therefore, Cryptocurrency should be called "password currency" rather than "cryptocurrency" . 
There is now a view that Facebook's Libra is not a password currency at all. This is a conceptual misunderstanding that equates “password currency” with “decentralized cryptocurrency” . In fact, electronic money that is used to establish an account system for trading using asymmetric cryptography should be classified as a “password currency” . However, this misunderstanding is also excusable, because the first cryptocurrency is bitcoin, which is decentralized and represents the cryptocurrency for a long time.
However, on the basis of the decentralized cryptocurrency, various centralized cryptocurrencies have emerged and become popular. For example, the various Tokens issued by the Ethereum ERC20 standard, the USDT and other stable coins issued in the form of tokens, these are cryptocurrencies. Although they are centralized, they are the private credit currency of the project party's credit endorsement, but they all use cryptography, which belongs to the broad "cryptocurrency" .
After the USDT, there were various compliant stable coins, followed by Morgan's JPcoin, which marked the entry of super multinational companies into the cryptocurrency, but JPcoin was mainly used within its own business ecosystem. Facebook's Libra is positioned to serve the global open finance industry. This is another major breakthrough based on previous cryptocurrency exploration experience and is part of the history of cryptocurrency .
Overall, from bitcoin, competitors, tokens, USDT, JPcoin to Libra, this is a series of cryptocurrencies generated by the market. Libra is the result of innovation in cryptocurrency practice. It is recognized that Libra is a cryptocurrency that helps us understand the essence of Libra. It also helps to adapt to the development of cryptocurrency practice and clarify the boundaries and classification of cryptocurrency related concepts.
 See: Liu Chang uses " cryptocurrency " or "password currency"
2. Libra has important innovations than stable coins
The general view classifies Libra as a stable currency , but "stabilized currency" has been used to refer to a token that specifically anchors a legal currency. Libra is different. First of all, it is not a token issued based on other password consensus platforms. It has its own password consensus platform, which is to issue password currency through self-built alliance chain . Of course, this is not an innovation. The real innovation of Libra relative to the stable currency lies in:
1) Anchor a basket of currencies instead of dollars . Most of the current stable currencies are anchored to the US dollar, which can be regarded as part of the US dollar money supply. With the help of the global circulation system formed by the cryptocurrency system and the exchange network, the obstacles to the establishment of the US dollar by traditional financial supervision are broken. A wide range of circulation. 
2) Mortgage a low-risk basket of assets rather than dollars . Most of the current stable currencies are collateralized in US dollars, and many also emphasize 100% reserves, which brings simple and strong credit support to the stable currency, but also wastes liquidity and limits the profitability of the operators. Libra collateralizes a basket of low-risk assets, not limited to dollar assets, so that it can circumvent the risks posed by single-dollar assets, has more open financial characteristics, and has more profit margins, at the cost of large financial risks, and requires Higher asset management capabilities.
3) Invite high-quality enterprises to form alliances . Libra's basic structure is the alliance chain. The founding members include commercial giants such as MasterCard and Paypal. After the completion, the goal is to introduce 100 alliance members to build nodes, and the funding threshold is 10 million US dollars. This is completely different from the single project side of the stable currency. This kind of alliance enhances the robustness of the system and uses the influence of alliance members to obtain great initial market users and expansion prospects. If it is established, its influence is that the general stable currency cannot be expected.
Therefore, Libra is different from stable currency, not an extension of the US dollar supply. Its credit base is more comprehensive, its operating mechanism is more complicated, and its economic impact is greater. It is an important innovation in cryptocurrency, but it is not sure whether Facebook has the ability to control it.
 See: Liu Chang's "GUSD's Impact on the Password Economy" , "Stabilization Currency 8 Questions"
3.Libra is essentially a private credit currency
Libra is still essentially a credit currency, with credit first coming from Facebook, followed by its affiliates, and ultimately strengthening its credit by anchoring legal currency and collateralized currency-denominated assets. Therefore, Libra is a private credit currency that is supported by the credit of the French currency. From this point of view, Libra is significantly different from traditional commercial banks. Banks do not issue currency, but only use their private credit to expand the supply of legal money through credit. Libra issues its own currency and uses its legal assets to increase its credit .
However, Libra's credit base will change throughout its life cycle. In the initial stages of Libra's establishment, Facebook and its affiliates lacked sufficient credit to support a global monetary system, so they needed to mortgage legal and legal currency-denominated assets to establish basic credit. Therefore, in the early days of Libra, its credit source was mainly French currency, which can be seen as the expansion of the supply of legal currency.
With the widespread adoption of Libra, its credit base will continue to increase, the proportion of mortgage assets or reserve ratios will continue to decline , and its own and alliance member credits are increasingly becoming the monetary base. At this point, the nature of Libra's private credit currency will become more apparent.
In line with the vision of the Zuckerberg and Libra white papers, Facebook hopes that Libra will eventually move towards a fully open currency. My understanding is to move from private credit currency to central currency . In theory, when this kind of currency application is getting bigger and bigger, its own credit accumulation is getting stronger and stronger, and the number of alliance members is increasing, so the reserve ratio is getting lower and lower, and finally it can become unsecured and anchorless. Bitcoin's decentralized cryptocurrency .
However, there are many technical problems, path dependence issues, and economic conflicts of interest that need to be overcome from the credit-backed currency to the decentralized cryptocurrency. There are no successful precedents. Although some of the token or pre-cut forked project parties successfully returned the project to the community, it achieved “decentralization”. But the truth is, the project side is not willing to continue to support the project with the funds obtained from the token sales. Generally speaking, it is “running the road”.
In general, Libra is a private credit currency created by Facebook, but the credit base and its dynamic evolution will be more complicated, with the characteristics of legal currency credit, and the possibility of turning to the central cryptocurrency, although it is very difficult.
4.Libra moved the cake of the traditional banking system
If the stable currency is only to join the bank's monetary expansion system and take a share of the monetary expansion benefits, then Libra tries to re-establish rules with the non-bank economic system and steal the bulk of the bank's monetary system: the coinage tax and the inflation tax. .
In addition to the benefits of providing professional intermediary services to the existing banking system, a large portion of the income comes from the inflation tax brought about by the participation in monetary expansion. In the case of inflation, the bank as a depositor's debtor and upstream of the currency issuance has a huge interest. Libra builds alliances outside the banking system, and does not rely on the banking system to expand the money supply. The benefits thus gained, regardless of how they are distributed among Facebook, alliance members, and users, have cut a large chunk of the traditional banking system.
With the gradual establishment of Libra credit, the reserve ratio has gradually decreased, and it has gradually become dependent on the legal currency. Libra itself will become the base currency , thus eroding the coinage tax enjoyed by the monetary authorities in issuing the base currency. For small countries that are strictly regulated by the monetary system and highly dependent on the coinage tax, there will be a big impact. Relatively speaking, the democratic country's coinage tax itself is subject to democratic supervision and power checks and balances, and the impact is relatively small.
Libra's challenge to traditional banks has largely adapted to the economic trend, because although the Internet economy is already very strong and the free flow of business information is realized, the monetary system has not fully integrated into the open Internet, but the traditional banking system has adopted some interfaces. The Internet economy provides money tools, which are not only costly and inefficient, but also divide the Internet into economic islands. Based on the Internet-based password consensus mechanism, Libra has become an Internet endogenous currency. It will have a strong market support in the direction of the world currency. If successful, the threat to the traditional banking system is real and strong.
Simply put, Libra moved the government and the bank's currency monopoly cake, which may be one of the reasons Libra did not invite traditional banks to participate. Libra's impact on the legal currency system is so great that it also brings a lot of suspense to its prospects.
5. The biggest difficulty Libra faces in the short term is supervision
The reason why private credit currencies have not existed for a long time in history is not the lack of technology, but institutional reasons. Early banks were private and helped customers keep and pay for gold and silver. After the credit was generated, the bank was able to lend interest rates before it began to pay interest to depositors, but at the same time it began to expand the credit of some reserves and currencies.
Under the gold and silver standard system, it is difficult for private banks to cope with the huge financial risks arising from the expansion and contraction of credit currency, which led to the birth of the central bank . The credit endorsement of the central bank eventually led to the end of the gold standard. The currency entered the era of complete credit currency of the central bank monopoly currency issue, and the system abolished the issuance and circulation of private money.
The expansion of the credit currency leaving the gold and silver standard is more volatile, the private credit is difficult to cope with, and there is a strong moral hazard, and it is even harder to return to the private currency era. Hayek’s “Currency Denationalization” emphasizes that private currency competition will eventually produce the best currency. This abstract logic ignores the damage caused by private credit bankruptcy in the process of competition, and it is not feasible in practice. The theory has not been implemented.
After hundreds of years of evolution, the central bank-based legal currency system has formed a complex institutional system to guarantee its authority, strictly restricting the establishment and operation of private credit currency. As a private credit currency, Libra almost always conflicts with the legal system of the legal currency in any country. This has led to a series of regulatory issues that are difficult to resolve.
I believe that the institutional environment and regulatory issues are the main issues that Facebook considers when planning Libra. There should be adequate consideration of institutional barriers, such as the establishment of strong business alliances to improve the economic strength of the regulatory response. In addition, there is also an important opportunity: Libra's cryptographic technology, technological innovation brought by network technology, and the global trading market of cryptocurrency are not encountered in the current monetary system. There will be some aspects in the short term. Institutional gaps, Libra finds these gaps and uses them. It is possible to obtain a window to avoid supervision and take the lead in “big but not down”, so that the monetary system can adapt to it.
6. The biggest difficulty Libra has faced in the long run is the internal interest game.
If Libra succeeds in establishing a large market in the short term and has reached a certain compromise or integration with the legal currency system, another major difficulty is the game of internal interests .
Money is the most important commodity or business in a market economy. The larger the size and circulation of money, the greater the economic benefits involved. The greater the economic benefits, the more intense the struggle or game , such as the decision of monetary policy and the distribution of system benefits. This level of intensity must be coordinated with a very powerful power system. As the system expands, the difficulty of coordination will increase.
Imagine if Libra becomes a world currency, its every move, such as the composition of its basket of currencies, the selection and disposal of a basket of mortgage assets, etc., will affect the currency stability, balance of payments, national income, etc. of different countries. It may even involve complex social issues such as race, religion, and terrorism. Libra as an alliance, in this complex social environment, the game and struggle will become so fierce that its currency is difficult to maintain stable and continuous operation.
Thinking about the operation of the United Nations and why the United Nations did not launch a world currency may help to understand the difficulties that Libra will face in the long run.
7. Libra cannot replace decentralized password currency
The decentralized framework designed by Nakamoto for Bitcoin, especially the pow mechanism that is simple and has no personal preference, greatly abstracts the various social relationships that may affect the operation of the currency, and avoids the politics that Libra will face for Bitcoin. The economic game has laid a solid foundation for the world currency.  This framework also provides a strong vitality for the bitcoin in the weak hour.
As a private credit currency that uses the French currency system to improve credit, Libra has rooted in the problem of centralized currency, which is fundamentally different from the central cryptocurrency . For example, Facebook and Zuckerberg have a very big impact on Libra, and they will also be affected by various forces, so the center is very risky; Libra anchors and mortgages legal and legal currency assets, and will be subject to currency inflation and currency exchange rates. Fluctuations, the effects of conflicts between fiat currencies, and so on.
In short, the decentralized cryptocurrency was born to eliminate the credit currency, especially the fundamental problem of the legal currency system. Libra's endogenous credit nature and its close relationship with the legal currency made it impossible to replace the decentralized cryptocurrency. As for whether Libra will be converted to a central password currency after success, this is a problem that is too far away.
 In order to save energy and improve performance, a consensus mechanism with voting nature, such as POS to DPOS, to reintroducing politics into cryptocurrency is not an innovation, but a retrogression.
8. The risk of decentralizing the cryptocurrency comes from itself
Bitcoin, as the first decentralized cryptocurrency, has continued to grow and develop since 2009, under the pressure of legal currency. Whether it is a legal currency or a private credit currency, it is difficult to eliminate its bottom-up vitality. The real risk it faces is not in the outside world, but in itself.
Since the dispute over the expansion of Bitcoin in 2015, problems such as development centralization , centralization of computing power, and low efficiency of public decision-making have been exposed. Due to the centralization of development, the long and complicated expansion of the dispute ended in block expansion. Since July 2016, bitcoin has become congested, transaction fees have increased more than tenfold, payment experience has become worse and worse, and then the money payment function has gradually been abandoned, and the settlement network and value storage have become more and more become the big investment products that Wall Street is keen on. .
Despite the success of Bitcoin Cash (BCH) fork in August 2017, the Bitcoin system, which adheres to the direction of the world currency, has been retained. However, due to the loss of the Bitcoin (BTC) brand, the market share is only 1/20 of Bitcoin and faces Decentralized ecological decision-making is inefficient and resistant to social attack. In the series of attacks launched by Craig S. Wright and Calvin Ayre from August to November 2018, although the system was successfully won, the community's ecological loss was heavy.
The decentralized cryptocurrency framework designed by Nakamoto Satoshi has been successful in social experiments in the past decade. However, after entering the complex environment of mainstream society, the lack of incentives for developers, the centralization of development caused by developer technology, and the public governance of decentralized communities have become increasingly acute, and these have not been resolved in the framework of Nakamoto. The ability to find an effective solution is the main risk facing the central cryptocurrency.
Bitcoin abandons the currency payment function, emphasizing the value storage function, and releasing a dangerous signal from the digital gold. In order to solve these problems, Bitcoin cash will push forward the dream of Nakamoto to reform the world currency, and it will require more efforts and uncertainty.
9. Libra will promote the popularity of password currency
As a form of generalized cryptocurrency, Libra is connected to other cryptocurrencies in terms of concepts, concepts, logic, technology, infrastructure, etc. If Libra introduces billions of potential users into the cryptocurrency field, the entire cryptocurrency will be Great push .
The idea of cryptocurrency can be traced back to Timothy Mey, Eric Hughes, David Chaum and other dreams and attempts to achieve personal freedom using asymmetric cryptography, rooted in the spirit of freedom. At this level, Libra's freedom is less than that of the Nakamoto Satoshi framework, but it is still an intermediate form of development from the legal currency system to Nakamoto. It is a move toward freedom. The Libra white paper also clearly defines the value of this spirit of freedom. Therefore, the promotion of Libra helps the spread of free spirit behind the cryptocurrency .
Libra is also technically borrowed from other blockchain systems, built using asymmetric cryptography, and its use will guide billions of users of Facebook and other affiliates to experience password currency, learn cryptocurrency knowledge, and build a cryptocurrency infrastructure. Bringing a large number of users, practitioners, entrepreneurs, and investors to the entire cryptocurrency. This is a huge boost to the cryptocurrency and password economy.
10. The legal currency system must face the impact of the cryptocurrency
The reason why Libra appears now is that Nakamoto's Bitcoin uses the asymmetric cryptography technology to open the Pandora's Box, which fundamentally provides a more liberal way of human economic interaction, and the currency and economy will be more free .
Because bitcoin and other cryptocurrencies are too small, the value is unstable, and the legal currency system cannot be shaken. In the face of the troubles caused by the central cryptocurrency, many governments, including the US government, have blocked or even banned bitcoin, resulting in Huge market volatility, but not smothered, has instead spawned an increasingly diverse and large-scale cryptocurrency ecology.
From bitcoin, competitive currencies, to tokens, USDT, GUSD, JP coin, etc., the expanding cryptocurrency continues to impact the traditional financial system based on legal currency in new ways. After Bitcoin was used for anonymous transactions and cross-border remittances, the ERC20 token brought a low-cost, high-liquidity securities issuance and circulation system that challenged the existing securities system. The emergence of the USDT broke the well-defined sovereignty boundary of the legal currency, and penetrated the dollar supply deeper into countries with foreign exchange controls.
As the latest form of cryptocurrency, Libra will bring a huge impact on the traditional monetary banking system with its huge commercial system in the forefront of modern economy, such as social, payment, exchange, and Internet.
For quite a long time after the emergence of Bitcoin, monetary authorities, bank executives, government departments, economists, etc. generally despise cryptocurrencies. The impact of Libra will force them to face up to the development of cryptocurrency and make a more positive response. Paying more attention to the far-reaching significance of the civilization of asymmetric cryptography to human social economic freedom, more actively adapting to the crypto-revolution and supporting the development of the global crypto economy.