The whole Libra system consists of three parts:
1) It is based on a secure, scalable and reliable block chain.
2) It is backed up by the Libra Currency and Reserve, which is designed to endow it with intrinsic value.
3) It is managed by the Independent Libra Association and is responsible for the development of ecosystems.
Independent Libra Association for Ecosystem Development | Libra White Paper
Facebook's Libra release had three options:
1) anchor US dollar at 1:1 and operate as a subsidiary company.
2) Link to US dollar, Euro and RMB, and reserve the above three currencies at the same time in the company's international accounts linked to the stable currency.
3) different from "mortgage stability ratio", it is a "mixture of credit currency and mortgage currency". The value is generated by "behavior mining user recharge". The currency value of behavior mining part comes from the product use value provided by Facebook ecology, while the currency generated by user recharge is generated by the legal tender mortgage of the user's own country.
Facebook chose the second option. The white paper shows that Libra is a stable digital encrypted currency with real assets as reserves, including bank deposits and short-term treasury bonds issued by a stable and reputable central bank. Libra will maintain a "basket" of assets and change its composition balance if necessary to offset major price fluctuations in any foreign currency. Libra is scheduled to be released in the first half of 2020, along with Libra Blockchain.
Facebook's subsidiary Calibra, at the same time, uses Kevin Weil, a former Twitter and Instagram product director, as a product vice president to launch a digital wallet, Calibra. Verge said Calibra will be introduced as a function of Facebook Messenger and WhatsApp, and will be launched with separate iOS and Android applications.
Calibra's Possible Product Form | Facebook
Facebook said it would not link users'real identities with public transactions for advertising positioning in order to protect users' privacy on privacy issues that the public was most concerned about. This means that users can exchange Libra in local currency without incurring large handling fees or providing real names, and the exchange is available at any time.
In addition, Facebook does not operate encrypted currencies alone. Libra Association is an independent non-profit organization based in Geneva, Switzerland. At present, the "founding members" of 28 enterprises, non-profit organizations, multilateral organizations and academic institutions, including Facebook, will oversee Libra's development process, giving Libra the equivalent of real world asset reserves and block chain governance rules. Each founding member pays at least $10 million to join and become a node operator.
Facebook says it wants to reach 100 founding members before publishing and be open to any organization that meets the requirements, including competitors such as Google and Twitter.
Global Payment Platform
"Libra is decentralized-which means that Libra is run by many different organizations, not a single organization, which makes the system fairer," Mark Zuckerberg said in a post today. Anyone with an Internet connection can use Libra, and the transaction cost is low, coupled with the protection of cryptography, can ensure the security of users' assets. This is an important part of Facebook's vision for a privacy-centric social platform where users can interact privately in any way they want, from message delivery to secure payment. "
Libra was not positioned as a speculative product such as Bitcoin. Facebook initially intended to provide transfer functions to individuals in developing countries who did not have bank accounts, but ultimately its goal was to create the first truly mainstream encrypted currency: a decentralized global payment form that was as stable as the dollar, bought almost anything, and supported a range of financial products. As Weill said, "After scaling up, Calibra can launch other profitable financial services."
Facebook's ambition to enter the block chain has long been evident. On March 6 this year, Zuckerberg published his long-standing article "Privacy-Centered Social Network Vision", saying that in the future, Zuckerberg hopes to build a secure and encrypted private social network by integrating three social platforms: Instagram, WhatsApp and Messenger, which will transform from "a digital public square" to "a digital living room of the family".
Facebook's transformation plan is undoubtedly a response to the data scandal leaked in 2018. In the past, Facebook used to get a lot of user data free or at low cost, such as the controversial Internet.org project, by analyzing user data to precisely push ads to users, in order to earn advertising fees.
Facebook has to look for new business models after personal data privacy has become more protected and a series of privacy scandals. Libra can be combined with existing Facebook, such as this in Stratagery, for example. Facebook can use a discount to attract advertisers to buy ads using encrypted money, and use the encrypted currency as a reward to encourage users to look at the ads.
In addition, before Libra was launched, there was speculation that Facebook was trying to break into the payment market. According to the white paper, the Libra Association includes payment companies such as Mastercard, PayPal and Visa. In the article "Meng Yan's Block Chain Thought", Facebook Digital Money: Origin, Significance and Consequences (Ten Thousands Words and Long Texts), the public number says, "In the case of less than 600 million users, third-party payment on the Internet in China created about 28 trillion dollars of transactions in 2018." Facebook currently has 2.7 billion users. "After years of development, it's not impossible for Facebook to carry $5 billion to $800 million in transactions a year."
Facebook says it wants to work with the financial sector rather than compete directly with it. Mastercard and Visa are willing to become members of the association, according to David Marcus, head of the Facebook blockchain. This proves that companies that have made huge profits in the financial system at this stage also see the potential of Libra, and one of the values Mastercard and Visa bring to Libra is to try to help businesses accept (Libra). "if this ecology is successful, you will see a lot of innovation in financial services."
But The Verge also points out that Facebook is trying to make Libra as a social networking platform popular around the world, giving people access to low-cost and even free financial instruments. Will this business move lead to Facebook being accused of "digital colonialism" as if it were a social platform in everyday life? Whether Libra's future is positive or negative is still unknown.