Facebook has released the white paper for Libra, the widely spoken about blockchain and cryptocurrency project.
The social media gaint tweeted the announcement with a ‘need to know’ document outlining all of the important details of the project.
We’re coming together with 27 organizations to create a new currency called Libra. Here’s what else to know about it: https://t.co/hvixAijJra
— Facebook (@facebook) June 18, 2019
The white paper of the project outlines that the aim of the cryptocurrency is to provide an opportunity for responsible innovation in financial services. According to the paper, the mission of the platform is to “enable a simple global currency and financial infrastructure that empowers billions of people.”
Libra has the same underlying principles as Bitcoin, such as being decentralised and cryptographically developed using blockchain technology, but will have a more stable value and will not see the same price fluctuations of the original cryptocurrency.
The document explains that the project is based on a three-fold system which is built to create a more inclusive financial community. These steps are:
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
One unit of the currency is called a Libra. For every Libra created, a basket of bank reserves and short-term government securities will be held in the Libra Reserve. The platform has stated that this will help preserve the value over time, resulting in a low-volatility stablecoin with trust in its intrinsic value.
Although it is defined as a stablecoin because of the low volatility, Libra is not pegged to only one national fiat currency and so users may not be able to sell or redeem the cryptocurrency tokens for a fixed amount of fiat at any time.
The reserve assets are managed by an independent consortium based in Geneva, Switzerland dubbed the “Libra Association”. This association will act as the governing body for the cryptocurrency and will be the only entity which will be able to mint and destroy any tokens.
New Libra tokens will be minted once official resellers have bought the tokens from the association with sufficient fiat to completely back their value. The tokens will be destroyed when the resellers sell the token back to the association in exchange for the underlying fiat amount. The white paper notes:
“Since authorized resellers will always be able to sell Libra coins to the reserve at a price equal to the value of the basket, the Libra Reserve acts as a ‘buyer of last resort.’”
The founding members of the Libra Association consist of a number of heavyweights from various industries, such as MasterCard, Coinbase, eBay, Andreessen Horowitz, Spotify, and Vodafone.
Facebook and the consortium are hoping that Libra tokens will be available for sale in the first half 2020, but have noted that roadblocks could delay the release.