The Libra consortium, led by Facebook, which has been keeping the world agenda for a long time since June 2019 when it announced it would issue its own cryptocurrency, is again frequently mentioned with its recently launched new version whitepaper.
We see that not only the project “prospectus or technical document” that we call whitepaper was revised, but also targeted narrative has changed in a completely different way: Instead of the “global, stable and secure currency” now we meet with new Libra with the motto; “a global payment system structure”! And this time presenting the renewed members of the consortium…
Last year, the consortium, which established the Libra Foundation with 28 founding members in Zug, Switzerland, to initiate a global cryptocurrency, drew a serious reaction from all financial state institutions, including the SEC, FinCen, and the FED of USA due to the threat it posed to the US dollar, which is the most widely used in global trade payments and as reserve currency among central banks worldwide.
The U.S. House of Representatives Financial Services Commission had immediately begun investigating the matter thoroughly and called Facebook CEO Mark Zuckerberg who “protects its users’ data in secure hands”! to testify.
As a result of this intense pressure of the regulators – which are not limited to the United States, but also immediate statements and warnings that the project is inconvenient and carrying high risks were made by the European Central Bank, Financial Stability Board of the G20, Germany, France and the UK. The main reason for these responses were the criticisms of the so-called decentralization in the “Blockchain” infrastructure, and the users’ data security, as well as inadequate concerns regarding AML (anti-money laundering measures) and KYC (know your customer) practices. The first dissolutions from the consortium began to come after these pressures – the most important actors, such as Master and Visa Card, then PayPal and Stripe, and finally Vodafone, left the union.
What was the reason behind creating such a wave of panic?
Now let’s look at some figures;
The world population is now about 7.8 billion.
The company that pioneered the establishment of the consortium: Facebook (which is represented by a group company called Calibra, which is developing the wallet software in the consortium.)
Other apps in the Facebook family: Whatsapp and Instagram
If we think about how often these applications are used around us, we can see that at least one of them is definitely used by you, your family, loved ones, friends and business contacts.
The use of these applications is quite common and has a high penetration in segments from similar cultural, demographic and socioeconomic characteristics.
Of course, it wouldn’t be right to generalize this to the world.
Let’s look at the numbers again:
According to Statista’s survey released in April 2020, which includes the latest Q12020 results, the number of FB monthly active users in the world has reached 2.6 billion people.
When we look at WhatsApp, according to the statement made by the institution as of February 2020, the number of users worldwide is 2 billion people. An important note here: India has the highest number of users! (This is very important 🙂, we will come back to this topic 🙂
As for Instagram, as of January 2020, the number of monthly active Instagram users exceeds 1 billion worldwide.
In this context, Mark can reach a total of 2.89 billion people worldwide thanks to any application in the Facebook app family.
So has an access to 37% of the world’s population!
Let’s leave two important statistics right here:
As of January 2020, China’s population is 1,438 million and India’s population is approximately 1,380 billion.
From the global medium of exchange to the payment infrastructure…
By April 2020, a Libra wind is starting to blow again.
What do we see in the new version Libra this time?
As we said above, the narrative of an aggressive cryptocurrency emphasis is now diverted to be a global payment system based on a fully distributed ledger technology, in line with regulations, audits and legislation.
It even promises a flexible structure for KYC and AML procedures, in line with relevant country regulations, in order to ease state administrations, Central Banks and monetary authorities, along with all stakeholders on this issue. In this context, a license application has already been submitted to Finma, the Swiss Financial Markets Supervisory Board, and a license application will be made from BaFin, the Federal Financial Supervisory Authority of Germany.
On the other hand, it is stated that it will use a permitted – private blockchain infrastructure to control governance and provide regulators with ease of supervision. However, in LibraV1.0, the goal was to switch to a public blockchain within 5 years.
Of course, innovations are not limited to product content, regulatory and technical issues.
We see that there is new union members to join: Checkout.com, the Payment Systems platform; Shopify, for e-commerce and online shop solution; Tagomi, crypto asset management brokerage services; and Heifer International, social assistance and donation infrastructure, with a total of 24 members which was 28 previously.
The Most Important Updates in the New Version Libra
Libra in V1.0; While it is planned as a global medium of exchange backed by a basket of foreign currency and government bonds in USD and EUR, it is becoming a global value platform where more single currencies can be “integrated” in V2.0. While the updated technical document explicitly mentions USD, EUR and GBP, the number of fixed currencies is planned to increase over time. It is possible to use the Libra coin (LBR), which will be created as a basis for the multi-currency basket containing these currencies, for use in regions other than these stable currencies.
Thus, from a more fluctuating, independent and realistic cryptocurrency feature in V1.0, we see Libra as an instrument that has evolved entirely into a digital currency in V2.0. Meanwhile, the digital currencies (CBDC) issued by the Central Banks could be easily integrated into the Libra platform in the future.
Another very remarkable feature that has been added is the smart contracts that can be developed through the platform. This structure, which will be audited primarily by the Libra Union, is expected to become free later. Thus, it will be possible to develop escrow practices and lending applications through Libra.
To sum up, when Libra is launched, it will be a payment and financial solution platform that already has access by 37% of the world’s population. Considering that it is a project targeting additional 1.7 billion unbanked people worldwide who have access to the internet but for various reasons do not have financial inclusion, it is obvious that Zuckerberg achieving this goal will have an incredible power eventually.
Let’s go back to India at this very point. Above, we shared the population data of India and China. And if you’re wondering what the United Nations is predicting these numbers in the future, you can check the chart below.