Facebook has launched its Project Libra white paper on Tuesday which describes the protocols designed by Facebook for its new global cryptocurrency. The project has been in development for more than a year now and has been labeled as an important initiative by many even before its launch. The Libra white paper is just an attempt by Facebook to show off its blockchain smarts. The document defines Facebook’s ambitious goal:
The Libra Blockchain is a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an effective medium of exchange for billions of people around the world.
The project will be handled by the Libra organization and not by Facebook. The Libra organization is a joint venture by Facebook and its partners. The non-profit organization will be responsible for the Libra blockchain. The organization will be controlled by the member companies, each of which will hold a single voting token, even Facebook.
Unlike bitcoin and Ethereum blockchains, Libra blockchain is focused mainly on payment and other financial use cases. Libra is custom built as a high throughput global blockchain for digital currencies. Even though the project may evolve in the future, currently it is just focused on the payment mechanism. Even though the blockchain platform is completely new, Facebook engineers have taken the best parts about existing blockchains and refined them for Libra.
Similarities Between Bitcoin and Libra
Just like bitcoin and Ethereum blockchains, Libra blockchain remains anonymous. There’s no real identity on the blockchain, just public-private key pairs. The transactions will remain anonymous while the user will be able to create multiple accounts. The paper states:
The Libra protocol does not link accounts to a real-world identity. A user is free to create multiple accounts by generating multiple key-pairs. Accounts controlled by the same user have no inherent link to each other.
The transactions will be permissioned, just like in a hyperledger. The consensus structure for Libra would be run by the partner organizations that will validate each transaction by running nodes on their networks. For every transaction, a leader would be chosen at random to count up the votes.
The founding members are well-reputed companies, from payment processing companies Visa and Master Card to internet giant eBay, and from blockchain startups to ride-hailing services Lyft and Uber.
The voting model and the governance model at the Libra organization ensure that the blockchain will be self-evolving. The founding members will decide how to manage the reserves and letting new validators onto the network. The governance structure will help in creating an evolving blockchain like tezos, with updates being essential for this strategy.
In hindsight, the blockchain takes the most from Ethereum. Just like Ethereum, it is programmable, meaning that the users can interact with the core software of the blockchain. The code base would be available for users to alter to create applications like smart contracts and wallets. However, just like Ethereum, the blockchain operations would require Libra tokens as gas to run. But unlike Ethereum, the Libra blockchain breaks data from software, enabling the use of the code for different wallets simultaneously.
Just like Coda, the Libra blockchain enables the users to dispose of the ledger; the users don’t need the whole ledger, they need to hold a proof of the last block so that they can validate the ledger using a smartphone.
Historical data may grow beyond the amount that can be handled by an individual server. Validators are free to discard historical data not needed to process new transactions.
A Work in Progress
Facebook is still not clear how some things will work as the company is hoping that by the time the blockchain is launched, it will have sorted out all the details. For example, the white paper states that storage of data may become a problem but doesn’t give a solution.
We anticipate that as the system is used, eventually storage growth associated with accounts may become a problem,
The white paper also states that the document’s purpose is to highlight major parts of the project while the social media giant is still figuring out the minute details of the project. The paper states:
“This paper is the first step toward building a technical infrastructure to support the Libra ecosystem. We are publishing this early report to seek feedback from the community on the initial design, the plans for evolving the system, and the currently unresolved research challenges discussed in the proposal.”