Facebook’s new Libra cryptocurrency: What you need to know

In the world of cryptocurrencies, big promises, names, and numbers aren’t uncommon; at every corner, you’ll find well-funded projects that aim to change the very core of the world’s financial system. But Facebook’s new blockchain project, Libra, dwarfs even the most ambitious of its predecessors.

The sheer power of the names involved with Libra, as well as the project’s scope, are serious business. Its initiator is the world’s largest social network. Its partners include some of the biggest finance, tech, crypto and retail companies in the world, and it will be integrated in some of the world’s most popular apps. 

In the past week, I’ve had several meetings with Facebook executives and experts involved with the project, and I’ve read over a dozen documents describing various aspects of it. Libra is still in its early stage, and many details are unknown; some will likely remain unknown until the first half of 2020, when the project is due to officially launch. But here’s a comprehensive overview of what we do know right now. 

With Libra, Facebook is reviving its old dream of building a payment network; the company tried in 2015 with Messenger Payments, but the feature, which let users send and receive money, never quite caught on. 

Now, it’s 2019, and times are very different. Cryptocurrencies such as Bitcoin have shown that it’s possible to build a decentralized peer-to-peer digital cash and a payment network that’s secure, and that anyone can use. Ethereum used the same underlying technology, the blockchain, to create a platform for decentralized apps. And stablecoins, such as DAI, USDC and TUSD, have shown that it’s possible to create a cryptocurrency whose value isn’t as volatile as the value of bitcoins and ether. 

With all those pieces in place, Facebook is trying money transfer out once more, but this time, armed with a system that takes some of the best traits of the cryptocurrencies available today, and a small army of partners to provide support and drive adoption. 

A short history of Facebook’s blockchain project

January 2018 was perhaps the first serious sign that Facebook was up to something in the blockchain space. In a seemingly out-of-character move, CEO Mark Zuckerberg spoke about the power of decentralized networks. 

“Encryption and cryptocurrency (…) take power from centralized systems and put it back into people’s hands,” he said. “But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”

In May 2018, things got serious. Facebook reassigned David Marcus, previously the head of Messenger, to lead an internal blockchain project. This spurred numerous reports about the size and the scope of Facebook’s blockchain endeavor, though Marcus, and — subsequently — Facebook, insisted that the team is small. 

“I’m setting up a small group to explore how to best leverage Blockchain across Facebook, starting from scratch,” Marcus said at the time. 

After that, the rumors intensified; and details on Project Libra, as it was reportedly internally called, began taking shape (the Libra moniker mentioned in those reports remained, but “GlobalCoin” appears to have been abandoned). Facebook kept adding people to its “small” blockchain team; in February 2019, the company acqui-hired the main people behind crypto startup Chainspace. Official word was that Facebook’s blockchain team was “exploring many different applications,” but even then, the plans for Libra — which turned out to be a not-so-small project after all — must have been well underway.

Three Libras, and one Calibra

Now that Libra has been officially announced, let’s clear some inevitable confusion. Libra is several things: the Libra Blockchain, the Libra currency and the Libra Association. 

The Libra Association is the Geneva, Switzerland-based not-for-profit organization that governs Libra, and is run by Founding Members, which include Facebook — but the social network does not have special preference in the decision making progress. 

The Libra Blockchain is a new type of blockchain, primarily designed to support the Libra cryptocurrency, but one that also allows anyone to build smart contracts on top of it, similarly to Ethereum.

The Libra coin is a special type of cryptocurrency, a stablecoin, meaning its value should not change much compared to some stable real world asset, like the U.S. dollar. It’s backed