Facebook’s entry into the cryptospace has finally given the community a much-needed push into mainstream adoption. As a result, institutions and individuals are being forced to understand the inner mechanics of blockchain, in an effort to best leverage the inevitable change. Changpeng Zhao’s Binance Research took a deep dive into Facebook’s Libra to present more clarity to the community.
The report began by explaining,
“Libra is a cryptocurrency minted on the Libra Network, a blockchain developed by a Swiss foundation and a consortium led by Facebook.”
Quoting the original whitepaper, the report stated that the crypto is backed by a not-for-profit organization called the Libra Association. Currently backed by the Libra Reserve, the basket of low-volatility assets includes four fiat currencies namely, USD, GBP, EUR and JPY. The selection of assets will be purely based on predetermined criteria related to quotability, free-floating and the ease of decision-making process.
Going into the specifics, Libra will run on Libra Blockchain, which is currently supported by a Proof of Stake (PoS) algorithm. While node development will be reliant on the new Byzantine-Fault-Tolerant (BFT) consensus algorithm, it reveals the company’s plan for interoperability with other chains in the future.
The chart above shows a one-on-one comparison between Facebook’s and JP Morgan’s crypto-initiatives, which also signals Facebook’s position as the bridge between traditional financial institutions and the general public.
Further, Libra’s smart contracting will be written in ‘Move,’ Facebook’s in-house programming language built for implementing custom transactions and smart contracts. While the current blockchain will be running only pre-approved contracts, the decision has been made to avoid transaction-related errors.
Although speculators believe pre-approval of contracts does not conform with the laws of crypto, Facebook has clarified that the number of use cases, needs, and desires to be pre-built can be fairly comprehensive as the necessary smart contracts and tools needed from enterprise players can be sourced and polled directly from its consortium of 100 parties.
Subscribe to AMBCrypto’s Newsletter