Facebook, a Menlo Park, California-based social networking service provider, recently introduced its own cryptocurrency initiative, called the Libra project. The American social media giant claims that Libra coins and their innovative technological infrastructure will allow for greater financial inclusion.
Libra: Medium of Exchange for “Billions of People” Worldwide
In order to facilitate transactions using its global currency, Libra, Facebook revealed its developing a blockchain, which has been referred to as “a decentralized, programmable database.”
As explained on the project’s official website, Facebook’s digital asset platform will “support a low-volatility” cryptocurrency - as its primary use case is to serve as an “effective medium-of-exchange (MoE)” for people throughout the world.
Libra Blockchain Designed to “Lower Barriers to Entry”
According to its technical documentation, the Libra protocol will implement “the Libra Blockchain”, which “aims to create a financial infrastructure” that can support a more accessible and cost-effective platform for conducting business-related and day-to-day transactions.
Other design goals for the Libra currency and its blockchain include having “lower barriers to entry” - meaning that Facebook intends to develop a financial platform that can be accessed using a basic internet connection and an “entry-level” smartphone.
Open-Source Prototype Libra Core Will ”Test Validity of Libra Protocol”
An open-source prototype, known as Libra Core, has been developed for testing purposes. Software architects and quality assurance testers (SQAs) will be experimenting with Libra Core in order “to validate the design of the Libra protocol.”
Notably, the Libra Core prototype has been released because Facebook’s management expects other organizations to participate in “a global collaborative effort to advance [the Libra cryptocurrency] ecosystem.”
Libra Blockchain Network Maintained By Set of Replicas from Different Authorities
As detailed in its specification documents, the Libra protocol “allows a set of replicas [transaction validators] from different authorities” to cooperatively manage a database system that consists of “programmable resources.”
Public key cryptography will be used to authenticate user accounts that own programmable resources on the Libra Blockchain, the project’s documentation states. The Libra network will be maintained by validators who will be required to process transactions and “interact with each other to reach consensus” on the state of Libra’s database.
“Core Mechanisms” Will Create and Enable “Unique Governance Mechanism”
Pre-defined smart contracts will be used to facilitate transactions on the Libra Blockchain and the option to write user-defined smart contracts will be implemented in the future. Software programs on the Libra platform will be written using a feature-rich, high-level programming language, called Move.
The “core mechanisms” or the fundamental design for Libra’s blockchain will be written using Move, the documentation noted. Core mechanisms include defining how the platform’s currency will be created and exchanged and how validator membership will be managed. According to the Libra project’s specification document, the global currency’s blockchain will use core mechanisms to “enable the creation of a unique governance mechanism.”
Libra Blockchain Project to Provide Financial Services to “Those Who Need It Most”
Initially, Libra’s decentralized governance protocol will leverage “the stability and reputation of existing institutions.” However, the crypto network’s developers intend to allow the platform to move to “a fully open system over time.”
Referred to as “a public service”, the Libra cryptocurrency platform’s main goal is to “reinvent money.” While advancements in communications technology and the creation of advanced Internet-based protocols such as 4G and broadband internet have increased efficiency, “access to financial services is still limited for those who need it most.”
Billions of people throughout the world still do not have access to modern banking services, which prevents them from being able to reliably and seamlessly send money, the Libra Blockchain whitepaper states.
Building A Permissionless Blockchain Network
As explained, the Libra platform’s developers are planning to eventually move to a permissionless network. According to the Libra Blockchain’s technical documentation, the crypto network’s membership eligibility will transition to “become completely open.” This means that members will be selected based solely on their holdings of Libra.
Implemented as a cryptographically authenticated and secured database, the Libra Blockchain will be managed using the Libra protocol. The project’s management has clarified that the global currency platform’s protocol is currently in its early stages of development.
Seeking Feedback Regarding Libra Protocol’s Initial Design
Its creators have also stated that they have released a detailed report on how they intend to develop the cryptocurrency’s protocol, so that they can obtain feedback regarding the project’s initial design.
As pointed out by Jameson Lopp, the Chief Technical Officer (CTO) at CasaHODL, a digital asset custodian, there is “no actual blockchain data structure” defined by the Libra protocol. This, as the project’s whitepaper clarifies that there is “no concept of a block of transactions in the ledger history” - which is essentially how a typical blockchain network is designed.
Using a Fundamentally Different Type of Blockchain Data Structure
In addition to using a fundamentally different type of blockchain design, Libra’s database will “store a ledger of programmable resources.” These may include the Libra currency itself, which Lopp revealed is more similar to how Ethereum’s (ETH) and Ripple’s currencies have been created.
Moreover, Libra’s documentation notes that network resources must “adhere to custom rules”, which are specified by the protocol’s “declaring module.” The source code and the associated operations of this module also reside in the platform’s database.
Libra Accounts May Be Managed By Custodians or Individuals
As explained, all Libra-based resources are owned and maintained by user accounts that are authenticated using public key cryptography. The project’s documentation adds that an account may represent custodial wallets or “direct end users of the system.”
By using an account-based data model, the Libra protocol is able to encode the ledger state - which consists of a snapshot of all the transactions registered on the cryptocurrency network. The state of ledger entries have been “structured as a key-value store,” the Libra Blockchain documentation explains.
Libra Blockchain Will Begin with a “Genesis Ledger State”
This allows the database system to use the key-value store to map account address keys to account values. As detailed in the technical documentation, an account value in the ledger state consists of resources and modules that are defined and supported by the Move programming language.
In a manner that is similar to how the Bitcoin (BTC) network produced its genesis block, Libra’s initial set of accounts and their associated state will reside in the blockchain network’s “genesis ledger state.”
Changes Made to Ledger State Must Be Approved By Libra’s Consensus MechanismThe Libra Blockchain’s ledger state may be updated by its users after their transactions have been submitted and verified by the validators. A Libra-based transaction consists of a transaction script - which is programmed using Move bytecode.
Additionally, Libra transactions include arguments which are sent to the transaction script. For instance, an argument may specify the number of Libra coins that are being transferred and also the address of the recipient
A validator on the Libra Blockchain then executes the transaction based on the inputs received from the arguments. This type of transaction model reliably produces “a completely deterministic transaction output.” However, changes are only made to the ledger state after the transaction(s) have been approved through Libra network’s consensus mechanism.