- By Eric Ervin, Co-founder & CEO of Blockforce Capital/Reality Shares
Libra is an ambitious concept for a new digital payment network initiated by Facebook and some of the biggest finance, tech, crypto and retail companies in the world. The Libra Blockchain is an entirely new type of blockchain, primarily designed to support the Libra cryptocurrency, which has the potential to be the first globally adopted cryptocurrency.
Libra Blockchain will start as a permissioned network, and slowly transition to a permissionless blockchain network over several years. This means, initially, only a small list of approved companies and organizations will run Libra, in contrast to the blockchain networks for bitcoin and ethereum whereby anyone can join and run a blockchain node. We do not believe this is a good idea out of the box, because in essence, a few large corporations could influence the various underlying currency instruments being held by Libra. In addition, these corporations would have oversight and could theoretically control global payments and other currency transactions.
The Libra Blockchain will support a special type of stablecoin cryptocurrency, backed by actual fiat money and equivalents, held by custodians chosen by the Libra Association. In the Libra project, Facebook enters the money transfer business with a host of influential partners to provide support and drive adoption. Several of these partners are components of the Reality Shares Nasdaq Blockchain Economy Index, while others continue to be evaluated for inclusion as Libra participation affects their Blockchain Score™.
The introduction of Libra has now created a firestorm in news circles and the global regulatory community. Libra is by far the largest blockchain and cryptocurrency initiative to date and has the potential to garner hundreds of millions, or billions of users. We believe it is just a matter of time before Libra, or a similarly functioning payment token will ultimately gain global adoption. As we saw in China with the mobile payment revolution, it is inevitable people will inherently want faster and more secure payments and transaction processing. A digital global currency is the logical ultimate solution, and Libra (or an equivalent initiative) constitutes a big leap forward.
Among our current concerns, however, Libra is a more centralized blockchain initiative (compared to the decentralized blockchain that underlies bitcoin), and transactions will most likely not be anonymous. The Libra Blockchain and network, theoretically, could be altered by many of the consortium members teaming together – which would be a problem. Whether this will ultimately happen remains to be seen.
Meanwhile, Facebook’s involvement could significantly boost its Blockchain Score from a current value of 58 up to 80 once the project goes live, propelling the company into the top 10 corporations engaged in blockchain innovation. The Reality Shares Nasdaq Blockchain Economy Index and Reality Shares Nasdaq Blockchain China Index are where companies involved in novel blockchain technology initiatives live.