Libra, can we trust Facebook with our money?

By Dennis Hertiandi and Ary Bandana, DIGITS Staff Writer

Facebook has released the details of its new cryptocurrency, Libra, which will let people buy things or send money to another person with nearly zero fees. There will be the ability to cash in and cash out Libra online, or at local exchange points (for example grocery store or mini-market), and use Facebook’s own app called Calibra Wallet, which will be integrated with WhatsApp, Messenger, and the Facebook app itself. But don’t worry, Facebook will not be the only company that fully controls Libra, but instead Facebook is part of the Libra Association, with Visa, Uber, and Andreessen Horowitz. Let’s dive in to see how it all works.

The Libra Currency

According to Facebook, Libra is a “Global Currency and Financial Infrastructure”. Libra can also be defined as a digital asset that is powered by a new blockchain created by Facebook. The target for this cryptocurrency is what Facebook called the “unbanked”. They aimed for this unbanked to be included in the financial activity market and thus gain profit from it.

How do User Use and Get Libra?

To get Libra, all you need is the internet, and a smartphone to get the Calibra app or other third-party apps. Users can buy Libra online, through ATM, or through local stores, like grocery stores and mini markets. User trades their currency to get Libra coins. Every currency worth some Libra (for example: 1 Dollar = 1 Libra). Then, people can use Libra to pay bills using QR code, coffee, to pay subscription like Spotify, etc. Users can also send money to another user, and the process is as easy as sending a Facebook message.

So, Libra will “live” inside Facebook other apps like Whatsapp and Messenger, and its own dedicated app called Calibra.

The Advantages of Libra

There are many reasons why Libra might interest people who are reluctant to have a bank account, especially credit cards. First, the sign-up process is simple. All you need to do is the photo of your identifier, such as ID card. Second, since its particularly free to digitally move money from one account to another, you don’t have to pay a big processing fee like you usually pay to the bank for the credit card transaction. It will interest and give more incentive for more people to use the app, as a lot of person thinks that the fees are too big.

This “basically almost free to send money” system will also benefit workers who need to send money to their families in other countries. The fee for an overseas transactions is very high in the banking system, so Facebook hopes that Libra can benefit those people.

Unlike bitcoin and Ethereum, the value of Libra will remain stable. It is because Libra will have its cash reserves in the most stable currencies like dollar, yen, and euro, which will maintain the price of Libra. All of which will be explained more later in the article (in the Libra Reserve Section)

Deep Dive into Libra – The Libra Association and The Technology Behind it

Libra Association

Because of their recent issue with security, Facebook knows that you will not trust it to safe-keep your money. It is also hard to create, develop, and to implement Libra worldwide by themselves. So, Facebook recruits and creates the Libra Association, a group of people who will oversee the development of the coin, reserve of real-world asset, and the governance rule.

Each founding member paid a minimum of $10 million to gain one vote in the Libra Association Council and a share (proportionate to their investment) of the dividends from interest earned on the Libra Reserve.

According to The Block’s Frank Chaparro, the 28 soon will be founding members are:

  • Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
  • Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
  • Telecommunications: Iliad, Vodafone Group
  • Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
  • Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
  • Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Not all companies can be part of the association, as members also have requirements to fulfill. For example, technology companies need to have a half rack of server space, and a 100 Mbps internet connection. Business must hit to of three thresholds of a $1 billion USD market value, and reach 20 million people a year. The list goes on and on, and each industry has its own requirement.

The “Jobdesc” for this Libra Association member are recruit more members, fundraise, design incentive program, and doling out social impact grants.

Since each member only has 1 vote or 1% of the total vote (whichever is larger), it prevents member to hijack Libra for their own gain, and therefore eliminate the possibility of sole ownership.

Libra Currency

Libra is a unit of measure in Roman. It’s also a wordplay from the word Lib, which means “free” in french.

Libra will be represented with ≋ as opposed to $. Libra’s value is expected to be largely stable since the money is tied to a basket of bank deposit and government securities with stable international currency such as dollar, pound, euro, swiss franc, ye, etc. Therefore, merchants and user can trust Libra to be their medium of exchange, as the value of 1 Libra today and tomorrow will worth the same.

The idea is for people to cash in some of their money in exchange for some Libra, which can be used to pay bills, things, subscription, etc through certain wallet apps such as Libra and convenience store, and also cash out.

Libra Reserve

When a person cash in their currency for Libra, their real money is sent to the Libra Reserve and the equivalent value of Libra will be sent to that person. If someone cashes out from the Libra Association, the Libra will be “disintegrated”. With this scheme, it is expected that the Libra will maintain 100% of the value of the Libra in circulation, collaterized with real world asset in the reserve. And since Libra is not only tied to single currency, but many, the value will remain relatively stable.

For the Libra Association members, they will receive Libra Investment token when they invest their initial $10 million minimum investment. The dividend they will receive comes from their proportion of interest on assets in the reserve, minus operating expenses, investment in the ecosystem, engineering research, and grants to non-profit. Therefore, if more people uses Libra, they will also earn much more interest.

Libra Blockchain

Libra blockchain is a cryptographically authenticated database that act as a public ledger, which can handle 1000 transactions per second, which is a lot faster than bitcoin’s 7 transaction per second. Here, payment is permanently written, and cannot be reversed.

Every investor has their own validator nodes. Nodes are used to legitimate and authorized payment. When a transaction happened, each nodes runs a calculation based on all transaction in the ledger. Just two thirds of the total nodes must agree for a transaction to be executed and written in the blockchain, thanks to a Byzantine Fault Tolerance System. With a structure of Merkle trees (which simplify recognizing changes in Blockchain), Libra blockchain should be able to handle 1000 transaction per second if nodes use at least 40Mbps and 16TB SSD hard drives.

Each transaction will have a small amount of fee to “gas’ the processing system, which is small per transaction, but when add up, will prevent people to creating millions of transaction of spams and denial of service attacks.

Sure, the system is not fully decentralized, since it needs the approval of members. But it is the most secure system available to date.

Move Coding Language

The Libra blockchain is open source with an Apache 2.0 license, and it uses Move coding language for developer to build apps. The Move is not ready yet, but it is in developer beta mode, where they use bug bounty system, where they will pay researchers who found bugs in the system.

The Move was created with the function to move Libra coins from one account to another while prevent it to be accidentally duplicated. An example of core transaction in Move is:

LibraAccount.pay_from_sender(recipient_address, amount) procedure.

The Libra Ecosystem and the Move language will be open to use and build, which summons risk. Fake developers can claim that their app works the same way as Calibra, and scam them. But then, there are no plans for Libra to take a role in actively vetting developers, said Calibra’s head of product Kevin Weil.

Libra Incentives

To encourage people to use Libra, First Libra will want to use incentive to lure merchant. They will give Libra coins (or other payment method) to node operators who can get people sign up to use their Cryptocurrency. They will also give incentives to wallet that can pull user through Know Your Customer anti-fraud and money laundering process, and also if they can keep user to keep using Libra for more than 1 year. They will also gain money for each transaction that they can get

The incentive can then be kept by the merchant, or to be used as another incentive method to lure customer. For example, to give discounts or rewards. This will create competition between merchant, and will also results in lower price, which will help to attract people to use Libra.

Can we Trust This?

Sure, on paper, Libra sounds attractive enough, and it will attract people to use them as a payment method. Then again, it is created by Facebook, the same Facebook who is caught up in the Cambridge Analytica Scandal.

Luckily, Facebook knows this, and that’s why they create the Libra Association. This ensures that Facebook doesn’t have sole control, and the system is decentralized. Moreover, Facebook will separate itself from Libra by default. Which means that it will not import your contact, your privacy, your history, or any profile information, although it may asks if you wish to do so.

Bottomline is, your Facebook news feed won’t be targeted by ads, rank your news feed, or otherwise earn Facebook money directly. Data will only be used for research and adoption measurement, which is anonymous of course. Also, you don’t even need Whatsapp or Facebook account to have Calibra


We still need whether Libra can revolutionize the cryptocurrency and bitcoin, and we also need to see whether it is really secure, or it is just another Cambridge Analytica soon-to-be scandal. However, judging from the pace of how things go, it is interesting to see the development of Libra in the future.




Constine,John. (2019, June 18). Facebook announces Libra cryptocurrency: All you need to know. Retrieved from

Chaparro,Frank. (2019, June 14). Facebook’s cryptocurrency partners revealed—we obtained the entire list of inaugural backers. Retrieved from

Paul,Kari. (2019, June 18). What is Libra? All you need to know about Facebook’s new cryptocurrency. Retrieved from


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