After their announcement of the plan to create a global blockchain cryptocurrency network that is backed by real fiat assets, Facebook revealed their new plan which includes a new Investment Token. It will exist on the blockchain along with the Libra currency and it will be available only to “much more exclusive” members.
Facebook Investment Token
As previously revealed, there will be 28 major companies that will be supporting Facebook with this project which will run their own validating nodes. Each founder company has invested at least $10 million and will receive an investment token as a financial reward and a single vote to use for future updates and changes.
The reward will be meaningful only in the network really takes off though. As per the statement by Facebook, the assets in reserve are low risk and low yield making returns for early investors will grow only if the project is an immediate success.
About the Libra Network
Governance
There are several layers to the governance of the non-for-profit organization The Libra Association. The main governance layer is the council, where every organization that is a member of this council will have a representative. Although council members have a lot of power when it comes to their votes and propositions, the association can decide to override the delegated decisions and make the key decisions itself, where the most important ones require a two-thirds majority.
The only way to become a member of this council you need to be an investor that puts in at least $10 million and be an organization that meets the elite criteria put down by Facebook, like being a part of the Fortune 500. The council will be responsible for standard governance matters as well as having the final say when it comes to technical questions, new features etc.
Reserves
Although the exact “components” of the assets that are securing the Libra network are yet to be determined, the social media leader, Facebook, stated that it will be structured with capital preservation and liquidity in mind. Although the components of this “asset basket” may change in the future, the currency will remain fully backed.
Compliance and Privacy
Of course, there are many threats to consider when making a project like this. One of the key features to have is apt anti-money-laundering regulations that will require funds to be traceable, which means that the transactions on the Libra network have to be unencrypted. According to Facebook, this makes it possible for third parties to analyze the transactions and detect frauds.
The lack of a cryptographic mechanism such as a zero-knowledge proof raises privacy concerns. Keep in mind that Facebook does have a reputation regarding handling user data and now it is offering assurances that are similar to what Satoshi Nakamoto gave in the bitcoin whitepaper in 2008.
Conclusion
To sum up, Facebook’s entrance into the blockchain world is a bit controversial. The social media giant has a substantial amount of funding to carry out the execution of the project but due to the future regulations and the company’s reputation with user data, it is expected for the community to remain cautious about their expectations.