Libra is supported with real, cold hard assets. Unlike most famous cryptocurrencies such as Bitcoin, Litecoin, Ethereum, etc. It’s hypothetically a “stable coin.”
It means it’s worth is connected to a basket of diversified global currencies and low-risk bonds, providing a lower bound, or floor, on price levels.
For years of successful currencies, with this is one core area Bitcoin and other popular cryptocurrencies have failed.
The Three Important Characteristics
At least three traits and arguably several more should be possessed. But three of the essential characteristics for a sufficient currency have been believed to be durable, acceptance, and being a store of value.
Libra, as Facebook’s cryptocurrency, doesn’t make sense at first glance. It is a non-theoretical token.
On the flip side, in the event with crypto on the protocol succeeds and even in many cases for having started the development of the project.
Besides, there is always an advantage for the people who launch a new procedure.
Users of Libra
It’s important to understand that Facebook is launching two cryptocurrencies, the one everyone’s talking about which is Libra.
Furthermore, the one accessible only for Facebook and its corporate partners are known as the Libra investment token.
A basket of fiat currencies and cash equivalents will be on support, meaning that for every dollar of Libra, there will be in theory a “dollar” worth of real-world assets which that token may be exchanged for under certain conditions.
As a usual user, by spending $100, you’d get $100 worth of Libra in return. In theory, across a variety of platforms, your Libra can be used or sent to an approved friend.
Just like the U.S. Treasury bills, your $100 put in the Libra Association will be into a variety of low-risk, short-term investments.
Investors of Libra
According to the paper, funds are used first for the network’s capital of the operation. Meanwhile, the rest is separated for the Libra Investment Token holders that are corresponding to their holdings.
Also, policies are determined by the association as per Libra Investment Token holders.
A minimum of $10 million was invested, and the association itself is composed of holders of the Libra investment token.
Besides, “special impact groups” selected by the association have to vote but don’t have to buy the investment token.
The first investors are seen to be significant technology and VC companies. For this investor, a $10 million worth of investment isn’t that huge.
The project makes sense, big or small when the big numbers come into play and look at what success is.
Libra’s potential market
To know the total size of Libra’s potential market, check out the U.S. money supply as traced by the Federal Reserve.
In a country of about 329 million people, accounts mounted at $3.7 trillion when M1 checked, which includes cash, coins, and money In January 2019.
It is in contrast to M2, which is more than $14 trillion, and everything in M1 includes such as plus savings accounts, money market funds, certificates of deposit, and other bank deposits.