Libra – Legit Bitcoin Cryptocurrency Asset Accounting Tax Software?
The initial coin offering ecosystem is currently flooded with hundreds of different platforms that claim to present investors with highly lucrative opportunities. Initial coin offerings have evolved from a simple method for platforms to generate launch capital into a broad spectrum of different investment platforms.
The blockchain ecosystem is beginning to capture the attention of venture capital around the world. The blockchain is now home to a wide range of highly disruptive platforms that are revolutionizing the way in which both informational and value are disseminated.
While tokenization may be an effective alternative to venture capital for some platforms, it’s clear that it does not work so well for many others. In 2017, less than 40% of all initial coin offerings succeeded in reaching their funding goals, a figure that doesn’t take into account the many fraudulent initial coin offerings that exist solely to separate unsuspecting investors from their crypto.
When assessing an initial coin offering, it’s important to develop a clear understanding of exactly what the platform wants to achieve and why it could possibly succeed in the saturated ICO market. This process is becoming increasingly difficult, as some initial coin offerings use confusing terminology to hide the specifics of what their platform delivers.
There are many different terms in the cryptocurrency world that can be used in an incorrect manner. Consensus methods- the processes used by blockchain networks to agree on the state of the ledger- come in many different flavors, such as Proof of Work, Proof of Stake, and more. Without a basic understanding of how these processes work, it can be easy to be mislead by intentionally confusing ICOs.
One of the most important milestones in the near future of blockchain technology is regulatory compliance. Regulatory bodies around the world are currently working to establish frameworks that govern the cryptocurrency industry, and with these frameworks comes taxation.
Accounting, auditing, and taxation are complex processes even with long-established legacy systems in the current financial paradigm, so when the blockchain is added in, it can become a headache. A new startup that has collected almost $8 million in venture capital, however, is aiming to create the next generation of accounting, auditing, and tax software for the blockchain and cryptocurrency industry.
Libra is focused on delivering real-time enterprise applications that are able to optimize and automate the many different processes required as part of the tax system, including reporting, compliance, and control.
In a recent series A round of funding, Libra has captured $7.8 million from a range of investors that include Liberty City Ventures, XBTO, Boost VC, and Lee Linden. Libra plans to use the capital in order to continue the development of the Libra Enterprise platform, as well as the development and release of a variety of different applications and data services.
In this article, we’ll take a look at Libra Coin, which is a good example of an initial coin offering that uses blockchain terminology in an incorrect manner. Libra Coin is essentially a “lending ICO”, which is a new trend in the ICO ecosystem in which high yield investment programs masquerade as coin offerings to gather investor interest.
Libra Coin is not necessarily a bad or fraudulent initial coin offering, but it does serve as a prime example of why it’s essential to understand the basics of blockchain technology before investing. We’ll proceed to highlight the ways in which Libra Coin is poorly represented by its ICO, and provide a neutral analysis on whether it’s actually a good investment opportunity.
What is Libra?
Libra was founded in 2014, which was the same year in which the US Internal Revenue Service issued guidance stating that cryptocurrencies would be treated in a similar manner to other kinds of taxable property.
Libra first began with the release of their LibraTaxa accounting software, which was one of the first cryptocurrency-specific tax accounting tools available in the world. The Libra platform now provides a range of institutional grade services that incorporate blockchain and cryptocurrency ecosystem connectivity and standardization through a secure, scalable, and auditable solution.
Libra Coin is a new initial coin offering that claims to be a decentralized peer to peer currency much in the same way as Bitcoin. The Libra Coin platform doesn’t actually deliver anything different from Bitcoin or other high market cap cryptos such as Ethereum, and as it doesn't explain anything about the blockchain upon which it is built, it’s impossible to determine whether it is delivering a unique solution at all.
Libra Coin promises investors the opportunity to generate income by “staking” coins on the Libra Coin network, or “lending”. This is the primary point of contention with this ICO. There are a number of initial coin offerings and crypto platforms that do actually facilitate peer-to-peer lending in order to decentralize the lending industry.
Libra Coin, however, has nothing to do with peer to peer lending whatsoever. Instead, the Libra Coin platform simply offers investors the opportunity to “lend” their capital to the “Libra Coin trading bot”, which then makes trades on behalf of the investor to generate up to “45% per month”.
This system is essentially a high yield investment program, or HYIP. High yield investment programs have a reputation for being risky and unstable, as many of them use new investor capital to pay out older investor withdrawal requests. It’s important to carefully assess whether you’re comfortable allowing an unregulated investment firm to make trading decisions with your capital, outside of your control.
There are many examples of legitimate and profitable high yield investment programs, but it’s essential to exercise caution when investing in them. Another issue presented by the Libra Coin platform is the “staking” process they offer, which promises to generate up to “30%” per year.
Staking is used by blockchain networks that use Proof of Stake consensus to agree on the state of the distributed ledger. It’s extremely unlikely that Libra Coin operates on a Proof of Stake blockchain network, as this would more than likely be mentioned in the white paper. Libra Coin is most probably build on the Ethereum network, as it’s extremely easy to generate ERC20 tokens.
Thus, “staking” on the Libra Coin platform essentially functions in the same way as “lending”. Yet another issue presented by the Libra Coin platform is that there is no information regarding its creators. A good ICO should provide detailed information about the development team and the creators, which Libra Coin does not.
Jake Benson, the CEO of Libra, has commented on the services offered by the platform:
“Libra’s vision is to be the premier provider of next generation accounting, audit, and tax software and data services for the blockchain and cryptocurrency industry.We provide our customers three core components of value. First, a single on-ramp that connects to the many data sources within the ecosystem. Second, the real-time data processing engines and services required to continuously and automatically standardize and deliver accurate financial information. And third, blockchain-native software that’s purpose-built for this industry by a team of engineers who have designed and delivered some of the most scalable and secure financial software platforms in the world.”
Libra currently offers two separate products. The first, the Libra Crypto Office, is an enterprise application that provides funds, exchanges, and market makers with the tools necessary to automate and optimize both back and middle office taxation processes and reporting. The Libra Crypto Office also helps to improve operational and finance analysis.
The second product offered by Libra is a suite of Blockchain Audit Tools that provide Information Systems Auditors with the tools necessary to perform continuous, real-time auditing and monitoring of distributed ledger systems. This product is currently under development and is set to launch in 2018.
In addition to the capital generated in their most recent round of funding, Libra has previously raised $2 million in seed funding in a series of transactions spearheaded by Fenbushi Capital and Liberty City Ventures, contributing to a total of almost $10 million in raised capital
The Libra Coin ICO
The Libra Coin ICO is set to launch on the 11th of December 2017, and will run until the 11th of January 2018. The ICO will sell LBR tokens, which will be available at a price of $0.60 USD. Libra Coin describe their coin as a “PoS Hybrid”, but don't provide any details on the blockchain upon which Libra Coin is built.
Libra Coin Conclusion
The Libra Coin ICO is relatively straightforward when assessed as a high yield investment program, but does lose points for not presenting their concept in a transparent manner. If you’re interested in investing in a HYIP, however, and are comfortable with the concept of allowing your capital to be traded by an automated trading bot, Libra Coin could be worth consideration.