Libra: The inevitable cryptocurrency??

BQT.io
BQT.io
Jun 28 · 6 min read

By Edward W. Mandel

I’ve made the point before that money was invented by merchants, not governments. So it was just a matter of time — in this case, 15 years — that some digital-native merchant — in this case, Facebook — got around to minting its own.

The only surprising parts of all this is that it took so long, and Amazon didn’t get to it first.

Libra rising

Social media giant Facebook has been putting the pieces together for its own ICO since this past February. That’s when it “acqui-hired” the Chainspace team, according to Cheddar. This is a Silicon Valley term for buying out a startup to gain expertise rather than assets.

Chainspace was “a small blockchain startup founded by researchers from University College London, [that] was building a decentralized smart contracts system that could facilitate payments and other services through blockchain technology,” according to reporter Alex Heath.

It snowballed from there, and in less than five months, CEO Mark Zuckerberg had a white paper online and some rough code in GitHub.

The name “Libra” might be a gentle dig at the Winklevoss Twins, his Harvard frenemies who launched their own Gemini Dollar in 2013. It’s a stablecoin used as a utility token for the Gemini exchange. If you’ve seen David Fincher’s 2010 film The Social Network (it’s almost a decade old already?!), then you get the sense of the antagonism between the genteel Tyler and Cameron and the scrappy Zuck. If you’re a tech industry watcher, then you know that the twins sued Facebook repeatedly — and unsuccessfully, except for a settlement of $65 million in relative peanuts — over the course of seven years starting in 2004.

I was told by a reliable-enough-for-crypto source that the Winklelvii and Zuckerberg have long since buried the hatchet and that the twins are actually participating in Libra’s launch. But I can’t find a thing to support either of those statements. Sure the twins managed to say some neutral-at-best things about Zuckerberg on CBS This Morning, but that’s as far as it goes.

In fact, the second statement — that they have any role at all in Libra — is demonstrably false. Not only are they nowhere mentioned in the Libra white paper, they really have nothing to bring to the table. Libra is being backed by a consortium of five venture capital funds, of which Winklevoss isn’t one. There are also seven online retailers, travel sites and service providers who have signed up to take Libra as tender; the closest Ty and Cam are to that is that they used bitcoin to pay in advance for a trip to space aboard the Virgin Galactic shuttle. Four nonprofits stand to benefit from being Day One participants in Libra, but the Winklevii are a rarity among billionaires in that they rarely even mention their philanthropic endeavors, so it’s impossible to tell if any of these organizations are among their pet causes. Coinbase is also part of the launch, and Gemini is not on that list. And as for payment processing, both Mastercard and Visa have signed up with Libra, as have PayPal, Stripe and PayU. The Winklevii had a payment company for a minute or two. It was called BitInstant, but it dissolved in January 2014 — just months after the twins invested in it — when the CEO was caught laundering money through Silk Road.

Armie Hammer, Josh Pence and some very good CGI as the Winklevoss twins. Will that be $10 million in total, or $10 million each? Probably neither. Credit: Columbia Pictures

But what’s it for?

According to the white paper, “Now is the time to create a new kind of digital currency built on the foundation of blockchain technology.”

If by “now” you mean ten years ago, Zuck, we couldn’t agree more. But the paper goes on:

“The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.”

And as far as I’m concerned, that’s a good thing. There are only tens of millions of people today who hold crypto, and it’ll never be able to do all the things it’s technologically capable of doing without being adopted by orders of magnitude more people.

Whatever issues Facebook is undergoing — the election-stealing bots, the private data-stealing employees, the out-of-touch top management, the social media platform that looks like a nursing home’s intranet — it might be the company that gets this right. With assets in the neighborhood of $100 billion, it’s definitely well-placed to back up its own, personal currency.

Aside from the Facebook platform itself, it’s got the much more youth-skewed Instagram in its portfolio. It also has two messaging apps: Facebook Messenger for the old folks and WhatsApp for their Instagram Generation kids. Any and all of these can serve as conduits for moving value from one account to another, irrespective of borders and without middleman fees. (With both Visa and Mastercard on board, let’s see how long that lasts.)

But is it a cryptocurrency?

Libra is a stablecoin. All its launch backers are ponying up money to serve as a reserve. Together, these backers for the Libra Association, which will be a you-bet-totally-independent body that will serve as Libra’s central bank.

Which kind of defeats the point of being a cryptocurrency. But let’s set that aside for now.

The consensus algorithm will be … absent. Libra will run on a centralized, permissioned blockchain.

Which kind of defeats the point of being a cryptocurrency. But let’s set that aside for now.

Libra also states that it “is pseudonymous and allows users to hold one or more addresses that are not linked to their real-world identity. … The Libra Association will … continue to evaluate new techniques that enhance privacy in the blockchain while considering concerns of practicality, scalability, and regulatory impact.”

And yet Fortune’s Robert Hackett is skeptical. Here’s his take:

Facebook assures people that its products will not source account information or financial data from [Facebook subsidiary] Calibra ‘without customer consent.’ Neither will it share any of this information with third parties, except in cases involving potential fraud, criminal activity, legal compliance, or product performance. … Any shared information ‘will not be used to improve ad targeting’ without permission, the document specifies.”

In other words, Facebook users would need to check their settings to make sure they’re not giving consent by default.

Which kind of defeats the point of being a cryptocurrency. Full stop.

Keeping perspective

The entire internet is aware that, on one level, the name Libra is a trolling of the name Gemini. But it’s more than that. Libra is, to give the Beel-Zuck-bub his due, a brilliant name for a cryptocurrency. It refers to balance and justice; it is the name of the weighing scale held by the justice goddess Themis. But ultimately it’s a measure of weight. Specifically, the Roman libra was a rough equivalent of the contemporary American pound. That’s why we abbreviate pound as “lb.” It’s also why the British pound sterling has a symbol, £, in resonance.

So if “pound” is a good enough name for the world’s longest-lived fiat currency, can “Libra” be good enough for a game changer of a digital token?

My personal view, this is a desperate move by Zuck to enter the crypto space after watching its ups and downs and profiting on ICO ads when it was most convenient. Notice Zuck was holding the news when BTC was in a DUMP being skeptical himself and non-believer critic of crypto… Now after watching the 2nd BULL for BTC he could not help himself to stand as a “HERO”.

Will we trade Libra at BQTX.com? Highly doubt it… but that’s up to the traders. But unlike other stablecoins and unlike other permissioned-chain tokens, it can’t be taken for granted by traders and exchanges.

Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and recently launched his own BQTX.COM Social Crypto exchange helping traders connect with each other to leverage their crypto assets.

BQTX.com has been in development since March 2017 and its ICO launched September 18. The information can be found online at BQT.io, on Telegram @BQTCommunity and on Twitter as @bqt_ico.

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