Libra is blockchain virtue-signalling at its worst — centralised, not private, and good for Facebook
On Tuesday, Facebook announced its plan for a global digital currency called Libra. Earlier this year our cofounder and scientific advisor George Danezis left Nym to help design Libra after Facebook acquired Chainspace, another startup that George cofounded with Dave Hrycyszyn. We were sorry to see him go.
Dave also went to Facebook but left after a week, and shortly thereafter became Nym’s CTO. Along with our acting CEO Harry Halpin, Chief Scientist Claudia Diaz, Head of Research Ania Piotrowska and others, he is developing software that will enable users to evade the mass data harvesting practised by Facebook and companies with similar business models.
Needless to say we watched the Libra launch with interest, not only because it was the result of years of George’s work, but because Nym is committed to ending surveillance by state and corporate entities and preserving people’s fundamental right to autonomy.
Libra is not an official branded Facebook product, but it has been conceived, designed, midwifed and launched by Facebook, and will be controlled by the Libra Association, a nonprofit set up in Switzerland, by Facebook. Libra will no doubt feature prominently in Facebook Messenger, Whatsapp and Instagram (all owned by Facebook), and if it is enthusiastically adopted by the 2.4 billion people currently being surveilled on these platforms, Facebook has more to gain in terms of data and capital than other Association members.
There are fairly clear-cut advantages to Libra’s planned implementation, but also potentially catastrophic dangers. It comes down to a few design choices that seem just as political as technical.
On the one hand, Libra aims to be a frictionless global currency that “empowers billions of people” — particularly the two billion who lack access to secure financial institutions, and the billions more trapped in monolithic, crony-capitalist banking systems. It would provide anyone connected to the internet with access to a stablecoin pegged to a basket of currencies, so it is possible that Facebook’s gigantic user base will enable Libra to pull off what Bitcoin has so far not managed — mass uptake could legitimize cryptocurrency and even challenge the global banking system itself.
On the other hand, the road to dystopia is paved with good intentions. From Nym’s perspective, there are two main problems with the assertions from Facebook and friends that Libra will be decentralized and private.
As it stands, Libra is not decentralized. The Libra Association is a conglomerate of large corporations and related organisations, with political power centralised within its board. Technically, the network is a permissioned blockchain run by the selfsame conglomerate, not a permissionless blockchain like Bitcoin. Uber, Visa, Paypal, eBay, Vodafone, and other data-hungry companies are hiding behind this blockchain.
And Libra is not private. It is a bank, and is arguably even less private than a bank, because the bank manager is a known data spy on an industrial scale. Libra will provide Facebook and its partners with the ability to analyse every purchase by every single Libra user. While Facebook currently promises that it will not triangulate its vast hordes of personal data with financial transaction information to probe ever deeper into the minds of its human subjects, there are no cryptographic or technical privacy guarantees in Libra to prevent Facebook from doing exactly this.
Talk is cheap, and Facebook has committed egregious violations of user privacy in the past. Facebook must be bound with cryptographic chains if it ever wants to regain the public’s trust.
Platforms like Libra need cryptographic privacy guarantees and real decentralization. It is surprising to see these crucial aspects missing from Libra. George Danezis helped design many of the building blocks of Nym and built the Sphinx packet format used in Lightning Network, and along with the other acquires from Chainspace and University College London could have built a privacy-enhanced and decentralized blockchain for Libra. Why didn’t Facebook want one?
Because Facebook is using Libra to try to virtue-signal its way out of its surveillance business model. This will never work. Surveillance capitalism is a black hole that absorbs any theoretically decent project that lumbers into its orbit. The only way to escape is by building new privacy-enhancing standards for the internet itself.
Nym is not just a blockchain or another cryptocurrency. We are building a new foundation of internet infrastructure where the data-harvesting of your information becomes impossible through:
- network-level privacy based on mix-networking
- identity and payment privacy through fast, scalable, and decentralized zero-knowledge credentials
We hope to build a new protocol that enables the development of sustainable models based on cooperation and innovation rather than surveillance and control, and Nym is uniquely positioned to deliver on this promise.
Join us, and have a stake in a private and decentralized internet.