Facebook’s Libra White Paper Revelations
Will Libra and Calibra really be “decentralized”?
In a nutshell, what do you need to know? Today June 18th, 2019 Facebook’s whitepaper has been made public.
Besides a longer all you need to know read, here are some highlights.
- Libra is set to launch in Q1 of 2020
- It will start as permissioned blockchain but will aim to be permissionless in the future
- It’s a “stable coin” meaning it’s backed by global currencies like the dollar (unlike bitcoin, for example)
- There will be an STO called Libra Investment Token!
- Validators on their network need to buy at least $10 million worth of LITs and are expected to incur annual costs of approximately $280,000.
- The code is open sourced! https://lnkd.in/d-s6xm6
- Facebook will be one of the 100 validating nodes and won’t have more than 1% of the voting power!
- A Swiss non-profit called the Libra Association will govern the cryptocurrency as part of decentralized network (other partners in this network include Uber, Visa, Mastercard, Stripe and PayPal)
- Governed by a non-profit, not by Facebook itself!
- Their entity Calibra is already FinCEN registered as MSB in 50 states.
- Test-net is live but the launch is 2020! 9) New programming language called Move!
That’s the short run-down if you want water cooler info.
Facebook finally released the Libra White Paper, and many of us couldn’t wait to unwrap what it had in store. Released Tuesday morning, the 29-page paper describes a protocol designed to evolve as it powers a new global currency.
So already knew most of this, that this Libra blockchain will go live in 2020, with the Libra Association (I think Consortium is a more realistic term here) — a Switzerland-based non-profit — tasked with leading the cryptocurrency’s ongoing development.
In December of 2018, Facebook announced a WhatsApp stablecoin integration in the works, with a focus on India, a market with over $69 billion in remittances. But don’t be fooled by Facebook’s use of the term “crypto”, this is nothing like a decentralized crypto your grandson told you about.
A Libra Consortium Does not Guarantee “Decentralization”
- Libra blockchain will be Byzantine fault-tolerant, meaning faulty behavior by some of the actors in the network will not compromise the security of the broader network.
- As a first step toward achieving Facebook’s version of the “decentralized” part, the protocol has been turned over to a new organization, the Libra Association, whose members will hold separate tokens allowing them on-chain voting rights to govern decisions about Libra. However that’s not what decentralized governance actually looks like.
- The group of 28 founding members includes the likes of Visa, Mastercard, Coinbase, PayPal, Uber, Lyft and others, which are each investing around $10 million to join the consortium. This number is expected to rise to 100 founding members by 2020.
Libra was positioned as the new cryptocurrency for the everyday online consumer, backed by one of the largest companies in the world. But the problem here of course is that Facebook masquerading as a “crypto” is entirely based on a lie.
The stablecoin will be a security and will be regulated as such. There won’t be anything particularly decentralized about it.
Facebook wants to “clone the hype” of real cryptos while disrupting and monetizing off of their fad.
The Libra Association is BigTech’s way of saying “We can do crypto better than you can”. It has to hurry before Bitcoin’s Lightning Network monetizes that original digital asset.
So Facebook’s centralized “association” deeply contrasts with the more open approach of public blockchains like bitcoin or ethereum, in which anyone in the world can dedicate the computing power necessary to validate the network’s transaction history. However, Libra’s node participation will eventually open up to everyone.
Facebook noted how it intends to work alongside the existing financial system. For example, it specifically noted the regulatory issues of other blockchain products. Facebook wants to be a hub that’s the best of all possible worlds to help monetize WhatsApp/Messenger, among other things.
On Tuesday, the Libra Association published documents detailing the full cryptocurrency project, one in which Facebook played a “key role” in hatching. It’s very hard to trust Facebook with anything these days. So when it wants to become your bank, it could be a win-lose proposition for payment networks and even merchants that partner with it.
The “decentralization” scam approach of brands like Block.One and Tron are now the new go-to in how to clone Bitcoin hype. Facebook’s hybrid centralization play, pretending it’s something else, is really fraught with ethical issues and the kind of fraudulent internet Google and Facebook have propagated.
If BigTech thinks disrupting crypto and payments in the process of being a banking service is a great monetization play, don’t expect it to do good for the world. At worst it could even cannibalize the fiat currencies of the vulnerable developing countries it’s proposing to help.
Facebook is attacking banks and crypto in the same swoop, all the while pretending to be collaborative. If that doesn’t mirror Silicon Valley’s deceptive tactics, I don’t know what does. We need real leadership in the valley, not these gimmicks.
When CNBC and crypto influencers are raving about what a great idea this is, you know something is very wrong. It might make them rich, but that doesn’t mean it’s a good thing. Mark Zuckerberg isn’t seen as a savior, he’s seen as a criminal by the majority of cryptocurrency enthusiasts.
You can pretend you are a lot of things that you are not, but that doesn’t make you a good business leader of the technology company we’ll want to bank with. That makes you the kind of company that’s difficult to trust.
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