Libra: The New Crypto “Social” Business
The social impact implications of Facebook’s Libra
In these days, all newspapers and digital blogs are covering the launch of Libra the new cryptocurrency built by Facebook. It was necessary for me to read several articles about it to understand the project and to form an initial opinion.
*Sorry whether I might sound skeptical and slightly critical. These are my first thoughts on the project.
Firstly, Facebook cryptocurrency is all over the place in the press. Maybe it is a marketing strategy since they have 2.38 billion monthly active users, their plans to penetrate the market through their platform (especially in the marketplace) does not sound too futuristic. However, there are many other partners who support the Libra project: Mastercard, Uber, Paypal, Coinbase, eBay, Spotify… It is true that Facebook is leading the process in this phase but they are not building their own cryptocurrency. They emphasize the diversity of the partners: companies, nonprofit, academia…tending to position this project as the opportunity to save humanity.
There is a repetitive message in Libra’s discourse: Improve the lives of people through a new simple and global digital currency. It seems they highlight the social value of the project, but again we are talking about a consortium of the most powerful For-Profit companies in the world. Do you think a farmer in the middle of Colombia’s coffee area would use Libra to pay a Uber ride? I believe they live in a different scenario where priorities are also different.
As WeChat already did in China, financial services are the best monitoring tool of our daily lives and every new transaction says something else about our lifestyle, routine, behavior… so it is the perfect channel to profile the world population. How many of these companies have already asked for a “bank” license?
I live in Colombia where 50% of the economy is informal if we can help these people to build formal businesses would be incredible, nevertheless, the solutions must be truly beneficial for them avoiding business-driven decisions. If Libra helps street sellers to manage their finances in a better way, with simpler logistics, not intermediary fees and saving strategies, it could be a relevant project for low-income communities. Libra should contribute to broadening access to certain basic services within the formal economy. To do so, we cannot bring standard crypto projects by capitalist companies, but we need to understand the behavior of this population and leverage the power of decentralization in these small communities. Start small with real and measurable impact.
Libra is a stable coin supported by a reserve of real assets. This characteristic makes it more credible if users have access to view all transactions in a transparent ledger and reduce the volatility associated with cryptocurrencies. Libra will start with a private blockchain, with a vision to open up a public one in the future. There is a clear trade-off between decentralization and functionality. In this case, they use a BFT consensus protocol with validators, they prioritize high transaction throughput, low latency, and a more energy-efficient approach rather than total decentralization. I see that the consortium might want to partially hold the control, so somehow there would be a central authority running the project. Not totally sure about it.
I envision that this is just the beginning of a new trend of global crypto projects brought by unicorns with a huge user base and an eagerness to supplant traditional banks.
I wish I am wrong and Libra will be the most impactful project of the next decade. A worldwide access to basic services is key to build a better society and this project could be a great opportunity.
PD: This small compilation of initial thoughts might vary in the next few months. Thanks for reading!
Disclaimer: The views expressed by the author above do not necessarily represent the views of the Ethereum Foundation.
