It’s been known for a while that Facebook has aimed to delve into the area of cryptocurrency, and after many different rumoured names such as ‘GlobalCoin’ and ‘Facebook Coin’, the company’s CEO Mark Zuckerberg made the announcement last week, of launching ‘Libra’ — Facebook’s ambitious cryptocurrency*.
Yes — there’s an asterisk next to cryptocurrency there (and I wish I could make it larger). To explain how Libra isn’t a real cryptocurrency, I’ll lay out what makes a real cryptocurrency and how Libra does not meet that criteria.
Cryptocurrency being open means that pretty much can anyone has access to using cryptocurrency — no form of authorisation, vetting or ID verification needed to access and participate in using cryptocurrency.
You don’t even need to be human to use blockchain, software agents can use blockchain and it is unable to tell whether or not a human is using it.
Facebook cannot give you complete access to Libra, extract it, or sell it to someone else outside the Libra platform — it isn’t truly open.
Just like the internet, cryptocurrency has no borders — it’s a truly international phenomenon. It doesn’t matter where you are, or live, or travel; the blockchain is there.
Libra is not borderless, since Facebook is permitted to block transactions to specific countries such as: North Korea, Iran, Venezuela.
Often banks (and even services such as PayPal) will hold money as part of ‘investigations’, (which I do see the point of, to ensure security etc) and at times it may feel like you are not in complete control of your money (which you aren’t), and neutral really means to be able to say to your bank, and to quote Andreas, “It is none of your f***ing business why I am receiving $500. It is my money.”
You say that, and your bank account will be closed, and you’ll get a knock on the door the next day with some ‘further investigations’.
So neutral means that the system of money does not care who the sender is, nor recipient, nor purpose — it only cares about getting the transaction through, and it’s one of the fundamental pillars of an open blockchain.
Libra not being bordeless already prevents it from being neutral, and as a company Facebook are:
- Extremely violators of privacy
- Spy on their users and sell data
- Censor and manipulate information
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data… With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.” — Maxine Waters, Congresswoman and Chair of the House Financial Services Comittee
The possibility of them being neutral is pretty damn low.
This means that if someone wants X to stop sending money to Y — they can’t, there’s no central authority that controls which transactions take place and which do not.
Facebook is legally required to censor certain transactions. It’s simply not censorship resistant.
The idea that everything you do is verifiable on the network by everybody else — nobody can cheat.
The transparency is one of the beauties of blockchain, and cryptocurrency being one of it’s applications, transparency is crucial. Anyone can check whether or not a transaction has been confirmed or not. Libra isn’t public and won’t be, public API’s can’t be created for it, and will not have anywhere near the level of transparency that blockchain has.
Facebook’s libra shits on all the core values of cryptocurrency. There isn’t transparency, anonymity, open access, and isn’t borderless. The company is a tech corporation that continually crushes privacy and Libra heavily undermines the fundamental values of cryptocurrency.
The application of blockchain that has real-world use and potential to innovate and transform how we use money, and what money really means is being damaged by Facebook’s advantage in pushing out an altered, and innacurate representation of cryptocurrency for their own benefit.
There’s a good chance that Libra will be adopted by many of Facebook’s > two billion users, and have the ability to push their own ‘cryptocurrency’ in the market and make it easy to acquire.
But it undoubtedly goes against the true values of what a cryptocurrency should be.