Libra Being Facebook’s Cryptocurrency Is A Fake News
By Fabrice Croiseaux on ALTCOIN MAGAZINE
Libra has been announced by Facebook on June 18th. Lots of articles explain what Libra is. Some are very positive and excited about the opportunities offered by this initiative, some others are scared and consider it very risky (mainly banks and regulators).
Libra has been described mostly by media as Facebook’s cryptocurrency, which is probably the main reason why Libra scares some many people, but which is fundamentally not true. Even the letter from the American Congress, that asks Facebook to pause the work states :
Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.
making a clear assumption that the presence of Facebook in the Libra consortium is the main problem and that Facebook alone can pause or stop the initiative.
True That Facebook Is A Major Contributor To The Libra Blockchain
Libra is basically two things: a crypto-asset and a blockchain. The technology behind the blockchain is a completely new one, being inspired by existing blockchains like Ethereum and also with new concepts like key rotation or Resources which are transferable assets as first-class citizens. There is still very good documentation about the technology and early access to open source code that shows how it will work. Everything is open source and everybody is encouraged to contribute. Even if it is not explicitly stated, it is more than obvious that Facebook is the major contributor to the technical work behind Libra and that it is financing it. If Facebook wants this technology to be successful, it must not own it but make it a public infrastructure, open to everybody.
Not True That Facebook Will Control The Libra Cryptocurrency
As explained in the whitepapers and emphasized by David Marcus who is head of Calibra (the subsidiary of Facebook dedicated to providing financial services that will let people access and participate in the Libra network).
Facebook will not control the network, the currency, or the reserve backing it. Facebook will only be one among over a hundred members of the Libra Association by launch. We will not have any special rights or privileges.
Facebook will have a limited role and control about how the Libra association will be governed, how the Libra reserve will be managed, and which new members will be accepted or rejected. Other big actors that are already part of the consortium (Mastercard, Visa, PayPal), will be very careful about what will be done by the association has given the potential impact on their image.
The association is supposed to grow and to have about 100 members at launch. Facebook would then have 1% of the voting rights through Calibra.
Would Libra Be More Accepted Without Facebook?
Probably, but only for bad emotional reasons. Let’s imagine that Facebook completely stops its implication from the Libra project and retires itself from the Libra association, but still plan to allow the users of its platforms (Facebook, WhatsApp, Instagram) to pay with Libra and to send Libra to each other. Would it be less risky? Would Facebook lose access to some data? No and no. Actually, Libra with or without Facebook won’t be very different.
What Is The Real Problem (If Any)?
The real breakthrough behind Libra is that :
- It is a cryptocurrency with all advantages of existing ones in terms of accessibility, cost of operation (account management and payments) and security.
- It will be a stable coin, with very few risks of volatility or market manipulation.
- The fact that Facebook will allow its users to use Libra without any burden open the systems to billions of people from its beginning.
It is basically the promise of the blockchain technology becoming a reality: having a global financial infrastructure with very low costs, accessible by everyone and as secure as the current system. There is a real regulatory challenge. In a first step to defining how to apply current rules, in a second one to define a new regulatory framework that takes into account the specificities of the new system. This will be the subject of another article.
