On June 18th, the whitepaper for Libra, a cryptocurrency and financial infrastructure headed by Facebook, was released. The project aims to “deliver on the promise of 'the internet of money’” by leveraging the large business infrastructure and 2.7 billion user base of Facebook, along with all the other participants in the project. Initially a permissioned blockchain, the project states its “ambition is for the Libra network to become permissionless;” which poses an interesting question for the blockchain space: does decentralization need to be inherent or can it come later down the line?
The bar for this experimental transition from a centralized blockchain into a trustless one has been set for five years. The company states, “one of the association’s directives will be to work with the community to research and implement this transition, which will begin within five years of the public launch of the Libra Blockchain and ecosystem.” The public launch is planned for the first half of 2020.
Some of the founding members include Visa, Mastercard, PayPal, Coinbase, Uber, Lyft, Ebay, and Spotify. Libra aims to “grow the Libra Association Council to around 100 geographically distributed and diverse members, all serving as the initial validator nodes of the Libra Blockchain.” Currently, the number sits at 28 partners.
Considering the 2018 Facebook data scandal, which involved the “alleged harvesting and use of personal data” of its users, many find it ironic that they would then ask for users to trust them with their financials. While the whitepaper states there will be no crossover between Facebook users’ data and Libra, we are forced to trust that social and financial data will remain separate. And lastly, we are forced to trust that there will not only be a transition to a permissionless blockchain, but that it was truly decentralized and void of its past centralized nature.
The announcement of Libra will certainly attract more attention to the blockchain and cryptocurrency space. It will also provide more institutional validation for those who are not sure about the legitimacy of the emerging asset class that are cryptocurrencies. This, however, would not be for the better if education does not follow in order to put the Libra platform into perspective. If the global world cannot differentiate between a true permissionless blockchain, such as bitcoin, and a permissioned database simply called a blockchain (blockchain in name only, essentially) then a global elite will be able to retain, and very likely to gain, more power transitioning from the legacy financial system, especially considering the potential to mix social and financial data. All in all, we are being asked to trust a group of centralized elites to act and remain honest, which is exactly what bitcoin/blockchain were created to counteract.
While Libra may eventually prove that decentralization could follow centralization, it is important to understand the risks involved and that Libra is a centralized financial infrastructure and not a blockchain as defined in Bitcoin: A Peer-to-Peer Electronic Cash System. Beware of a wolf in sheep’s clothing.
This article of mine was originally published on Cryptos.com.
