Facebook’s Libra is a Centralized Wolf in a Decentralized Sheep’s Clothing: Ethereum Co-Founder
Even before Facebook made an official announcement and all the crypto community had were just speculations, everyone had a thing or two to say about what a Facebook owned digital asset would mean for the sector. Now that an official announcement has been made and a whitepaper released, the analyses and reactions have more than doubled. Those in support have likened the future of the Libra to the success of WeChat and how its dominating the payment sector in China. On the other hand, the major reason some are unexcited about the Libra is centralization.
This is an opinion also corroborated by Joseph Lubin, a founder of Consensys and co-founder of Ethereum, who recently mocked the Libra coin, calling it “a centralized wolf in a decentralized sheep’s clothing.” This opinion was expressed in an article by Lubin, where he extensively describes his opinion on the whitepaper as well as the token itself.
Facebook’s Trust Issues
The article begins by describing the introduction of the Libra’s whitepaper as something that would only have impressed crypto enthusiasts ten years ago in the early days of Bitcoin. Lubin also touches on the social media giant’s trust issues, saying that Facebook somewhat tries to dissociate itself from Libra for this reason.
According to him:
“Facebook is painfully aware of the gulf of trust between itself and the public. And that’s likely why Facebook itself is hardly mentioned anywhere in the whitepaper or technical documentation.”
The issue of trust, according to Lubin is very important to the success of any blockchain or cryptocurrency. According to Lubin, the Bitcoin whitepaper specifically mentioned that using third parties and cryptography for the settlement of electronic transactions who may have no reason to be deceitful just might be a more trustworthy approach than the reliance on financial institutions who are strongly motivated by profit. However, in the case of Libra, Facebook and the Libra Association are simply “imploring us to trust in Libra.”
“You have to trust that one Libra coin will have ‘intrinsic value’ by being backed by a basket of currencies and government bonds, rather than the capriciousness of daily cryptocurrency price swings.”
The Libra blockchain will be a permissioned one when deployed. This means that for anyone to do any Libra mining, for example, they would first have to seek permission. Lubin suggests that for the Libra to actually reach the Promised Land,
“it will need merchants to trust that their initial network will responsibly run nodes to validate transactions on the system.”
He then expresses that he hopes the network would eventually not be made to require permissions.
“Perhaps most importantly, it requires our trust that Libra will eventually transition to a more ‘permissionless,’ decentralized system, whereby anyone can validate the network, rather than the restrictive member evaluation criteria keeping control in the hands of the initial 28 firms.”
At the moment, there are 28 firms (including Facebook) which makeup the Libra Association. Facebook hopes that before the Libra is officially deployed in 2020, the number would increase to 100. However, there is a very strict set of requirements on how to become a founding member. For example, an interesting firm would need to have an international reach of at least 20 million people, must be officially recognized as one of the top leaders in their industry by international and regional or nation-specific lists such as the Fortune 500 or the S&P Global 1200.
Regardless, Maybe Libra Could Help
If Libra works out the way the Libra Association hopes that it would, the asset could reach two billion people worldwide in just a couple of years. If this happens, the user experience (UX) with any related software or applications would be greatly improved because UX engineers would be forced to make them simpler if people are to be encouraged.
“In one fell swoop, talented UX designers could reduce the current friction of using cryptocurrency. Managing private keys, understanding ‘gas payments,’ and installing crypto browser plugins could be as simple as pressing ‘send’ in WhatsApp, another Facebook-owned entity.”