It has been known for a while that Facebook aimed to delve into the area of cryptocurrency, and after many different rumored names like’ GlobalCoin’ and’ Facebook Coin,’ last week’s CEO of the company, Mark Zuckerberg, announced the launch of’ Libra’ — the ambitious cryptocurrency of Facebook*.
Yes — there is an asterisk next to cryptocurrency (and I wish I could make it bigger). To explain how Libra is not a real cryptocurrency, I will explain what makes a real cryptocurrency and how Libra does not meet those criteria.
I’m going to credit Andreas Antonopolous here; a prominent blockchain expert who lucidly laid out the five pillars of open blockchains in Seoul earlier this year.
cryptocurrency means that virtually anyone can have access to using cryptocurrency— no form of authorization, 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 you can’t tell if a human is using it or not.
Facebook can’t give you complete access to Libra, extract it, or sell it to someone else outside the Libra platform — it’s not really open.
Just like the internet, cryptocurrency has no boundaries— it’s a truly international phenomenon. Wherever you are, or live, or travel, it doesn’t matter; there’s the blockchain.
Libra is not borderless as Facebook is allowed to block transactions to specific countries such as: North Korea, Iran, Venezuela.
Often banks (and even services like PayPal) will hold money as part of’ investigations,’ (which I see the point, to ensure security, etc.) and sometimes it may feel like you’re not in complete control of your money (which you aren’t), and neutral really means being able to tell your bank, and to quote Andreas, “It’s not your business why I’m receiving $500. It’s my money. “You say that, and your bank account will be closed, and the next day with some’ further investigations’ you’ll get a knock on the door.
So neutral means that the money system doesn’t care who the sender is, nor the recipient, nor the purpose— it only cares about getting the transaction through, and it’s one of the fundamental pillars of an open blockchain.
Libra not being boundless 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 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
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 are going on and which don’t.
To censor certain transactions, Facebook is legally required. It’s simply not resistant to censorship.
The idea that everyone else can verify everything you do on the network — no one can cheat.
Transparency is one of blockchain’s beauty, and cryptocurrency is one of its applications, transparency is crucial. Anyone can check whether or not a transaction has been confirmed. Libra isn’t public and won’t be, public APIs can’t be created for it, and won’t have anywhere near the level of transparency that blockchain has.
Facebook’s libra shits on all the cryptocurrency core values. There is no transparency, anonymity, open access, and there is no borderlessness. The company is a tech corporation that continually crushes privacy and 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 inaccurate 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’ on the market and make it easy to acquire.
But it certainly goes against the true values of what a cryptocurrency should be.
Originally published on Medium