Facebook’s proposed Libra Coin isn’t getting much love from different quarters, and we should probably hope it does for the foreseeable future.
When Facebook first announced its plans for a new ‘decentralized’ cryptocurrency not controlled by Facebook itself, a few eyebrows were raised. And then when Facebook released its official whitepaper some months later, not only eyebrows were raised, an imminent discussion ensued.
The timing of Facebook’s decision to announce a global alternative digital currency was ominous at best, and it was only natural that the most pressing of the discussion bordered on trust issues. Jose Lanz even described Facebook as Libra’s worst Enemy. And here lies the biggest problem.
Trust Shouldn’t Be Part of the Equation
The fact that we are talking about trust is perhaps the most obvious of red herrings we should or should not be talking about. The concept behind the creation of cryptocurrencies and mostly Bitcoin a decade ago was based on the need to eliminate the need for trust in financial interaction. In fact, the underlying technology powering most cryptocurrencies today, including Bitcoin, which is the blockchain, has often been described as ‘trustless’ and decentralized.
That we are talking about trust and whether Facebook is worthy of it efficiently distracts from the major agenda of it all, a company like Facebook completely defies the ethos of a truly free and decentralized cryptocurrency regardless of their previous privacy issues. However, now considering the hundreds of nefarious scandals that has closely followed Facebook over the past few years, we can safely begin to get the major picture of all that is wrong with Facebook.
Here’s the Background You Probably Missed
Facebook is no stranger to complaints and issues of privacy, and by 2019, we are probably already familiar with the whole unpalatable scenario. A new scandal is uncovered, and Facebook claims to resolve it and also determines to get better too, only for a new scandal to unfold. Facebook is unarguably the least trusted company amongst the popular tech giant ‘conglomerates.' Google has its own share of problems, but it is a joke compared to the complaints being raised against Facebook.
Besides, Google seems to have the required leadership necessary to back the power it is. Facebook has been entrusted with so much power, and they are at loss on how to control it. Or perhaps, they know just how they are ‘controlling' it. However, with the emergence of Libra and its possible exponential growth, Facebook stands to benefit from the biggest power we have ever seen.
Facebook could potentially control not only people’s social lives but their financial lives as well. Although Facebook claims it would not handle any Libra matters but delegate it all to Calibra—an independent subsidiary that would dictate important developments— the two-third vote model it suggested in its whitepaper only clarifies that Calibra is only a smokescreen. And I will explain that just in a bit.
Facebook was rocked with the Cambridge Analytical scandal. But ‘rocked’ is perhaps an overstatement, a relative occurrence. Facebook was not rocked. People’s trust was shaken, but only a few took it imperative to leave. I am still on Facebook. I still use Whatsapp. Whatsapp founders fled Facebook by the way after its takeover, but people like us might not leave. This is another issue. Facebook has conveniently woven itself into our lives.
Facebook has gotten cozy with scandals in a really comfortable way, and other ones have since rolled in. The Myanmar genocide preceded the hack of more than 50 million users some months ago. And a dozen had since happened before then. Facebook looks the farthest to commanding trust now, and it doesn’t take a genius to understand why Libra coin isn’t getting much love.
What is Wrong with Libra?
‘Libra’, of course, is not the liberation we have been craving. If anything, it is the opposite. Libra, according to its whitepaper, seeks to address not only the flaws of the centralized financial banking system but the current decentralized model itself. The bitcoin has its lapses, to be honest, and just a little critical study of Bitcoin’s evolution over the years would point out a few flaws that could nevertheless become a huge problem in the future.
Since the inception of Bitcoin, other third-party groups or entities have risen to fill in essential gaps that would make Bitcoin easy and accessible to everyone. In doing so, however, a sort of oligarchy has been formed, and key entities now have a certain control and power in the Bitcoin-crypto space. Such as the majority of Bitcoin mining pools being centered in China.
Libra aims to solve this by establishing a foreign reserve with a hundred members. The hundred members are of course familiar names you know such as Visa, PayPal, Uber etc. They would have the power to control all future developments by a two-third majority vote.
The biggest issue, however, remains that the Libra with its foreign reserve, although solving issues of volatility, also takes power away from its users. Bitcoin's value is determined by its users and is worth zero dollars if its users decide so. But if Libra users decide so, all they do is exchange with cash from the reserve. It's a win-win for Libra. And don't be deceived, it's a win-win for Facebook as well.
With the billions of users under Facebook’s command and companies such as Visa and Paypal as well, Libra should probably be a source of concern for all of us.
Facebook isn't getting much love; Libra isn't too. But don't be surprised, if in a year time, a billion people are using the Libra coin.