It’s been just under a week since Facebook’s cryptocurrency, Libra, has been unveiled to the public. In this time, much of the world has come to accept this bizarre technological and financial phenomenon, which some optimists say is set to revolutionize everything.
But, Joseph Lubin, a co-founder of Ethereum and founder of ConsenSys, is struggling to swallow this venture. In a recently published op-ed, the cryptocurrency pioneer laid out his thoughts on why Libra could be a threat to decentralization, despite what the altruistic white paper suggests.
A Promise of Decentralization
True to its nature as a white paper for a cryptocurrency, the seminal Libra document made a big deal about the benefits of digital money and decentralization. One line reads, “People will increasingly trust decentralized forms of governance”; another, “Financial infrastructure should be globally inclusive and governed as a public good.”
Flowery language aside, this is exactly what Facebook is pushing through via Libra. The minds behind the project have pledged, as made apparent by this Bloomberg interview, to democratize finance, bank the unbanked, and to challenge the hegemony held by Wall Street and the United States Dollar. And they hope to do this through what they claim will be a decentralized ecosystem, built and backed by the people.
Libra, a Centralized Wolf?
Regardless, Lubin is worried that there exists a “gulf of trust” between Facebook and the public. He writes that the existence of said rift is made apparent by the attempts to disassociate Libra from Facebook through the branding and the white paper. He goes on to state that Libra, at launch, will be going against one of Bitcoin’s main tenets, being trustless. The Canadian entrepreneur writes:
“Yet, with the Libra whitepaper, Facebook is not eliminating subjective trust, but 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.”
Lubin continued this train of thought further, writing that Calibra, the planned flagship wallet of this cryptocurrency ecosystem, could be forced by governments to hand over its data. Not only does the Ethereum founder believe that the Libra wallets will have to conform to regulation, but the nodes themselves too. “It will need merchants to trust that their initial network will responsibly run nodes to validate transactions on the system.”
He thus concludes that until Facebook can prove that Libra is entirely decentralized, the project will be nothing more than a “centralized wolf in a decentralized sheep’s clothing.” Ouch.
Interestingly, Lubin isn’t the only executive embroiled in cryptocurrency to have questioned Libra’s pledge of decentralization. In a press comment conveyed to this writer, Phil Chen, the Decentralized Chief Officer of Taiwanese tech firm HTC, noted that Libra will not be conducive to the digital privacy of consumers the world over:
“If you’re concerned with Facebook knowing too much or having too much access to your private data or social graph, the GlobalCoin will give Facebook even more direct access to your financial information. It’s not just access to the information of your transactions, it’s direct access to your wealth and capital.”
Crypto Pundits Still Think Libra Will be a Bitcoin Boon
Despite Lubin’s and Chen’s skepticism, there are many that believe Libra’s launch will be a net benefit to Bitcoin and cryptocurrencies at large. Staunch Bitcoin bull and decentralist Max Keiser explained that Facebook’s cryptocurrency will be instrumental in the success — not downfall — of BTC.
Keiser remarked that built into Bitcoin’s Genesis Block is code that tacitly awaited the arrival of a “heavyweight” like Facebook into the cryptocurrency ecosystem. He explains that with the increased awareness and appeal of the digital asset class achieved via Libra’s widespread adoption, Bitcoin should directly benefit.