Ethereum co-creator Joseph Lubin says he has a few problems with Facebook’s new cryptocurrency Libra.
Lubin Doesn’t Care Much for Libra’s Ideals
The biggest issue at press time appears to be trust. Right now, he says he has little faith in the true goals of Libra, and comments that most of the public probably feels the same. Again, this is likely a reference to the company’s recent ties to Cambridge Analytica and allegations that it sold users’ private information to third parties for advertising purposes.
In a recent article, Lubin calls Libra a “centralized wolf in decentralized sheep’s clothing.” It has been mentioned in the past the Facebook Coin is allegedly being promoted as a means of payment for goods and services through WhatsApp and merchants’ websites that offer Facebook login options. This would align the currency with one of crypto’s primary goals.
The problem is that Libra is also likely to be controlled by a small party of its largest sponsors, which means that party’s ideals and profits are bound to come first. Maybe not right away, but somewhere down the line. This is a scary thought in the sense that Libra will allegedly become a global cryptocurrency yet will be controlled by only a small and privatized group whose interests could potentially take precedence over customers.
In the article, Lubin writes:
Trust is a slippery subject, especially when magnified to the scale of a global financial infrastructure. Ten years ago, the bitcoin whitepaper proposed that instead of relying ‘exclusively on financial institutions serving as trusted third parties to process electronic payments,’ we can instead rely on crypto-economic proof… With the Libra whitepaper, Facebook is not eliminating subjective trust, but imploring us to trust in Libra. You must trust that one Libra will have ‘intrinsic value’ by being backed by a basket of currencies and government bonds, rather than the capriciousness of daily cryptocurrency price swings. Facebook will seek trust from regulators that its Calibra wallet can comply with know-your-customer (KYC) and anti-money laundering laws by requiring government-issued IDs to verify an account. It will need merchants to trust that their initial network will responsibly run nodes to validate transactions on the system.
If We Don’t Trust It, We Won’t Use It
One of the biggest problems appears to be that Facebook is asking people to trust its new cryptocurrency “just because.” The Cambridge Analytica scandal occurred just over a year ago. Since then, all that’s really changed within the Facebook spectrum is Mark Zuckerberg’s declaration that the platform will focus more on privacy, but even that has caused executives to argue.
In addition, former players in the Facebook arena have spoken out regarding the social media conglomerate’s rise to power through its entry into the digital asset space. Among them is co-founder Chris, Hughes, who referred to the situation as “frightening.”
Libra Presses On in Spite of Association Losses
Oh, Libra… Has it occurred to you yet that perhaps venturing into the crypto space wasn’t the greatest idea? And that maybe creating an entirely new cryptocurrency as a means of garnering Facebook’s trust back wasn’t the best response to the Cambridge Analytica scandal?
Libra Pushes Through the Mud
Despite several companies exiting the Libra Association, despite several delays, regulatory problems and anger from the U.S. Congress and international governing bodies, Libra has taken the time to let its “fans” know that it will be moving forward as planned.
The Libra Association was going to start out with 28 members. It fell to 27 over a week ago when PayPal, one of the project’s biggest supporters, decided to hit the road and pursue other paths. This really didn’t look good considering David Marcus, the head of Facebook’s blockchain department and the leading developer behind Libra, used to be a PayPal executive.
From there, several defections took place. At press time, as many as six companies have cut their ties to the Libra Association, including Mastercard, Visa and Uber citing worries regarding regulation and the company’s tough relationship with U.S. lawmakers.
Libra, however, is either being very stubborn, or has a lot of resolve. Today, the company signed 21 charter members at its latest inauguration meeting in Geneva, Switzerland. Despite everything that’s happened, it appears there are a few companies out there willing to stay loyal, and Libra is doing all it can to hang onto them.
At this stage, though, it’s easy to assume that perhaps its not so much loyalty that’s keeping these firms together, but rather the potential for profit. Many of the remaining members of the Libra Association are capital venture funds that are intrigued by the notion of making money with new technology. While Facebook itself has been around for roughly 16 years, Libra is still relatively new. Nobody has developed a centralized global cryptocurrency like this before, so it’s possible many of these companies that stay are thinking about all the money there is to be had.
Will People Even Use It?
The only issue is there will be no funds unless people agree to utilize Libra, and at this stage, that notion is looking a little far-fetched. It seems Facebook is having a very hard time repairing its reputation following the Cambridge scandal in 2018, and surveys suggests that trust in Libra is very weak, with less than three percent of Facebook users saying they would consider using it.
That would be a real shame if the company puts all this work, time, and above all, money into something that winds up on the cutting room floor. If the company were to lose enough, it’s likely Facebook would have a very hard time recovering financially.
‘Visa and Mastercard Could Have Slowed Us Down,’ Claims Libra’s Managing Director
Despite the bad publicity over Visa and Mastercard leaving Facebook’s cryptocurrency project, the newly-elected Managing Director and COO of Libra, Bertrand Perez, said that it won’t slow down its development.
Facebook’s Libra was hit with some bad PR recently over the departure of two major sponsors of the Libra project: Visa and Mastercard. However, this has apparently not deterred Facebook’s cryptocurrency plans. Betrand Perez, the COO and Managing Director of Libra, told French magazine Capital recently that it is “better that they did it now than later.”
Libra’s 21 Official Members Are Motivated ‘2,000%’
Perez did not mince words in expressing the utmost confidence in the Libra project recently. The COO stated that the existing 21 official members have only been further emboldened by the departures of Mastercard, Visa and others.
As BeInCrypto previously reported, eBay, Mastercard, Visa, and others have officially withdrawn from the Libra project. However, as Perez makes clear, they left due to regulatory uncertainty — they did not question the long-term viability of the Libra project.
Overall, Perez says that they won’t be missed. He admits that they are big names in the payment world but that they are largely involved in “payment systems that are 50 years old.”
He also says that Libra is preparing to roll out new members shortly. Around 1,600 companies have expressed interest in joining. The criteria are, however, still very strict. There will only be 100 members and companies and they need to match certain criteria such as having coverage of over 20M people — and most possess a significant geographic market.
Perez says he is certain that the numbers in Libra’s ranks will “grow by the end of the year.”
Facebook’s Cryptocurrency May Need More Time to Launch
Libra was expected to launch mid-2020, but Perez admitted that this might be further postponed. “I think we are not a few quarters away,” he told Capital, but “a shift of the date will not be a drama for anyone and especially not for us.”
Ultimately, Perez said that Libra will launch when there are “no doubts” regarding its compliance with existing regulations. That, he admits, might take more time than anticipated.
Libra is ‘Catalytic Event’ for Central Banks, Says Head of Sweden’s Riksbank
The Libra cryptocurrency payments project is shaking up central banking, according to the head of Sweden’s central bank.
Speaking on CNBC’s “Squawk Box Europe,” Riksbank governor Stefan Ingves said the Facebook-led project has been an “incredibly important catalytic event” forcing central bankers to reconsider their primary product: money.
Ingves said the Riksbank – which is working toward piloting an e-krona in the near future – has had to reconsider its own development in light of private currency alternatives. The development of a new kind of currency is a near-unprecedented event, happening only once every few centuries, he added.
“Part of my job is to produce a good/service called the Swedish krona which is convenient to use for Swedish citizens, and if I’m good at that in a technical sense then I don’t have a problem,” Ingves told CNBC, “But if I were to start issuing 20-kilo copper coins the way we did in 1668, then we soon would be out of business.”
Ingves cautioned, though, that most private sector money initiatives “have collapsed sooner or later.”
The Libra Association gathered in Geneva, Switzerland Monday to sign a formal charter among its now 21 initial members. Last week, multiple money providers such as Visa and MasterCard dropped out of the project after pressure from U.S. lawmakers.