Libra - Maybe a good thing?

  • A lot of pieces have popped up around the web and on this forum as well ever since Facebook announced Libra, with a mission of ‘ enable a simple global currency and financial infrastructure that empowers billions of people’ as outlined in the white paper. They all analyze the consequences of Libra in the future and are mostly bash pieces.

    To begin with, Libra is not exactly a cryptocurrency like Bitcoin. Bitcoin is not controlled by one single person and is based on a permissionless blockchain whereas Libra will be in the form a permissioned blockchain with a set of official ‘validators’.
    While the basis of Bitcoin is ‘consensus’ and not trust, leading to lack in efficiency, with Libra the basis is ‘trust in the validators’ leading to a much better efficiency. It is this tradeoff between trust and efficiency (highlighted here in this brilliant piece) that is differentiating Libra from other cryptocurrencies.

    So the question arises, who exactly are the validators for Libra?
    The Libra white paper section lists down the current Founding Members (including Visa, Mastercard, PayPal, Uber, Vodafone and more) and also defines the criteria to become a Founding Member, whether they are a business, a non-profit or an academic institution. The aim is to reach a 1000 Founding Members before launch. Requirements include providing some initial investment as well as computing power to the Libra project.

    Now here is the catch: A lot of misconception flying around is that Facebook will control Libra and the validators. That is incorrect information. Facebook will be one of the validators but not be the one controlling the others. The trust in Libra is spread across all the validators which is enabling the better efficiency. If Facebook wanted to create its own cryptocurrency that they want to control end-to-end, Libra would have been the wrong way forward. But ever since the past few years, the trust lost in Facebook from a consumer perspective seems to have nipped the idea of a ‘Facebook-controlled currency’ in the bud.

    It is here that we can hope that Libra will serve as a genuine alternative to regular currency and end up disrupting the large banks who control the dollars and euros of the world.

    I stay open to alternative views. Am hoping I can get some here, let me know what you think!

  • Community Manager

    Valid points @funding4u! Thanks for this. 🧠

    The point on a higher overhead for bitcoin vs Libra with limited validators, was particularly interesting.

    On the other hand, Bitcoin, thanks to the overhead of communicating and verifying every transaction, can only manage around 7 transactions a second; Libra is promising 1,000 transactions per second.

    I'm no expert, but am wondering how these other fast-transacting blockchains have a leg up vis-a-vis Libra on that aspect though!

  • @funding4u Libra is conceptually a good idea but is in my view dead before it even got off its feet.

    Regulators have made it abundantly clear that Facebook will not be permitted to become a defacto bank. In fact in a recent report ( Facebook seems to have indicated its internalising that reality.

    Regardless of the above, Libra does not solve the problem of decentralised or uncorrelated asset. Even if Facebook doesn't "own" Libra (it basically does though), it "owns" the wallet and can disconnect anyone it wants at anytime. Furthermore Libra, as is the case with any stablecoin, is collateralised by fiat. That fiat has to sit in a bank account somewhere. Someone has to own that bank account. Centralised.

    Libra and arguably BTC are both good things conceptually but unrealistic at scale.

  • Contributor

    @ecent said in Libra - Maybe a good thing?:

    Libra and arguably BTC are both good things conceptually but unrealistic at scale.

    totally agree

  • @ecent Man, you. Are. Right. They're sounding so different from when they first launched it loud and proud.

    In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all. We do not have significant prior experience with digital currency or blockchain technology, which may adversely affect our ability to successfully develop and market these products and services.


  • @ecent to the point on Libra being unrealistic at scale, I do think that mainstream adoption at a scale will be easy through their platform given their prevalence in so many communities if we're just counting numbers. But the problems are exactly what you mentioned - not decentralised, not standalone in valuation, and also lack of clarity and sufficient testing. These I guess would make it unrealistic regardless of its scale?

    But will FB and friends even be incentivised or well-intentioned to create, build, maintain something decentralised and potentially out of their will? ....crows cawing

  • @arigatomon said in Libra - Maybe a good thing?:

    @ecent to the point on Libra being unrealistic at scale, I do think that mainstream adoption at a scale will be easy through their platform given their prevalence in so many communities if we're just counting numbers.

    Totally agree with this point. Adoption should not be a problem for Libra given Facebook's prevalence. How they handle the regulatory scrutiny will be key in Libra seeing the light of the day.

  • If we see regulators relenting, this means that Zuckerman would hold the keys to fiat currency, instead of countries. It's basically a transfer of ownership. How even? Let's all rule this out already btw.

  • @funding4u
    Lynette Zang is highly respected in the world of finance. Her charts and straight forward approach is what I need to hear.

    Also Mike Maloney,

    If you haven't seen his series "[The Hidden Secrets Of Money "](link url). I was so unaware, just living an ordinary life. Since this series, I have actively looked for ways to protect what we have.
    I share because I care.

  • @phire Valid points in that video by Lynette Zang! Libra may not gain traction after all but if they ever merge with the banks bringing their data along, we might be screwed.


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