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 ‘..to 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!