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.”