Facebook has announced a new digital currency backed by a basket of national fiat currencies is to launch in the first half of next year.
Libra says it is a permissioned blockchain, meaning validators have to be authorized and allowed to take part in the network.
The whitepaper refers to it as a “programmable database designed to support a low-volatility cryptocurrency,” with this appearing to be a stablecoin, but tracking a basket of currencies. They say:
“As the value of the underlying assets moves, the value of one Libra in any local currency may fluctuate. However, the reserve assets are being chosen to minimize volatility, so holders of Libra can trust the currency’s ability to preserve value over time.”
Numerous corporations are to be validators, including Mastercard, PayPal, eBay, Coinbase and others.
The consensus system to be used is Byzantine Fault Tolerant, meaning there can be a 33% attack, but what is a lot more concerning is how ordinary people will access this network.
That’s through a wallet by Facebook called Calibra which does in many ways sound dystopian as it appears to give Facebook total control over your money. They say:
“All accounts and transactions are verified, and fraud prevention is built in throughout the app. Accounts are verified with government-issued ID, so you know people are who they say they are. Facebook and WhatsApp account information are also used when available to verify identity and prevent fraud. Calibra also has in-app reporting and dedicated customer service. In the rare event of unauthorized fraud, you will receive a full refund.”
Putting aside what authorized fraud might be in this context, they also say:
“Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products.”
We all know that means they probably will because why on earth wouldn’t they, with the “limited cases” including to “provide basic functionality to the people who use Calibra.”
So a database with shared access fully controllable by a handful of corporations and accessible through a Facebook app that connects to your Facebook or WhatsApp account provided you give them your passport or driving license.
Sounds like Venmo. Just like there, presumably Calibra users won’t be able to send money outside of the Calibra app.
So the blockchain here is for decoration, a backend database. Libra is backed by fiat, so it too is a fiat coin. It sounds like you can’t quite send it to whoever you want, you have to give all your information to Facebook first.
Once you do so, now Facebook knows what you bought for lunch. Since your name is linked with your Libra address, they they can now see everything.
Obviously they won’t target ads, but by coincidence presumably you won’t get pitched a Ferrari if you only earn $2,000 a month. Lambo ads are only for Libra++ customers.
And while a bank might know what US customers are having for dinner, Facebook will know what the entire world is having for lunch, except China presumably which has its own Calibra app, but they don’t bother pretending it has anything to do with the blockchain.
Now Libra is ostensibly governed by an independent association, but they don’t give much detail on how this will be “backed by a reserve of assets.”
They don’t say who is putting up this money or how much, they only say “interest on the reserve assets will be used to cover the costs of the system.”
That’s relevant because who pays you controls you. If this is Facebook’s money, then obviously this association is just a facade.
Not that it has to be if the only way to access it is through Calibra. Then, this association is irrelevant as Facebook controls the accessing app, and thus pretty much everything.
Making all this sort of WeChat Pay. Facebook is basically copying China in merging a payment network with a social network, leading potentially to social credit scores and other forms of monetary control.
GlobalCoin they called it at first. The worst of the blockchain merged with the worst of the current fiat system.
Is it Good For Bitcoin Though?
If this is only accessible through Facebook’s app, then this is not a crypto. It’s just Venmo or WeChat Pay, so in many ways it has nothing to do with bitcoin.
Facebook however is pretending it is a crypto that uses a programmable database which they say is a blockchain.
They also claim people in poor regions don’t have access to banking, so this may change that.
People in poor regions obviously don’t have a passport or driving license either, so when Facebook tells them about Libra, and how it’s like bitcoin or a crypto, they might then realize that for bitcoin all you need is just a smartphone, and with text based services, not even that.
So too when they realize with bitcoin you can send it to anyone, regardless of what app they use as long as they have a bitcoin address, then they might think this bitcoin thing is somewhat cool.
The smarter ones will probably be amazed you can actually run the bitcoin network yourself. Wow, I can be Facebook?
Devs of course have been burned by Facebook’s walled garden many times. The choice between an open ethereum which they themselves control and a Facebook platform that can burn their business to the ground, is somewhat obvious.
So Facebook may well be good for bitcoin and ethereum in showing the benefits they have over total control by Zuckerberg.
Thus of course this is good for bitcoin. What on earth isn’t. If people want Zuck dystopia, well everybody is free even if they exercise such freedom to enslave themselves. For everyone else, there’s the people’s money.
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