Facebook’s David Marcus took to the platform recently to address some of the hysteria that has been whipped up in principal by the mainstream media over their controversial plans for Libra coin. In the blog post entitled ‘Libra, 2 weeks in’, Marcus states that they released the plans early because they wanted to “encourage open discussion by design”, something they have certainly managed – at least, discussion is one word for it. Marcus then goes on to tackle the following key criticisms of the project:
Libra is not decentralized and it’s not a blockchain
Marcus states that while the platform isn’t as open as Bitcoin in terms of running a node, unless you think $10 million is loose change, anyone can “build services like wallets, or merchant acceptance.” Hmmm, not really the same thing though is it? With regard to decentralization, Marcus states amusingly that “one hundred geographically distributed, industry-diverse organizations is quite decentralized.” No, no it’s not. He also states that the blockchain will become more decentralized over time, something that we can’t judge until we see it in action.
Can Libra really address financial inclusion?
Marcus cites a “misunderstanding” about the idea of the unbanked, saying that people who say they can’t afford to have a bank account are saying that the costs associated with having and using one often invalidate its use for them, whereas Libra will be free of such costs as all it needs is “a $40 smartphone and connectivity”. As interviews with the unbanked tend to be thin on the ground, we can’t know for sure who is in the right here.
Regulations will stop the project
Marcus states that Facebook are “committed to a collaborative process with regulators, central banks, and lawmakers” to make sure that Libra is created and used safely and legally. He states that the platform will feature “regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity”. This alone is enough to make privacy advocates shudder.
Can Facebook be trusted to manage financial services?
Marcus is keen to state that Facebook will be “one among over a hundred members of the Libra Association” in order to reinforce the dilution of Facebook’s control over the day to day workings of the currency. He also states that Facebook will have “no special privileges” and that everything will be handled by the Libra Association. Marcus sums up the argument by saying “Bottom line: you won’t have to trust Facebook…” which is very different than saying ‘yes, you can trust us’, which is what most people will want to hear.
More to Come
Regardless of how much or how little control Facebook has over Libra, the fact is that a company that can impact everything from the way people receive news to the machinations of democratic elections wants to now change the world people use money. That same company has been vilified for selling personal data and not realising that it was wrong, or at least not caring. It will take more than a few placatory statements to get people over the mental hurdle of trusting them to be their bank.