Is it a bold new play by the world’s largest social media platform or a last bid attempt for Facebook to regain trust after the loss of faith of millions of users after the past few years of data mismanagement? Whatever the case, on Tuesday 18 June 2019, Facebook published a whitepaper for its new global digital currency Libra. So what is Libra? And what could be motivating the tech titan to move into cryptocurrency? Moreover do its proposals stack up with traditional notions of cryptocurrency and blockchain technology? And most importantly… do we want private companies having so much access to our data whilst also controlling our finances?
Libra will allow users to store, spend, and transfer money with extremely low transaction fees. It is hoped that sending Libra will be as simple as sending a message on a mobile phone. And its value will be pegged to a basket of assets / currencies to prevent the fluctuation in value other cryptocurrencies have experienced.
To date, Facebook has lined up support from a consortium of 28 backers including tech giants like Uber and eBay, and payment firms such as PayPal and Visa. It hopes to have 100 such backers at launch in the first half of 2020; jointly they will make decisions about the currency.
But already the organisation that represents the world’s central banks worries that even though this new cryptocurrency could cut costs and speed up transactions, the move into such volatile uncharted territory could undermine the stability of a banking system still bearing scars from 2008’s crash.
Interestingly, Chris Hughes, a co-founder of Facebook, was another dissenting voice to this brave new development. Hughes, co-chair of the anti-poverty campaign group Economic Security Project, remarked: “If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies. If global regulators don’t act now, it could very soon be too late.”
There are several motivations for Facebook’s latest manoeuvre, some professed, others inferred. The social media platform claims to want to bring cryptocurrency to the masses, in particular the 1.7 billion “unbanked” people around the world, though questions remain over how fiat currency will be converted to Libra.
But many question if Facebook’s real motivation might not be simpler:a desire to find alternative means of revenue since it is significantly dependent on advertising revenues whose growth has been slowing.
Others see a clever PR exercise: announcing a currency using cutting-edge blockchain technology as a tool for financial inclusion and disruption of expensive, cumbersome methods of payment could be the narrative that enables Facebook to re-establish trust. The social media platform has lost user and governmental confidence recently, not just owing to the Cambridge Analytica scandal, but also its perceived paralysis in content moderation.
Whatever the case, Facebook wants to use decentralised technologies in very centralised ways by harvesting financial data in addition to its established practice of doing the same with personal data. And we know what happened there, don’t we….
And while the Libra blockchain aspires to be permissionless one day, for now it remains permissioned and quite centralised. Indeed, some have queried why the system needs a blockchain at all.
For livetree and its partner Infinito Wallet, owning your own data and not being beholden to a giant tech company’s vagaries is key. That is why it’s important for the best projects in the blockchain space to come together and to bring decentralisation to everyone. livetree teaming up with Infinito Wallet, one of the most prominent wallet providers in the blockchain space, represents an important step forwarded in the strengthening of pro-blockchain cooperation. And Infinito Wallet users, in the interest of the movement towards decentralisation, will be given free livetree Seed tokens, in a move which will help further livetree’s agenda of giving the people not only financial power but also creative power.