Thoughts and Musings: Project Libra – Facebook’s GlobalCoin White Paper is Public

by Jasmin Bey Cowin, Ed.D.

Facebooks Project Libra, the long anticipated, secretive GlobalCoin White Paper finally went public https://libra.org/en-US/white-paper/. It creates more questions about the implications of decentralized blockchains,  low-volatility cryptocurrency, and smart contract platforms. According to the White Paper the decentralized currency will be Byzantine Fault Tolerant (BFT). Byzantine Fault Tolerance (BFT) is the ability of a decentralized system to provide safety guarantees in the presence of faulty, or “Byzantine” members. (BFT consensus protocols are designed to function correctly even if some validator nodes — up to one-third of the network — are compromised or fail.)

The Switzerland-based Libra Association, a group composed of Facebook and its global corporate partners with an entry fee of $10 million, will be making all the governance decisions surrounding this new global currency. Chris Hughes, who left Facebook in 2007, tweeted on Friday that Libra is both “brilliant and frightening” because it shifts crucial power into the hands of private companies. In the Financial Times op-ed, he wrote:

Let us imagine that Libra works as planned. Hundreds of millions of people around the world will be able to send money across borders as easily as they send a text message. The Libra Association’s goals specifically say that ability will encourage “decentralised forms of governance”. In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations. quoted from https://gizmodo.com/facebook-co-founder-says-libra-will-empower-corporation-1835735044

Bitcoin oracle Andreas Antonopolous’ (https://aantonop.com/) initial review and reaction to the Facebook GlobalCoin Initiative: “While Facebook’s Libra doesn’t compete against any open, public, permissionless, borderless, neutral, censorship-resistant blockchains, it *will* compete against both retail banks and central banks. This is going to be fun to watch.”

Larry Cermak, Director of Research at The Block @TheBlock__ , was more specific in his observations: “Just so we are clear, Libra is: not decentralized not censorship resistant not guaranteed to work technologically not guaranteed to be cleared by regulators not clear in regards to tax implications” from https://lnkd.in/eiBXe6d

Here my concern: Will Facebook through GlobalCoin pose a threat to the US Dollar? GlobalCoin will be a stablecoin. Stablecoins are cryptocurrencies designed to minimize the volatility of the price by being pegged to currency, or to exchange-traded commodities such as precious metals or industrial metals. GlobalCoin will be pegged to a “basket of fiat currencies”. The Wall Street Journal reported that the social media giant has signed on more than a dozen backers for its GlobalCoin cryptocurrency. “Each of the new backers will invest roughly $10 million in the project as part of a governing consortium for the cryptocurrency. The crypto will operate within the company’s messaging infrastructure – WhatsApp, Instagram, and Facebook Messenger.” quoted from Nikhilesh De.

Featured Image: Facebook Stablecoin Initiative is Internally Called “Project Libra”
Glen Bates May 6, 2019 https://news.ibinex.com/2019/05/06/facebook-stablecoin-initiative-is-internally-called-project-libra/