Ethereum co-founder Joseph Lubin recently published a blog post in which he claimed that Facebook’s cryptocurrency Libra is “a centralized wolf [disguised] in centralized sheep’s clothing.”
Lubin, a Canadian entrepreneur who’s also the founder of ConsenSys, a Brooklyn, New York-based Ethereum (ETH)-focused development studio, acknowledged that the Calibra project’s goal to send money quickly and cheaply should be a key design consideration of modern internet-based currencies.
Can Facebook Be Trusted?
However, the Princeton University graduate pointed out that most people would not be able to place enough trust in Facebook’s management - as he wrote:
Don’t I need to trust Facebook and other intermediaries to trust Libra?
Interestingly, Lubin also noted that the name of the social media giant, Facebook, is “hardly mentioned” in the Libra crypto project’s whitepaper or its technical documentation. Moreover, Lubin believes that Facebook’s new cryptocurrency project is “not eliminating” the need for “subjective” trust, which most decentralized currencies do. Instead, he thinks the social media firm’s crypto is “imploring us to trust in Libra.”
Merchants Must Trust the “Initial” Libra Network Will Operate “Responsibly”
Going on to allege that Facebook’s cryptocurrency wallet Calibra will “seek trust” as using it will require users to provide their government-issued IDs for verification, Lubin also pointed out:
It will need merchants to trust that their initial network will responsibly run nodes to validate transactions on the system.
Younger Users Prefer Decentralized Payment Protocols
The former VP of Technology at Goldman Sachs further mentioned that the younger generation prefers “payment systems built on truly decentralized protocols” - rather than having to verify their identify and share other personally identifiable information on centralized platforms like Facebook.
Concerns Regarding Users’ Financial Privacy
The ConsenSys founder also noted that Facebook, as a company, makes a lot of money off personal user data. Should the Libra project move further, as it is currently facing various regulatory challenges, then some of Lubin’s concerns might seem reasonable:
What happens when you wrap your personal finances up in this, too? That our digital identity will never merge with Libra’s financial data is a hard perception to shake. It is almost a given, even if they have the best of intentions—“accidents” and incursions happen when relying on centralized architectures.
Lubin went on to reveal that the developers at ConsenSys had already begun to review the source code shared by the Libra project’s creators. He claims that the technical documentation and other details released by Libra’s founders is quite similar in some ways to Ethereum, the world’s largest smart contract platform.
While admitting that Facebook’s project will (most likely) be “well executed, technically”, Lubin remarked:
As of today, Libra has made a bold promise, and it’s one that Facebook needs to keep. Until then, Libra is like a centralized wolf in a decentralized sheep’s clothing.