Yesterday, the whitepaper for Facebook’s Libra cryptocurrency was released, delineating the social media giant’s entry in to cryptofinance.
In an effort to create a global digital currency, Libra will offer users the possibility to make payments at miniscule fees across the globe, store the coin in the Calibra wallet, and bring the unbanked into the financial system. Libra will be governed by a council currently comprised of 28 enterprise members, independent of Facebook, to oversee the network and reserves.
Below is a range of expert commentaries from several leaders in the blockchain and cryptocurrency space.
Brett McDowell, Executive Director of the Hedera Governing Council, the governing body of Hedera Hashgraph, an enterprise-driven distributed network for the creation of fast, fair, and secure decentralised applications, said:
“We welcome Facebook and Libra to the market we helped pioneer, noting there is no market without competition. However, we can clearly recognise Hedera’s influence on the Libra governance model, with one glaring departure — they will fork, and they recognize that fact, hoping their “published recommendations” will be sufficient risk mitigation.
Based on the information published thus far, it appears their board members are not term limited, and can be re-elected indefinitely. We believe that term limits are an important check on the power of any individual member of a governing council, and term limits incent companies to make decisions that do not just benefit their interests.
Libra is using BFT (not ABFT) blockchain with leaders, and is vulnerable to DDoS. To mitigate this, they note that “In the future, we may also influence leader selection in order to select robust leaders more often”, which could create incentives with unintended consequences for those involved.”
Stefan Deiss, CEO of BLOCKCHAIN PROPULSION, a global accelerator program designed to build start-ups and enterprises into successful blockchain-powered businesses, said:
“When an organisation such as Facebook announces the launch of a global cryptocurrency, it is a positive indication and reaffirmation that blockchain technology is moving towards greater acceptance as a game-changing technology, enabling the financial inclusion of the unbanked and contributing to a positive economic and social impact around the world.
The governing entity of Libra, the Libra Association, is currently comprised of 28 large international organisations. These organisations are themselves disruptors in their own industries, offering diverse and innovative products and services. The association indicates the extent to which enterprises and organisations are taking an interest not only in cryptocurrencies as a new payment model, but in the global progression and adoption of blockchain technology in their businesses more generally.
While it is early days for the Libra cryptocurrency, this announcement is certainly going to bring further attention and interest to the blockchain ecosystem. Equally, the fact that the Libra Association is to be based in Switzerland (Geneva), re-emphasises Switzerland’s forward-looking attitude to blockchain technology and its crypto-friendly regulatory environment, as a leading jurisdiction and global hub for blockchain/crypto projects and innovation in the space as a whole.
Headquartered in Crypto Valley, BLOCKCHAIN PROPULSION looks forward to potentially contributing its specialist expertise to support the Libra Association in realising its strategic ambition to create a global cryptocurrency and financial infrastructure that empowers people around the world to participate in and benefit from equitable access to the financial system, thus encouraging economic inclusiveness.”
Matt Branton, CTO of Neutral, issuer of the Neutral Dollar (NUSD), a stablecoin pegged to an aggregated basket of multiple live stablecoins, said:
“Libra will employ a basket model, meaning that the stablecoin will be pegged to an aggregated basket of multiple assets, rather than being pegged to a single fiat currency. This has been proven by Neutral to be beneficial to investors. The use of a basket offers increased stability through diversification, by countering the unexpected volatility found in instruments backed by a single centralized component.
Moving forward, the challenge for Libra remains: can they maintain the value of their token? Simply having a basket isn’t enough; the chosen currencies will experience inevitable fluctuations in price, and this will have an impact on the value of the overarching currency. Maintaining a peg can be extremely difficult, and the basket could experience significant volatility. Any mistake here could result in complete failure.
The Libra whitepaper released today states that the composition of the basket is not designed to change, which makes it inflexible to these inevitable market fluctuations. While it does state that if the underlying assets experience unwanted volatility, the Libra Association — the governing body responsible for the currency and blockchain — may vote on a change to the basket composition, our own modeling has shown that nothing short of a real time quantitative strategy is sufficient to maintain value.”
Vaibhav Kadikar, Founder & CEO, CloseCross, a decentralized prediction market platform, said:
“While there are thousands of tokens, cryptocurrencies and digital currencies out today, we still haven’t reached more than 1% of the population. The last 10 years since the dawn of Bitcoin, there has been an extensive education and awareness campaign for something like Libra to come along. No network boasts as many active users as Facebook – over 2 billion by some accounts – and now every human/retail aspect of money, from payments and banking on the chain to lending and mortgages can be disrupted in one fell swoop.
The potential is immense. The $10m per node being charged for every partner is peanuts compared to the price.
The downside? The new age demographic loathe the too-large-to-fail, centralised institutions and how they control finance throughout the value chain. Libra in its approach needs to make space, beyond the large corporate partners you already see in their ecosystem, for the little guys, the truly disruptive forces that need access to a large network to fundamentally change the way the world works. Naturally, they have to go after the big money first – they owe it to the shareholders – but there’s the other big stakeholder group in all this. One that may actually decide how successful the Libra development will be and that is the Facebook users themselves.
So if I were to write an open letter to Libra, it would be summarised to say “Do what you need to do but also what the ecosystem as a whole needs you to do. With the position of (network) power in hand, your responsibility goes beyond the shareholders. This is your chance to enable a new world order where even if we don’t gain complete self sovereignty, we are at least more empowered. Do great business but also think of the ideological legacy you could build.”
Mateusz Tilewski, CTO of Concordium, the next-generation, decentralized world computer and the first with ID-verification built in at the protocol level, commented:
“With some of the world’s biggest payment giants such as Mastercard, Visa, PayPal and Stripe on the consortium of companies governing Facebook’s bespoke cryptocurrency, and with its coin due to be pegged to government-issued cryptocurrencies, this development is bound to transform the way international transactions are carried out. This development is especially interesting in light of the FATF announcing that it will impose new rules for virtual asset service providers (VASPs), with regulatory compliance set to be at the top of Facebook’s agenda.
While detractors may claim that Facebook is trying to create a new stream of revenue amidst its net profit falling 51 percent year-on-year, it has an enormous reach of 2.38 billion monthly active users which will undoubtedly help with the mainstream adoption of cryptocurrencies and will see other big players moving into the space.”
Tara Annison, Technical Product Manager at the PR9 Network, which provides real-time trading and settlement for blockchain-based assets held in cold storage, commented:
“The introduction of Libra shows that a wide range of players across the blockchain and traditional finance/tech space are interested in blockchain technology and its potential. The Libra foundation has stated that they think blockchain is a powerful tool for improving financial inclusion and it will be interesting to see how they shape the product offering around this, especially regarding the user experience. They have also developed their own blockchain and are using Move as the programming language, so it will be exciting to see if this sparks other innovations in the space and other companies exploring their open source technology.
Within the Libra whitepaper, the focus is very clearly on improving financial inclusion and the prevalence of mobile technology in many of these regions. Therefore, I would expect a mobile-first offering which takes advantage of the user experience expertise many of these companies have. The ability for users to understand the offering and be able to easily purchase and trade Libra will be pivotal in the success of the project.”
Iain Wilson, Advisor at NEM Ventures, the venture capital and investments arm of the NEM blockchain ecosystem, said:
“On balance, it’s probably helpful for traditional players to enter crypto, especially alongside other traditional players who already have, such as Visa (with Wirex) and Paypal (with Coinbase). A company like Facebook has huge distribution and potential for P2P or micro transactions, so the mass market will be further exposed to tokens. At this point, people will be free to exchange out of a centralised Facebook system into a more decentralised currency like bitcoin.”
Jehan Chu, Co-founder of Social Alpha Foundation and Managing Partner at Kenetic, commented:
“Facebook’s bold, all-in crypto approach is not only a breath of fresh air for the industry, but is the new benchmark for unicorns if they want to get to the trillion dollar level. Crypto economies are still in their infancy and have massive growth curves ahead, and Facebook will not only boost the industry, but benefit from utilizing their own internal cryptocurrency to capture and drive value. History will mark Facebook’s Libra as the starting gun of cryptocurrency 2.0.
Facebook’s onboarding of the “Who’s Who” in global payments resembles how Apple brought in the largest music publishers to their iTunes platform. While it’s unlikely that the endgame will result in the same power shift away from traditional institutions, Libra will trigger a seismic shift in how these institutions engage and adopt crypto into their businesses – Visa crypto won’t be far away. While critics bemoan the centralized nature of Facebook’s crypto, I believe it is an enormously positive driver that will accelerate crypto into mainstream consciousness and adoption, and provide further capital and opportunities for fully decentralized blockchains like bitcoin and ethereum and the startups that build on them.”
Matt Luczynski, CEO, and Co-founder of Travala, the blockchain-based hotel booking platform said:
“Having Booking.com as one of the members of the Libra Association is indeed a positive sign not only for the cryptocurrency space but for the entire travel industry. Cryptocurrency and blockchain hold huge potential in revamping the travel industry, making it more efficient and streamlined, so seeing a well-respected, household name like Booking.com pledging their commitment to the future of cryptocurrencies is really refreshing to see.
I believe this is far more than a group of tech companies cashing in on the hype, this signals the start of crypto’s mass adoption. Visa, PayPal, Stripe, are all trailblazers within the payments space, and this involvement in Facebook’s Libra is not only reassuring but sparks a new excitement in those of us already championing cryptocurrency as a form of everyday payment.”
Tony Gu, Founding Partner at NEO Global Capital, one of the world’s leading blockchain investment firms with over $400 million in assets, commented:
“Facebook’s arrival on the crypto scene illustrates the subtle transformation of money as an economic medium, mirroring the metamorphosis of the global financial system into a virtual economy. Whereas cryptocurrencies are often not viewed in the same league as traditional capital markets, the scales are set to tip in favour of the digital asset class with the social media behemoth’s latest endorsement via Libra. The digital coin’s core proposition, beyond onboarding a greater sense of legitimacy to the nascent space, lies in its fulfillment of a future where Facebook becomes the sole custodian of value. Money prescribed under the modern theory of macroeconomics have two definitions: M1 and M2, with the latter referring to the multiplier effect of currency in use. By boosting the circulation of transactions across its growing platforms, Facebook is a unique position to capture the spillover effects of coins that are issued within its ecosystem i.e. M2, imagined through a built-on-blockchain central bank anchored by Libra.
Consequently, the creation of value is now recognized as a responsibility that can reside with players in the private sector, previously the exclusive domain of centralized authorities such as governments and banks. By rewriting the playbook, Web 3.0 will welcome distinctly different rules of engagement, as well as players eager to stake their claim in an unexplored era. The deployment of blockchain technologies, in this instance, gestures to Facebook’s greater need to create a token of trust that exists and functions independently of the business entity. While Facebook’s purposed entry into the crypto-space has translated to optimism in the stock markets, observing steady share gains across the past few days, investors bearing in mind the longevity of their investments have to exercise prudence in navigating the blurring lines between emerging technology and the enterprise environment.”
Benjamin Scherrey, Group Chief Technological Officer & Chief Systems Architect of HotNow, the first gamified online-to offline economy for users to derive real-world value from a virtual world:
“Libra is absolutely an endorsement of the value and inevitability of cryptoledgers, their impact on our economy, and ultimately how we will govern our society. The question that remains to be answered is whether it will be a true cryptoledger which is open, fully decentralized, and trustless, or will it be simply a cheaper, faster, more flexible alternative to existing centralized solutions. That will be answered hopefully today when Libra’s source code is revealed to the world and it’s operational model is more fully explained.
Given the businesses behind it, most likely Libra will be a poor choice for a cryptoledger but will still be quite disruptive to the banking industry which has, of its own volition, regulated itself into an entirely dysfunctional industry. Given that, Libra will be the gateway drug into true crypto for most people and businesses. It’s a positive sign, regardless, and will likely help the adoption of other legitimate crypto assets as well. If it’s not truly decentralized then it’s a sign that Facebook and other Libra backers believe they can retain control and still do crypto. That’s going to be a hard lesson for them in the long run.”
David Wachsman, Founder and CEO of blockchain PR firm Wachsman, commented:
“Facebook and its subsidiaries, including WhatsApp and Instagram, presently count more than 2.3 billion monthly active users, nearly the sum total of the world population in 1950. With mass scale completely unprecedented in world history, these companies and their brethren are prepared to underwrite a transformation of our hyperconnected human community.
For the past decade, cryptocurrencies have been plagued by the curse of inaccessibility, but the arrival of Facebook’s Libra Association promises burgeoning mainstream interest in the space. With many of the benefits that cryptocurrency enthusiasts have long championed, the initiative should serve as an onramp for mass market adoption. After all, Facebook’s platform advantage provides it with a potential distribution network completely unparalleled; no nation-state has ever had so vast a population.
Marquee organizations, including Andreessen Horowitz, Visa, MasterCard, PayPal, Stripe, Uber, Spotify, eBay, Farfetch, and Booking.com, have signed up as members to govern Project Libra. More will surely join.
With this group’s backing, every individual business or even consumer transaction –– booking a car, paying for a meal, listening to a song, or planning a trip –– might soon be powered and enabled by digital currency. Project Libra is a watershed moment for the blockchain industry and for cryptocurrencies.”