Facebook’s cryptocurrency has not yet been launched, but investors no longer trust it. Doubts about the success of Libra are expressed by everyone: crypto enthusiasts, regulators, programmers, ordinary users of social networks and even Donald Trump.
In search of decentralization
First of all, let us recall that cryptocurrency initially appeared with the sole purpose of removing finances from the control of the central authority, as it begins to feel undeniable omnipotence over a person.
If you follow this meaning of the word “cryptocurrency”, then Libra would better use the definition of stablecoin, linked not only to the dollar but to a whole group of fiat currencies. Control over the blockchain of this coin will be controlled by a group of 25 companies, one of which is Facebook. The management group also includes Visa, Mercy Corps, eBay, Booking, PayPal, Uber, Kiva, Women’s World Banking, and others. Obviously, a limited number of managers contradicts the basic principles of decentralization, so the first question is why Facebook blockchain is generally called decentralized.
In search of an answer, you need to turn to the consensus algorithm that is used in the blockchain – LibraBFT based on PoS. This algorithm fulfills the Byzantine consensus condition but functions faster than PoW. For the sake of speed, you have to sacrifice the requirements for network nodes, which in Libra Network should be connected each to each, in contrast to the nodes of bitcoin.
Recall that the control of each node is carried out by one of 25 companies (in the future, the number of companies that hold full nodes will increase). As a result, it turns out that Libra mining is impossible, and it will only become possible to become a network node after preliminary approval of the consortium. Access to network management will be possible through the purchase of Libra Investment Token (LIT) tokens.
Such a blockchain cannot be called decentralized. You can talk as much as you like about the inconvenience of the classic Proof of Work-coins and that after 10 years with bitcoin you still can’t pay for milk in the supermarket, but this does not give the right to substitute concepts. Once again, an electronic payment system was created with a distributed, public, public-private, hybrid, special, fast, any, but not decentralized blockchain.
Data leak scandal
In the cryptocurrency world, it is generally accepted that a public blockchain is a decentralized inclusive distributed registry, but the definition of publicity from Libra has a completely different meaning. And here we are, of course, talking about privacy and scandals associated with the merged data from Facebook.
Given several high-profile cases involving data leakage from Facebook, ordinary users have something to think about. We are talking about 540 million entries, including Facebook ID and 22,000 unencrypted passwords. Now imagine that the attacker already has a Facebook ID and password to log into the account of a specific user. Until a certain time, these data do not bring monetary benefits, but at that moment the same user binds a wallet to his page and, without suspecting anything, replenishes it with a stablecoin for an amount equivalent to $ 1000. Further actions of the attacker are obvious.
What will government agencies require
As much as a consortium of 25 companies did not resist the regulators, the data from Libra Network will nevertheless be under the control of state bodies as well as in the banking system. The other day, Facebook manager David Marcus confirmed that stablecoin will not start without the consent of regulators, namely the Senate Banking Committee and the House Finance Committee. Zuckerberg has already been to court hearings and does not want more of such an experience.
For users, this means that their data can be disclosed, and Calibra wallets are blocked according to the completely different requirements of the tax, internal affairs bodies, court bailiffs, customs authorities, the court of accounts, etc.
Programming smart contracts Libra
At the moment, it is generally unknown what can be written in the Move programming language, since only ready-made smart contract templates will be available at the first stage. Zuckerberg is in no hurry to offer third-party programmers the development of any Dapp based on Libra since it was because of the third-party services that all data leaks occurred.
Already now it is known that programmers will need to minimize the size of the code, observing strict standards for CPU / RAM (something similar is implemented in EOS). Also there is no possibility of updating the code.
Libra is not a decentralized cryptocurrency, but another payment tool that competes with PayPal and banks. Statements about the threat to the dollar on its part are not valid since it is stablecoin pegged not only to the dollar but also to the euro, the pound sterling, and the Japanese yen. Despite all the criticisms and shortcomings, a huge base of potential Libra customers can still pull this project to leadership positions among payment systems.