Libra: Single point of failure
Zuckerberg is the point of failure in this decentralised crypto currency effort
Hey Bheem,
Going by your last post, It looks like we are in for a tough couple of quarters to come. In all this real world difficulties, the self appointed emissary of disruption, Zuckerberg has unveiled his latest project, Libra. My post is all about it and How can it be stopped. Read on to know more.
“Libra”, you must have heard this word in your circle in the last few weeks. If case you missed it, the largest social media, Facebook, roles out its own currency. Along with a stated aim :
A simple global currency and financial infrastructure that empowers billions of people.
Also as a tagline :
Reinvent money. Transform the global economy. So people everywhere can live better lives.
Countless have already spent hours trying to debunk what this new initiative from Facebook means to most of us. And countless more hours will be spent in determining the intent of the project and how foolish it is of Facebook to take up this initiative.
Diverse Takes
Many people are writing their take on how it is going to work. What is it going to counter as obstacles alongs its way. Others have penned outlining what are its capabilities as a currency , some are explaining why feature the word cryptocurrency in the first place.
There is ton of information surrounding Libra and Calibra, the different views and analyses show the attention that the Facebook generates. But it also points out how wide the affect of such an initiative will be. Sovereign nations, banks and political representatives are and have to be institutionally against your initiative. Libra starts to look like DOA (Dead on Arrival ) , Or is it ?
In all of these analyses there are few who believe this can be a collective good in the end. They laud the effort and think this can be something that can propel e-commerce for even more people. Reading all these pieces led me to believe if I could cover some other piece that has been missed out, then you would could take something from this piece. But the fact of the matter is that I am not that smart nor Facebook pays me to come up with business and product proposals. Then why should I show them the way ?
Instead i will focus what we can conclude from this initiative.
Demystifying the Crypto
This is coming from a guy who has spent two years of his life peering into the vortex of decentralised currency. The whole crypto is built around avoiding single point of failure. Hence, they are decentralised, trust less and provide universal opt in. To communicate / transact, we use consensus protocols. The biggest two are Proof of work (POW) and Proof of stake (POS) there are multiple more.
The permission blockchain on which Facebook is looking to build the Libra is not a cryptocurrency in any sense. It is a distributed database that many untrusting (hostile) nodes could use to interact with each other.
How is it different, in the traditional database structure, every node trusts every other node in the network. This is why spam and spyware spread so easily.
Once Spam infects a device in a network it can easily spread across all devices connected to the network as the internet architecture is built with the innate belief that any connecting node to the network is a trusted node.
Distributed nodes doesn’t consider that belief and is designed to treat every node in the network as hostile, the only way the transaction is registered across the network is through a consensus protocol that enables all the transactions to be shared along the network .
There are different types of consensus protocols, these protocols help all the nodes to take part in the transaction to agree to a certain set of standards in the code. The other nodes of the network are used to help authenticate the transaction. This happens without the need of a central clearing house like a bank. Here we have Libra that went with Proof Of Stake ( POS) with a non profit organisation ( consisting of 28 partners) being allowed to authenticate transactions.
All of this is secondary as Libra is going to be a stable coin with reserves, meaning it will be pegged to a dollar( 1Libra = 1 dollar) or a basket of local currencies. So why the crypto, as Alex danco said “ FB wants bitcoin to be its strawman”
What we know ?
Instead of future proofing their release, I would like to look this with what we have. I am not going to try to understand what was behind this roll out. Rather, i will only make sense of things that are there right in front of us.
Zuckerberg = Facebook
This guy decides his yearly goal of 2018 is to read and research on cryptocurrencies to fix Facebook . As the year ended, the collective strength of Facebook staff is set to launch a cryptocurrency.
If this roll out of Libra points to anything with a significant amount of certainty, it is that Facebook is still and will always be what Mark wants it to be.
The buck stops with him, it is upto you and me to decide why you want to leave the fate of a currency that is going to compete with all other currencies with such lofty stated goals to depend on a person who decides to live life on yearly goals. A person who tapes his own computer camera yet wants you to have his company’s camera in your home.
They are doing this for the global good
Facebook’s internal monologue :
“There are still many people who are unbanked, let us entice many corporation with the access to those individuals. Giving us and business world the validation required to back our initiative.”
We control the largest Identity asset
With over 2.4 billion monthly active users, it holds the largest identity database required to transact digitally. It doesn’t need your sovereign identity, doesn’t need any sort of KYC, all it needs is your FB account. Convenience to the power ‘n’.
Facebook is sorry but F#$K You for thinking they will slow down
The Facebook speed has given us some really terrifying fault lines. They are responsible for election distortion , riot incitation (Myanmar) and has been a safe abode for Neo-Nazis ( White supremacists). For all of these they have been telling us how sorry they are and how they are trying to tackle them.
Yet, Libra is set to launch in 6 moths. The ambitions are next to sky high. The monetary policy and currency we have ended up with took a few thousand years but in the age of silicon valley scale, currency gets 6 months. Deliberations are for the whinny bunch, not the developers in Facebook.
Summing it Up
There is also an another motive why Facebook is starting this initiative. Pundits suggest that it is because FBs existence due to its shift towards privacy as a business model opens it up to the vulnerability of losing customers and the data being generated by them for advertising monetisation. In order to circumvent this possibility, it needs to move towards a utilitarian business model. Just like how you use electricity, fuel and water.
This analysis sounds good and interesting to write, but i don’t subscribe to this view. I believe strongly that one man decided ( Zuckerberg) and then everyone else spent their time figuring out how can we justify, sell and scale it. Yet, we are still plauged with all the present issues around Facebook being unsolved. Now is it not the time to start a new endeavour to begin with.
For Libra to end before it starts and to not harm anyone while preaching that it is for our good, It needs to start with the sacking of their CEO. Current capitalism framework makes it impossible to achieve this feat. So all we could wish for is that Mark takes up enlightenment in the foothills of Himalayas as his 2020 goal.
Regards,
Vivek
Duologue is an effort by Vivek and Bheem to have a dialogue about varying topics.
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