Facebook's Libra digital currency is the company's new project of the "Like" button. Although it is based on blockchain technology and tries to take advantage of emerging cryptocurrency markets and technologies, is it really a cryptocurrency? We explain it to you below.
What is Facebook Libra?
EThis is a project developed and sponsored by Facebook together with a group of large world companies. Libra is a form of money transfer that uses technology blockchain, entirely developed by Facebook. The main objective of this new application is to offer a digital currency with low volatility and global reach. All this on a decentralized and programmable infrastructure designed to support a large number of transactions. This seeks to create an efficient medium of exchange for billions of people worldwide.
This is possible thanks to Pound core, a free software development accessible worldwide. Libra Core seeks to have third parties build a series of replicas called validators. These validators depend on the operation of Libra in every way. From transaction validation, identity management and authentication through a decentralized public key infrastructure.
Along with Libra Core, Facebook has introduced a new interpreted programming language called Move and your virtual machine MoveVM. Both with the aim of building and deploying smart contracts about Libra.
At the moment, Libra is a launch in the testing phase, but the technological bases of the digital currency are built. This means that the most difficult and complex part remains, testing the network in real use cases and ensuring that everything works as it should.
Technology used by the Facebook Libra project
Consensus Protocol (LibraBFT)
One of the creations that make the operation and scalability of Facebook's Libra digital currency possible is its consensus protocol. Under the name of PoundBFT, this consensus protocol promises to be Byzantine fault tolerant. Also LibraBFT, they claim, allows you to process transactions efficiently and without having to resort to mining. That is, LibraBFT does not use or PoS, neither PoW nor any other mining model that we are used to. However, it is still unknown if the protocol can really respond to the Byzantine faults since it has not been tested.
Instead, transactions are handled by so-called "validators" via two consensus protocols called Proof of Safety (Security Test) and Proof of Liveness (Vitality Test). Due to the little evidence of these protocols, the degree of security and real decentralization that they can offer is unknown. In fact, it is unknown if they can be resistant to 51% attacks although this is unnecessary in Libra as the validators are centralized.
Move and MoveVM, Libra's language and virtual machine
Unsurprisingly, Facebook developers have borrowed some features from other cryptocurrencies. One of these features is the creation of a programming language for your blockchain. This language is called Move. This language was developed to provide a secure and programmable foundation for Libra Blockchain.
Move is an interpreted programming language, so it depends on a Virtual Machine (VM) for its execution. With both capabilities, Move is able to give you the ability to run smart contracts y DApps to Libra. To do this, it uses MoveVM, the virtual machine programmed in the Rust language that must be able to interpret and execute the functions programmed in the Move language.
However, the specifications of Move and its VM are not yet fully complete. Its syntax is incomplete and is still under development, so its real potential is currently unknown.
Is Facebook Libra really a cryptocurrency?
Despite all the advantages Libra claims to promise and the use of part of blockchain technology for its operation, the reality is that Libra is not a cryptocurrency. For a cryptocurrency to be a cryptocurrency it really must meet certain conditions, which are:
- They are not controlled / issued by any government or institution.
- They cannot be censored.
- They are highly private and even anonymous.
- Its value depends directly on the trust of its users.
- They are based on cryptography.
- They are open source.
- Your accounting book is made up of a network of computers forming your blockchain
Libra views: The union of all evils
Can't wait for a cryptocurrency with the ethics of Uber, the censorship resistance of Paypal, and the centralization of Visa, all tied together under the proven privacy of Facebook. https://t.co/C4FymDjtFw
- Sarah Jamie Lewis (@SarahJamieLewis) June 14, 2019
"Impatiently waiting for a cryptocurrency with the ethics of Uber, the resistance to censorship of Paypal and the centralization of Visa, all united under the privacy that Facebook guarantees."
Sarah Jamie Lewis, Executive Director of Open Privacy on Twitter (ironically)
Principles that Libra does not respect
However, Libra does not respect these conditions and in fact carries other much more dangerous ones that we will now explain:
- It is controlled by a centralized entity. The Libra ecosystem is managed and controlled by Calibra and all who are part of the Libra Association. These also mean that the ecosystem is closed. No one can activate a node or join the network, only its developer companies.
- Libra's operating structure allows censorship to exist. Any party exercising control over Libra can censor transactions within the network.
- Libra is neither private nor anonymous. The fact that Libra uses a KYC and associates your data with your Facebook account throws this condition to the ground.
- The value of Libra is dictated by the level of reserve that exists behind it. This means that their value can be manipulated by the companies that support them and at the same time it depends on the value of the asset that is used as a reserve.
- At the moment it is unknown what kind of crypto Libra uses to secure the data of its blockchain.
- Libra is certainly open source, but only a small part. In fact, as Libra is under development, much of the technology required to operate it is not yet complete. If the developers release the code, they will respect this condition, otherwise they will continue to move away from the definition.
- Libra does have a blockchain ledger, but it is not publicly accessible.
Libra's Opinions: The Corporations' Legal Mess
reading some #Libra docs Love * this legalspeak when one word changes the meaning of the whole sentence:
"We believe that people have an inherent right to control the fruit of their legal labor."
__LEGAL__ work. Gotcha.
* No, it's actually disgusting.
— Sergei Tikhomirov (@serg_tikhomirov) June 22, 2019
“Reading the Libra documentation. I love* this legalese where one word changes the meaning of an entire sentence:
We believe that people have the inherent right to control the fruits of their legal labor »
_legal__work. I catch you.
*No, it actually disgusts me.»
Sergei Tickhomirov, PhD student in Blockchain Security on Twitter
Pound vs Bitcoin
Bitcoin (BTC) | Pound |
---|---|
Bitcoin is decentralized.
There is no single entity that controls it. |
Facebook and the Libra Association control most of the asset and how it can be used. |
Bitcoin (BTC) | Pound |
---|---|
Bitcoin is deflationary, there can only be a maximum of 21 million bitcoins in circulation. | Controlled by the Libra Association at all times and "subject" to supply and demand. In this way, the issue is at the mercy of the interests of the Libra Association. |
Bitcoin (BTC) | Pound |
---|---|
Bitcoin's price doesn't depend on any government and state the way fiat currencies do. In this way it depends more on the value that its own users give it. | Value tied to the main national currencies such as the US $ USD and the € Euro of the EU and other types of traditional assets. |
Bitcoin (BTC) | Pound |
---|---|
The type of blockchain in Bitcoin is “permissionless”, so it does not need any acceptance or qualification process.
Miners can start mining whenever they want. |
Libra will start using an allowed blockchain.
This means that miners will have to go through a prior selection process before they can start mining, and not all of them will be able to pass it. |
Bitcoin (BTC) | Pound |
---|---|
Bitcoin is a cryptocurrency thought of security from start to finish. The use of strong cryptography and highly proven consensus protocols demonstrate this fact. | Libra is a digital currency that uses a centralized model, an untested consensus protocol, and does not make use of strong crypto. A fusion that invites disaster. |
Bitcoin (BTC) | Pound |
---|---|
In Bitcoin, privacy is one of the foundational foundations of technology. Using it is synonymous with the fact that your privacy is protected from start to finish. | Libra is part of Facebook, and as such its use is associated with the data you have on that social network. Name, address, photos, conversations, all this can be associated between Libra and Facebook. |
Libra views: Nothing new under the sun, just one more centralized currency
Looked at the Libra white paper. It's not very interesting. Just another centralized coin. You can't start out centralized and "become" decentralized. #facecoins
- Samson Mow (@Excellion) June 18, 2019
"I've had a look at the Libra white paper. It's not that interesting. It is just another centralized currency. You cannot start centrally and then decentralize.”
Samson Mow, CSO Blockstream on Twitter
Libra reserve and stability
Libra is intended to be a stable currency, with low inflation, broad global acceptance and fungibility. That is why Facebook has created the Libra Reserve.
The idea behind this is for the world to accept Libra as a stable means of payment. A means of payment backed by a serious entity and fiat money. But this does not mean that Libra is a stablecoin. In fact, the value of Pound against other currencies can fluctuate depending on the free market. In this point, the Pound Reserve can help keep these price fluctuations to a minimum by avoiding high impacts on currency valuation.
But the reality of the Libra Reserve is that it is another means of control for the ecosystem. With it, Facebook can control the Libra economic system at will, raise or lower the price of its currency and carry out extensive market manipulations.
If we have in the center a traditional currency such as the euro, where control is held by the central bank, on its left is Bitcoin, where control is in the people. In the opposite direction, on the right, is Facebook, which enjoys double control: central bank and corporation once again subject to government. This digital currency seems to go in the opposite direction to the freedom of the human being.
The Libra Association
In order to lead Libra to achieve its goals, the Libra Association. An organization that brings together all those interested in developing, adopting and expanding Libra throughout the world. The association is located in Geneva, Switzerland.
This group currently consists of the founding members of the Libra Project, which comprises 28 companies or organizations. Among these, giants such as VISA, MasterCard, PayPal, Stripe, Facebook / Calibra, MercadoPago, ebay, Spotify, Uber, Vodafone, Coinbase, Xapo and Women's World Banking.
With all this support, Libra seeks to become a real payment option for billions of people worldwide. But also the Libra Association is another example of its high level of centralization and corporatization. These names, none of them identified with the development of blockchain and its technology, are the ones who manage this new currency. All in a way to earn money by taking advantage of a technology that seeks to give users the freedom, privacy and anonymity that they have taken away for years.
Calibra, the centralization of Libra
Along with Libra he was also born Calibra, a company that represents the interests of Facebook within the Libra Association. Facebook has created this company with the aim of keeping its two businesses separate. A smart move that allows you to safeguard Libra from various criticisms that have been leveled at Facebook, and at the same time, allows you to maintain your practices that openly violate privacy.
Calibra's ultimate goal is to be Libra's central bank. This company will manage development efforts, the economic system and the entire ecosystem of Libra. In this sense, Calibra sold being the central bank of Libra, as if it were any fiat currency. The only difference is that this time Calibra will have the weight of imposing its law on the whole world, while controlling everything.
For example, Calibra is developing a Libra wallet with the same name, Calibra. This wallet is a custodian type wallet, that is, private keys and all the operating infrastructure is on the server side. This makes it easier, for example, for Calibra to exercise breaches of privacy, censorship and becomes a huge security flaw that affects everyone.
Libra reviews: Libra's true inspiration
— Libra (@LibraReserve) June 23, 2019
» – What inspired you to create Libra?
- Money"
Libra Parody, critical profile with Libra's digital currency on Twitter
Libra reviews: what you don't want Facebook to know about you
They have your data, your face, the location of your home, your work and your vacations, your family, your friends, your fingerprint, your way of writing and speaking ... If you don't want your bank to have all this, you don't want Facebook have your money.
—CeuxDruman (@CeuxDruman) June 18, 2019
“They have your data, your face, the location of your home, your work and your vacations, your family, your friends, your fingerprint, your way of writing and speaking… If you don't want your bank to have all this, you don't want them to Facebook have your money.
Carlos Mata, Twitter user
Libra reviews: A brilliant but terrifying creation
1. #Libra has a long way to go before being successful, but in theory, it's brilliant and frightening. At the start of the week, I thought the problem would be that it would reinforce Facebook's corporate power.
- Chris Hughes (@chrishughes) June 21, 2019
"Libra has a long way to go before it succeeds, but in theory, it's bright and scary. At the beginning of the week, I thought the problem would be that it would reinforce the corporate power of Facebook.
Chris Hughes, Co-founder of Facebook