Does Facebook’s Libra Deserve the Hatred of the Crypto-Community? A Neutral Analysis

Does Facebook’s Libra Deserve the Hatred of the Crypto Community? [A Neutral Analysis] Hey, Utsav Jaiswal here, Hacker Noon’s blockchain editor. Before diving in, we’d like to remind you that anyone can start a crypto discussion thread in the community or submit a blockchain or crypto story for review (by me or one of the other editors) to be published on Hacker Noon . Coming back to — Facebook’s foray into cryptocurrencies. It is not everyday that a company of Facebook’s stature and 2.5 billion users decides to foray into what’s become known as the crypto wild west. Libra In a nutshell, Libra, according to its white paper is: A decentralized open source blockchain A low-volatility cryptocurrency A smart contract platform How different is it from , , , and their ilk, apart from its stablecoin initiative? Quite a lot actually. Ethereum EOS Stellar Let’s Get Back to the Myth-busting For starters, Ethereum’s unencumbered ETH does not lend itself for use as a medium of exchange (at least in the current scenario where crypto-sceptics outnumber maximalists) as well as Facebook’s backed-by-reserves Libra. This makes Libra a better candidate for financial transactions out of the box. Comparisons to stablecoin initiatives such as USDT and TrueUSD will be applicable once these existing stablecoins achieve at least half (… or even a tenth) of the user-base that Facebook has. Libra — 1 | Ethereum — 0 Myth I — Libra is a Permissioned Blockchain. Not forever though. Libra will start as a permissioned Blockchain with a stated ambition to become a permissionless Blockchain within the next five years. It is pertinent to note that most Blockchains except the big ones such as Ethereum, Bitcoin, Stellar etc are practically permissioned until people start signing up as nodes and install the requisite hardware and software. Myth II — Libra is pegged to USD/FIAT The eagle-eyed amongst you might have noted that we’ve shied away from using the term stablecoin with regards to Libra. This is because Libra is backed by bank deposits and short-term government securities. This is radically different from USDT where 1USDT represents 1USD. In the Libra ecosystem, this is not the case. The value of 1 Libra will fluctuate throughout the day, but to a much smaller degree than most cryptocurrencies out there. This is more similar to a traditional FIAT — FIAT conversion on a floating exchange rate. Myth III — Libra is backed by Money-in-the-Bank The funds you spend to buy Libra will not sit in a bank vault collecting interest. Most of it will be invested in low-yield low-risk bonds and other assets as the Libra Association might see fit. We say most of it because some of it will sit in the banks collecting interest. But you won’t get a piece of the pie. The yields, profits, and interest will be used to cover the operational costs of running the ecosystem and for other incentives that the Libra Association deems fit. The whole thing is like a bank where you deposit your money and the bank lends it out to someone. The only difference: Banks pay you Interest on your Deposits. Valid Criticisms of the Libra Ecosystem Does the Market even Exist? Facebook is also banking on “tens of hundreds of retailers” who are expected to embrace Libra just as they embraced AliPay (in China) and PayTM (in India). This can prove problematic because both these countries had peculiar events that led to the proliferation of cashless banking. In India (where I live), the Central Government banned high denomination currency notes which effectively killed the money supply and its citizenry had to get acquainted with systems such as PayTM. In China, the vast population, burgeoning waiting lines, and Government nudging led the the rise of AliPay and TenPay. It is debatable whether the almost 3 billion population of these two countries will embark on a learning curve again and embrace Libra. With news of Facebook delaying Libra in India and China’s ban on cryptocurrencies, Libra will sorely miss its two biggest markets at launch. Good Luck being a Central Reserve The Libra Association will assume roles similar to a Central Banker and will dictate the policies governing the Libra cryptocurrency. If they think that hammering out a global policy will be a cakewalk, they need not look further than the EU or the UN. Global policies have led to wars, boycott, and even made friends out of enemies. The Libra Association features some of the biggest names in the Technology, payments, Telecommunications, and Venture Capital. What it will miss in the coming days will be Diplomats and Governmental Backing. Interestingly, the Libra Association will not dictate Monetary Policies but these things can be overturned by a swish of the pen. In closing, we would like to share some of the top Libra stories on . Hope you enjoy them as much as we did and get to show-off to your friends your deep knowledge on Facebook’s latest Move (pun-intended). Hacker Noon was published 15 months ago when Facebook had clamped down on crypto-ads. One of the first pieces world-wide that predicted Facebook’s Blockchain foray Facebook and Crypto: what you need to know for 2018 [7 min read] by Coin and Crypto [9 min read] by is another Hacker Noon story from last year on low-level P2P protocols, decentralizing technologies, and Facebook’s increasing dabbling in Blockchain technologies in light of Cambridge Analytica scandal The world doesn’t need a new Facebook, it needs a new internet Arjun Hassard [17 min read] by speculates the impact of Facebook on Blockchain and cryptocurrencies Libra, a Cyberpunk Nightmare in the Midst of Crypto Spring Daniel Jeffries [4 min read] by is a diplomat’s take on the Libra cryptocurrency and what it might be planning to be Welcome, Libra: The Facebook Cryptocurrency Andreas Sandre [6 min read] by provides an overview of what to expect from Move, the newly-minted programming language on which the Libra Blockchain is/will be built ‘Move’ Programming Language: The Highlight of Libra SECBIT [8 min read] by explains everything related to Libra — from why named Libra to who control Libra, and everything in between Is Libra As Good As It Looks? Matias Lapuschin [5 min read] by takes a technologist’s tooth-pick through the Libra Technical White Paper and examines the utility of the new Blockchain, the new programming language, and the new smart contracts Libra First Impressions Michael Yuan Join the discussion via our community. Is Facebook’s Libra a Turning Point in Monetary History? We, at Hackernoon , are excited help provide a medium of discussion for those involved in the development of Blockchain-based solutions. You can become a part of the discussion by checking out our contributors’ stories on blockchain technologies , and remember anyone can start a crypto discussion thread in the community or submit a blockchain or crypto story for review (by me or one of the other editors) to be published on Hacker Noon .