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Facebook Crypto Libra’s Leader Responds to Concerns and Misunderstandings

Last Updated September 23, 2020 12:49 PM
P. H. Madore
Last Updated September 23, 2020 12:49 PM

In a responsive blog post  on Wednesday, David Marcus, head of Facebook’s financial blockchain project ‘Libra’, covered a range of subjects including responding to sweeping concerns surrounding the crypto project.

He wrote:

As expected there are also some questions and a few misunderstandings. So I wanted to take the time to provide answers and add clarity.

Among the subjects he touched on was the decentralization of the Libra network.

Facebook Chief: Libra Is Already Pretty Decentralized

Marcus argued that having a diverse range of node operators, all of whom are trusted companies, is rather decentralized. He alluded to the centralized nature of certain proof-of-work chains, where less than a dozen mining pools run everything.

“I’d argue that one hundred geographically distributed, industry-diverse organizations is quite decentralized. Maybe not enough at equilibrium, but to start. As a comparison, often the concentration of power in the hands of those running software for mining pools on other blockchains is overlooked. But there’s no question that there are more decentralized blockchains available, and that the Libra Association must strive to gradually decentralize it further.”

Marcus clarified that Facebook is only one part of a 28-member body, and this also explains why Libra doesn’t yet have a charter.

Member organizations and companies will write a new charter sometime in the near future.

Marcus argues that Facebook will be able to provide crucial digital finance products to people in parts of the world where they can’t otherwise access such services. He says the company can deliver such services to people who need it most, and it can do so for a fraction of the cost.

“With Libra, anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services. We firmly believe that if Libra is successful, it can be a non-linear step change for billions of people who need it the most.”

Many of the people in this target market already have a smartphone, and they are already using Facebook. Signing up for Libra is only the next logical step. But what does that look like for people who aren’t already in the system somehow?

Banking the Billions

Will there be two-way Libra ATMs, that allow you to buy digital tokens for cash?

Or will that be where Libra fails, and people who need these services continue to look on – discovering cryptocurrency?

Libra’s “success” or “failure” won’t be an objective assertion. As far as its western uses go, it might become popular.

Companies like Uber can charge less as a result of reduced transaction fees. The savings, while not massive, can be passed along to the consumer.

To promote the Libra, companies might offer exclusive deals for using it. Those with a stake in its success would be particularly motivated. Elsewhere, it might take some encouragement.

If Libra is readily accessible to billions of Facebook and WhatsApp users, its applications could be transformative globally. | Source: Shutterstock

However, there are plenty of everyday uses you can imagine.

Imagine one scenario. A parent sends their kid in college some Libra. The kid takes the Libra, via Facebook already on their phone, to an ATM which gives the kid cash. The whole transaction costs a lot less than a Western Union, and it’s faster than a bank wire.

Notably, you can already do all of this with cryptocurrency. Presumably, Facebook’s going to make it cheaper and easier.