One of the world’s leading non-profit cryptocurrency research outfits has joined the chorus of voices playing down the threat that Facebook’s Libra represents to Bitcoin. Citing its lack of decentralization and contrasting it in detail with Bitcoin, Coin Center denounces Libra as little more than World of Warcraft gold.
“We believe that Libra is not a cryptocurrency because of its use of a permissioned ledger and its reliance on a trusted issuer to hold and manage a fund of assets that back the currency. Libra is still part of the broader category of digital currencies along with airline miles, World of Warcraft gold, or Liberty Reserve Dollars.”
World of Warcraft gold is undoubtedly handy for active WoW players. Ultimately, however, we are unlikely to see mainstream adoption of this particular “asset.”
This is one of Facebook’s key challenges in marketing Libra as more than “air miles for social media.”
There is no question the cryptocurrency community is gradually shifting its opinion on Libra.
While many were quick to cheer Facebook’s foray into digital currency, mainly due to the positive impact on mainstream interest, this enthusiasm is fading as the reality of Facebook’s plans have come under scrutiny.
With an adjustable supply and privately controlled ledger, Libra remains under lock-and-key compared to Bitcoin’s unfettered public ledger.
Delving deeper into Coin Center’s research, it becomes apparent that the fundamental missions of Bitcoin and Libra do not align.
If Bitcoin exists to demolish the need for centralized entities, Libra exists to improve upon the current financial establishment, as the following excerpt from Peter Van Valkenburgh’s piece demonstrates:
“Bitcoin’s primary goal is to obviate the need for trusted intermediaries in online payments… Libra’s goal is to make online payments easier, more inclusive, and scalable.”
It has not just been blockchain experts who have immediately called out Facebook for marketing Libra as a cryptocurrency.
Even talking heads like CNBC’s Joe Kernen, who have made it clear they are not all that knowledgeable on the subject of Bitcoin, have been able to immediately see that Facebook’s project is not technically a cryptocurrency in the sense that most people use the term.
The final issue that Coin Center addresses is regulation. The research finds that in attempting to keep Libra on the right side of lawmakers, Facebook may find themselves overly burdened.
Contrary to this finding, the report also makes the case that BTC’s structure does not warrant such a heavy-handed approach.
“A system without intermediaries is a system without intermediary risk, and thus no need for regulation aimed at safeguarding against the types of risk presented by intermediaries. It stands to reason, therefore, that a true cryptocurrency will involve fewer regulated parties than a traditional financial service.”
For Facebook, this seems to be a case of “be careful what you wish for.” As the firm attempts to please both privacy-hungry consumers and privacy-hating lawmakers, they may end up angering them both.
Last modified: March 4, 2021 2:37 PM