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Facebook’s Crypto Libra & Corporate Blockchains: Existential Threats to Bitcoin?

Last Updated March 4, 2021 2:36 PM
P. H. Madore
Last Updated March 4, 2021 2:36 PM

By CCN.com: When we think of Facebook entering the crypto space with Libra, we need to consider it holistically. There’s a lot more going on here than some social networking giant splashing around in the crypto space. There’s something much more significant we should think about: the litigation that comes along with major companies.

Libra liabilities: Intellectual Property and Courtrooms

To date, we’ve largely ignored this reality, but the truth is that Facebook and others entering the space brings its own set of challenges. For starters, there will be lawsuits. Somehow, someway, these companies will find themselves in court – with each other and more.

Secondly, there will be intellectual property. Will Craig Wright’s claims play a role in the development of the crypto space, as a result of the many patents he and his companies claim to be filing?

All we can know for sure is that companies don’t operate on an open source model as much as we’d love them to. Facebook may be using open source for its Libra project , but the company can likely concoct several blockchain patents, just as several banks and others have done.

Endless Litigation and Roadblocking Patents

The more patents we have in this space, the more likely that lawsuits will arise.

The more lawsuits that arise, ironically, the more legitimate the industry truly is.

Nevertheless, it would be preferable to stave off this inevitability until some degree of wide adoption has been reached.

The only ideal outcome from a slew of litigation would be a more open, free Bitcoin space. We need developers to have the freedom to innovate. Patents introduce roadblocks that are purely based on greed, rather than pushing the protocol forward.

At present, we have three separate implementations of Bitcoin. Each is pursuing its scaling vision. The large block parties, in the forms of Bitcoin SV and Bitcoin Cash, each believe they can sustain a network with significantly larger blocks. The result is far cheaper transaction fees than Bitcoin Core, which opted to stick with small blocks and use second-layer scaling solution Lightning Network.

Notable people have said that Facebook’s project isn’t a blockchain at all.

Whether or not it’s a real blockchain is not at issue here. What it means for the rest of crypto is an issue.

Let’s think of some examples of ways that a company with that much data on each user might use a cryptocurrency.

Suppose you send Libra to an exchange. Facebook can now identify at least one address you used on an exchange. They are relatively sure it was you, personally, who sent the money. The prospect introduces a new range of privacy implications that weren’t necessarily considered before.

Thus, while Facebook’s crypto project might not present a real threat to Bitcoin as far as cryptocurrencies go, it could create a new reality that people who use Bitcoin and other cryptocurrencies will need to deal with.