Mark Zuckerberg provided some rare commentary on Facebook’s new Libra cryptocurrency project. CNBC’s Fast Money posted the soundbite to Twitter:
“Building a financial system is not the kind of thing that a company can do by itself. So we played a role in helping to stand this up.
But the Libra Association is an independent organization, and we will have one vote in it… By the time it launches, hopefully we will have 100 co-founding companies.”
The partner companies Zuckerberg references shouldn’t give consumers or businesses any more reason to trust Libra, certainly not more than they can trust decentralized, proof-of-work cryptos like bitcoin and Ethereum.
These are all corporations with a record of failing to protect their customers’ financial information. They can’t keep your money or information safe from the internet era’s inevitable data breaches. It’s not merely that they are inherently untrustworthy. (Although they might be.) It’s that all corporate finance carries inherent counter-party risk. This is especially true in the internet era.
Two of Libra’s biggest co-founders are Visa and MasterCard.
In 2005, CardSystems Solutions was breached, compromising 40 million accounts. Fourteen million were MasterCard accounts. Twenty million were Visa accounts. The 2017 Equifax data breach compromised the credit cards of 200,000 Visa and MasterCard account holders.
Another Libra partner is eBay. In 2014, cyber thieves were able to access the data of all 145 million eBay users at the time by hacking three of eBay’s corporate employees.
Uber is yet another Libra corporate co-founder with a history of breaches. In May 2014, hackers breached 50,000 Uber drivers’ account data. Uber didn’t even realize it until September of that year. Amazingly, the company didn’t disclose the breach until six months later in February of 2015.
The following year, hackers accessed the personal information of 57 million Uber riders, and again Uber waited until the following year to disclose the data breach.
Facebook alone has proven to be completely untrustworthy with just your photos and private messages – all the more with your money. As if the Cambridge Analytica scandal weren’t bad enough, hackers were able to compromise 50 million Facebook accounts in September 2018.
Still think all these partners make Libra any more trustworthy?
Bitcoin sparked off the cryptocurrency revolution with a design architecture that brilliantly executed a big idea. Digital information can be secured by an open source, permissionless, decentralized network without the need to trust a third party.
This big idea represents the diametric opposite of what Libra represents.
The Bitcoin network implemented this big idea to secure financial records and transactions because that’s the most valuable digital information out there. Until Bitcoin, consumers and businesses have had to trust third-party institutions that have proven themselves untrustworthy with that information.
It’s not that bankers or corporations are bad people.
It’s that the incentives built into the institutional financial system itself are inherently corrupting. The history of banking is a record of mass theft and fraud. And in the computer era, with even the best intentions it is simply not possible to completely secure a centralized database.
Libra is business as usual. Bitcoin is the internet of money.
Last modified: June 23, 2020 7:33 PM UTC