Libra: a wolf in sheep’s clothing

According to Cointelegraph and media outlet Quartz, Ethereum’s co-founder, Joseph Lubin, has called Facebook’s Libra token, “a centralized wolf in a decentralized sheep’s clothing.”

He opens his article by comparing the introduction to Libra’s whitepaper “like an epiphany many of us had when we first learned about bitcoin.” It says, amongst other things, “People will increasingly trust decentralized forms of governance,” and Lubin asks, “Wait — but don’t I need to trust Facebook and other intermediaries to trust Libra?”

He remarks that Facebook is “painfully” aware of “the gulf of trust between itself and the public. And that’s likely why Facebook itself is hardly mentioned anywhere in the whitepaper or technical documentation.”

As Lubin ays, “trust is a slippery subject.” The ‘trustless’ character of cryptocurrency is what differentiates it from fiat currencies. “Yet, with the Libra whitepaper, Facebook is not eliminating subjective trust, but imploring us to trust in Libra.”

Lubin says, “You have to trust that one Libra coin will have “intrinsic value” by being backed by a basket of currencies and government bonds,” and “Facebook will seek trust from regulators that its Calibra wallet can comply with know-your-customer and anti-money laundering laws by requiring government-issued IDs to verify an account.”

He argues that the notion of ‘trust’ needs to go further and points out that Ethereum provides “not only the shared ledger of transactions, but application code that itself could be executed with cryptoeconomic objectivity, not subjective trust.” Decentralised technologies are the game changer in Lubin’s opinion.

Developers at ConsenSys and Ethereum have been exploring Libra’s code and found it “borrows a lot of ideas from Ethereum and other public blockchains.”

He says, “Our assumption is that it (Libra) will be well-executed, technically. But it will take more than an open-source codebase to stress-test the system.”