Libra — sometimes referred to as “Facecoin” or “Zuckcoin” — is self-billed as “a simple global currency and financial infrastructure that empowers billions of people.” The introduction waxes cypher-poetic about the liberating nature of the internet and the potential for an online currency to unfetter financially disenfranchised populations around the world from the shackles of the inefficient and parasitic banking system.
“The world truly needs a reliable digital currency and infrastructure that together can deliver on the promise of ‘the internet of money.’”
— Facebook Libra white paper
If it sounds like “Facecoin” is hijacking Bitcoin’s narrative as an open and global monetary system, it’s because it is. But just because Libra is talking Bitcoin’s game doesn’t mean this digital currency will actually compete with the grandpappy of cryptocurrency or fulfill the same role. There’s next to nothing in the white paper that indicates it will resemble Bitcoin in function, structure or design. In reality, its real competitors are the tirelessly proliferating mass of stablecoins, any number of overly abundant and redundant altcoins, permissioned banker blockchains and smart-contract platforms — oh, and the traditional banking sector, both public and private.
The Libra white paper dropped at 5:00 a.m. EST today, June 18, 2019, and as Nic Carter said on Twitter, we’ve already reached peak “Libra saturation.” You can hardly scroll through Twitter without being slapped in the face by Libra takes. Nonetheless, here are a few takeaways from Facebook’s foray into blockchain technology. Namely, it’s a lot of what we expected and a little of what we didn’t. And the white paper left about as many (or more) questions as it addressed.
Is Libra a Cryptocurrency?
Above, I called Libra a “digital currency” for good reason: Definitions are important and we need to define our terms accordingly.
Bitcoin is a cryptocurrency. Ether is a cryptocurrency. Both of these cryptos leverage public-key cryptography to facilitate transactions, and they operate on a public/permissionless blockchain on which anyone can mine and anyone can run a full node to validate transactions.
Libra is a digital currency. It touts “the security of cryptography” and “a secure, scalable, and reliable blockchain.” These buzzwords, though, belie a janus-faced coin: one that offers the promise of true cryptocurrencies like Bitcoin but which, in practice, will likely be much different.
The Libra blockchain is built using Move, a new programming language derived from Rust specifically for Libra, and it will use a Libra-tailored Byzantine Fault Tolerance consensus mechanism. Using these specifications, it’s promising 1,000 transactions per second and 10-second block times.
This should be more than feasible, given the “blockchain’s” technical structure. Blockchain is in quotes there because, technically, “Facecoin” has about as much in common with Bitcoin as a Tamagotchi pet does with a CryptoKitty.
As Jameson Lopp explains in his breakdown of the technical white paper, “there is no actual blockchain data structure in the Libra protocol — blocks are more of a virtual/logical construct that are used for the purpose of coordinating confirmed snapshots of the system state.”
In Libra’s own words, its blockchain “is a single data structure that records the history of transactions and states over time.” Unlike Bitcoin, which requires ordered, timestamped transaction batches to achieve a unified and distributedly verified state, Libra is a permissioned system “that doesn’t need to batch transactions because the transaction history is much less likely to be rewritten,” says Lopp.
$10 Million Libra Nodes
Basically, Libra’s ledger will be guarded by an echelon of approved node operators and transaction validators known as the Libra Association. These inaugural validators include the following big tech, payment, venture capital and nonprofit heavyweights: Mastercard, PayPal, PayU (Naspers’s fintech arm), Stripe, Visa; Booking Holdings, eBay, Facebook, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies Inc., Iliad, Vodafone Group, Anchorage, Bison Trails, Coinbase Inc., Xapo Holdings Ltd., Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures, Creative Destruction Lab, Kiva, Mercy Corps, and Women’s World Banking. These nodes will accrue transaction fees in Libra for their services.
To run a node, each validator must commit at least $10 million to the project, which will be represented by so-called Libra investment tokens. These tokens represent stake in the project and will entitle validators to a single seat on the Libra Association Council, a say on the project’s technical advancement and governance, Libra coin minting/burning privileges and a share of interest on the…