Facebook’s David Marcus is pushing back against concerns about the social media giant’s new cryptocurrency project, Libra.
In a note published Wednesday on Facebook, Marcus addressed “a number of questions and a few misunderstandings” about the project.
The social media giant’s blockchain lead also confirmed he would be testifying before both the Senate Banking Committee and the House Financial Services Committee on the project later this month.
In Wednesday’s post, Marcus sought to address a number of issues that have been raised by lawmakers and informed observers alike, including whether Libra is actually decentralized, why there isn’t a charter in place for the Libra Association and whether Libra can actually address financial inclusion.
Perhaps most notably, he addressed the widespread distrust of Facebook in the wake of Cambridge Analytica, 2016 election interference and other high-profile mishaps.
“Bottom line: You won’t have to trust Facebook to get the benefit of Libra,” Marcus wrote, adding:
“And Facebook won’t have any special responsibility over the Libra Network. But we hope that people will respond favorably to the Calibra wallet [made by Facebook]. We’ve been clear about our approach to financial data separation and we will live up to our commitments and work hard to deliver real utility.”
Facebook published a white paper and supporting documentation for Libra last month, but was immediately met with pushback from regulators worldwide.
Under various subheadings, Marcus addressed complaints about the project, including concerns that Libra would not be able to bank individuals who are currently under- or unbanked, as well as concerns about Facebook’s track record on consumer data protection.
“Someone wrote that the key reason people are unbanked is that they don’t have enough money to actually be banked, and claimed Libra wouldn’t solve this,” Marcus wrote, calling this explanation misguided.
In his view, Libra would lower the drawbridges to financial services for anyone with “a $40 smartphone and connectivity.”
Marcus also repeated a claim from the Calibra subsidiary’s public documentation in noting that Facebook would not have access to any financial data from the wallet provider.
“People will have many ways in which to use Libra and access the network,” he said. “You’ll be able to use a range of custodial and non-custodial wallets that will have full interoperability with one another, meaning you’ll be able to pay and receive payments across wallets from different companies, or use a software wallet you’d operate on your own.”
The company’s profit model for Libra would come from any commerce that occurs across its family of apps by ensuring that ads are more effective and advertisers are more motivated to buy space on Facebook’s platforms, he said.
“We are looking forward to continuing to engage with the various communities and stakeholders. We want to hear your feedback, and we are committed to taking the time to get this right,” Marcus said in his conclusion.
While Libra will be controlled by a small number of entities at launch, it will gradually decentralize over time, he said.
Facebook, which is one of 28 founding members for the Libra Association – the governing association which will be responsible for overseeing the Libra network after it launches – will ultimately have the same amount of power over the network that its other launch associates will have, Marcus said.
“It’s easy to assume from the headlines that Libra is only associated with Facebook, but that is not the case,” Marcus wrote, adding:
“But it was important to start with trusted entities that could operate in a regulated environment and with the operational expertise required to ensure the integrity of the network in its foundational stage. I’d argue that one hundred geographically distributed, industry-diverse organizations is quite decentralized. … As a comparison, often the concentration of power in the hands of those running software for mining pools on other blockchains is overlooked.”
“But there’s no question that there are more decentralized blockchains available, and that the Libra Association must strive to gradually decentralize it further,” he said.
Each of the founding members will be a part of setting up the Libra Association’s governance rules and “other key decisions,” as part of an effort to limit the amount of power Facebook has over the network, he claimed.