Speaking to CNBC the author of Ten Arguments for Deleting your Social Media Accounts Right Now said that Libra ‘could turn out to be a good thing’.
Why libra might be a good thing
According to the virtual reality pioneer and Microsoft scientist, this is because Libra will require a new business model. Instead of catering to advertisers, Facebook will treat Libra users as the ‘party they have to please’:
You know it could turn out to be a good thing. ‘Cause it’s the first time Facebook has said that ‘hey you know what we want to do in the future is make money by offering goods and services to our users instead of the third parties’. ‘Cause that’s always been the problem with Facebook…
Ever the social media cynic (Lanier is not on any social media platform), the VR pioneer also expressed apprehension. Stating that Facebook’s crypto efforts could go ‘terribly terribly badly’, Lanier warned that the currencies of developing countries were endangered.
Poor countries of the world, watch out
Per Lanier, Libra’s effect on the national currencies of economically-disadvantaged might turn out to be the same as that of Facebook on small newspapers where it destroyed their business model:
[Libra] might first expand the number of people who have financial services. It might grow economies. But it will quickly overwhelm the smaller developing economies. And this could really not end well.
The VR pioneer also expressed concerns about Facebook’s transparency with regards to its cryptocurrency. Per Lanier, one of the things he disliked about Libra was that it isn’t being presented with ‘complete honesty’.
Lanier also joined economics professor Nouriel Roubini and Bitcoin evangelist Andreas Antonopoulos in questioning whether Libra was a real cryptocurrency. Per Lanier, Libra is lacking ‘all the special qualities of cryptocurrencies’. Facebook has said that some of these features will be rolled out in future though a specific date wasn’t given.
Can facebook be trusted to keep its promises on libra?
Indeed, Libra’s white paper admits that from the outset it will be a permissioned blockchain. However, it aims to become permissionless in future though no specific timelines were provided. Experts have speculated that Libra will probably adopt a ‘Proof of Stake’ consensus mechanism when and if that time comes.
With the admission that it aims to become permissionless in future, the question that arises is why Libra launch in that mode from the onset.
According to the white paper, this is due to technical challenges. Specifically, Facebook bemoans the fact that with permissionless networks there currently lacks a ‘proven solution’ which is capable of delivering the ‘scale, stability, and security’ required to support billions of users spread all over the world.
Time will tell whether this solution will be found or whether in future the technical challenge will conveniently serve as an excuse to keep Libra on a permissioned blockchain.