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Libra's Great Responsibility

Competition towards facilitating cross-border payments has intensified. Novel business models and solutions to address the slow pace of payment process, dispute resolution and negotiation along with clearing costs, have emerged. For industries with great reliance on trust (financial sector, for instance), the technology that truly revolutionizes and disrupts is none other than blockchain - introduces a novel method to accounting where value transfers minimize uncertainty and disintermediates the exchange of value with a decentralised and shared ledger, functioning as a digital institution of trust.

Thus, substantiates the commencement of Facebook’s cryptocurrency known as Libra. Since the white paper’s release on June, crypto space was tremendously shaken with Libra’s aim to streamline money transfer processes as it functions as a multi-currency backed stable coin that will run on its native scalable smart contract blockchain platform that doesn’t use Bitcoin’s proof of work model.

Even with professional lines of partnership, Libra is at the early prototype phase and the core infrastructure is yet to be developed. Libra association, an independent, not-for-profit membership organization is responsible for the operation and governance of the Libra ecosystem - where specifications of submitted, ordered, executed and recorded transaction processes occur. All of which comprise an open-source implementation of the Libra protocol, the Libra Core.

With a goal to target business enhancement and fair trade; foster economic growth and financial inclusivity; most importantly, cut down on fraud and provide efficiency gains, Libra blockchain was mainly designed for security, scalability as well as reliability. Constant evolution dictated Libra to be flexible - the utilization of comprehensive technologies ranging from hash trees to pseudonym transactions. These approaches led to a currency model that is reserve-backed in order to minimize volatility and a permissioned network that will transition to permissionless.

Technology is subject to maturity and the Libra Community exerts effort to maintain its development velocity needed for launch, to push forward a framework for open development wherein pull requests, issues, and design documents are publicly and collaboratively developed. Despite continuous integration, it has recently been announced that veteran payment systems, Visa, Mastercard and Stripe among others, left the Libra project following PayPal’s exit. Dante Disparte, Head of Policy and Communications of Libra Association, argued that the withdrawals were rather a correction than a setback.

Libra, acting as a polar opposite of Bitcoin, has a permissioned consensus mechanism restricted to few validators allowed to join the network. Others claim that Libra coin is shared for it is centralized and unknown to many, several existing payment systems are centralized, Visa payments and WeChat pay, to name a few. MoneyGram transfers and usage of visa cards are still prevalent, while it has been observed that people in China settle financial transactions (hotel accommodations, tuition fees, daily necessities and even alms to informal settlers) through a chat messaging program acting as an internet of money. It’s safe to conclude that Libra strives for a similar outcome - financial transactions at a tap of a finger, whenever and wherever.

In spite of the reverberating dilemma of possibly being a downside to the remittance market, a threat in general, and as Central Banks worldwide stated that might become a rival to sovereign currencies, Libra’s mission remains the same - to globally transform the payment system and finance management. Interestingly, David Marcus, raised before the Senate Banking Committee that Libra would not be visible in anyone’s wallet until global regulators’ concerns are satisfied and fully addressed.

The moment a cryptocurrency reaches the recipient, all the information (e.g. past and present transactional history) that goes with it is transferred too - payment history linked to personal identity, and Facebook was expected to have privacy preservation.

Though brand recognition is significant and a ripple effect caused by Paypal backing out the Association is quite alarming, the volume of active Facebook users (2.41 billion) is worth pointing out. Cognitive dissonance occurs for even when Facebook interferes with data privacy and submission of personal information in addition to privacy breach issues, majority of the users keep their faith in the system. In the same manner, the said pushbacks do not necessarily resonate Project Libra’s total failure or collapse. In fact, varied associations/organizations (outside Libra) have expressed interest to be one of the founding members. On 15th of October 2019, twenty-one initial members of the Libra Association formally signed the Libra Association charter (namely but not limited to PayU, Spotify and Uber), formalized the Libra Association council.

The incident would, however, affect the project’s momentum, slow down its pace for a short period of time. To revolutionize the current paradigm with constant pressure on its sides and government scrutiny, proves that a shift to a more scalable system and interconnected world will deliver breakthrough ideas, capabilities and disciplines that drives business growth. Besides, relevance weighs more than pace.

Lawmakers are disturbed by Libra’s ecosystem with an aspiration to create a transnational currency that, to their belief, bypasses traditional financial networks. Considering Facebook’s recent records (Cambridge analytical scandal as well as the allegations towards supporting election meddling) led skepticism-Libra’s readiness to be handed an immense responsibility arises numerous speculations. Being cognizant of Libra’s public status, Facebook seeks to strengthen the public's trust through (1) cryptocurrency backed with real-world basket of currency to aid with value stability coupled with a (2) supervisory board that exercises due diligence.

“Move fast and break things.”

Mark Zuckerberg’s mantra aptly captures how entrepreneurs regard disruption: more is always better. Lawmakers doubt Libra’s smooth implementation without breaking things.

Hence, issues do not solely exist due to security but also extends to the fear of power dominance.

Ideas are very powerful constructs—once it has been accepted by the public and potentials were recognized, it will take on a life of its own. It is highly unlikely that anyone could ever kill the idea of Libra blockchain.

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