By Gystilyn O’Brien. 7/31/19 Published on Medium by Revain.

On June 18 of this year, Facebook released its white paper announcing its move into banking with Libra coin, a cryptocurrency established by the Libra Association. In terms of moving traditional third-party banking into p2p blockchain, the goal to integrate the ‘unbanked’ world population into a mobile app cryptocurrency system has a sound foundation. Libra would allow, through apps like Facebook, Whatsapp, and Calibra mobile wallet, global transaction commerce and exchange based on a stablecoin reserve which aims for a ‘permissionless’ ecosystem — or so they claim.

The idea is that Libra will allow global users to fuel their Calibra wallet with fiat currency (bank accounts, paychecks, credit, cash) and exchange that currency into Libra coin with no exchange fees. Libra can either be spent or transferred and exchanged again into “the local” fiat currency for use. Where currency exchange rates for fiat money would still be tied to the local currency (e.g. dollar:pound), the value of Libra would be based on a “Reserve crypto” monitored by the Libra Association.

The Libra Association, proposed to be a 100-member ‘founding’ collective of geographically distributed and diverse businesses by 2020, made primary investments in the equivalent of $10 million USD in their local currency to create a Reserve, which will aid in backing transactions with fiat-based ‘real assets’ — in theory, providing a secure decentralised ecosystem. The use of blockchain infrastructure aims to ensure security, while the Libra Association will monitor system.

A Conglomerate Club?

Curiously, the Libra Association membership has an extremely high entry fee, requiring not only the primary investment, but also a demonstrable business value, including a $1 billion USD market value with $500 million USD active customer basis, 20-million multinational followers, and it must have been established as a top-100 industry leader by a third-party association, such as Fortune 500. Any names come to mind?

Where a strict voucher system for investors may seem like a good idea for an association tasked with global transaction monitorship, it also insinuates a certain monopoly-type goal in regards to changing the nature of economic commerce from Big Bank into a beast regulated solely by Big Business. Marcuk Ferber, a German member of the European Parliament, said Facebook, with more than 2 billion users, could become a “shadow bank,” and warns that government-based business regulators should be on high alert.

Jerry Brito, executive director at the research non-profit CoinCenter, has taken a hard look at the situation and, in spite of optimism for what could be a great transition into financial equality by applying open-source and public access to all, has some questions worth evaluating.

In a long Twitter post he addressed the section on becoming a ‘permissionless’ network stated in The Libra Whitepages: “With the testnet, the association starts the journey towards building a permissionless system. And where there are a number of technical and economic challenges that will need to be solved together with the open-source community to make this a reality, we believe that for the Libra network to achieve its full potential it needs to be permissionless.”

Brito writes in response:

As far as I’m concerned, this is the most important paragraph in all the materials released today. Knowing some of the folks behind this, I don’t doubt the sincerity of the sentiment. But I’m having a hard time understanding how Libra becomes permissionless. Permissionless to me means (at the very least) that the functioning of the network is not contingent on any single person or group of persons. Seems to me Libra becoming that kind of permissionless has technical, legal, and governance challenges…On governance, it’s important to note there doesn’t seem to be anything binding the Association to a permissionless path (though that may be their intention today). It’s unclear to me what incentives investors will have to grow the membership and to eventually give up the float. If Libra becomes wildly popular and is very profitable, the incentive may be to remain permissioned and limited to a fixed number of member-owners. Clearly the aspiration is to avoid this, but is there any mechanism in place to counter that incentive/temptation?”

Brito makes a good point, one we should all consider carefully and voice our opinions to build strength as a community, and use that influence to affect the future of our financial overseers.

Suspicions Abound

Concerns are running high throughout the business sector and making governments tremble in their boots. In an open letter created by a US coalition of business owners, signed by Open Markets Institute, Public Citizen, Revolving Door Project, and Demand Progress Education Fund, a public request was made for the members of Libra Association to drop the Libra concept.

We call upon you as respected members of the business, financial, technology, and civil society communities to collectively withdraw from the Libra project. The Libra project is a global parallel currency with significant competitive, political, financial, and social implications. The ostensible purpose is to service the 1.7 billion people without access to traditional banking products and services. Achieving a laudable goal should not be cheapened with a project whose aims are in fact unclear and whose leadership structure is based on fear.

In Senate hearing, Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations, [US] Senators on both sides of the aisle reflected deep skepticism towards virtually every aspect of the Libra project, including its potential to facilitate money-laundering, terrorist financing, bank runs, systemic risk, evasion of sanctions, and anti-competitive activity.

US and European accusations regarding Facebook’s slew of privacy and antitrust investigations have the US Senate reeling when looking at Libra. Facebook says that it will use “all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior.”

The speed with which technology is advancing proves that it is practical that financial economics should transition into blockchain for secure record-holding. The question standing is whether or not the Libra Association will actually be that blockchain. Statements like ‘anti-fraud processes’ are very much attested to be unnecessary in the physical mechanics of blockchain, which implies the question: Does Facebook, and Libra Association by proxy, intend to misrepresent their project?

The very prospect that the Association is funded and self-monitored by Big Business begs the question of whether Satoshi Nakamoto’s intent was to liberate us from the control and structure of, in this case, financial institutions only to hand that power and control over to Big Business who want to become financial institutions?

The beauty of a review system, such as Revain’s Platform, however, is that it provides the opportunity for everyone, big or small, to speak out, either for or against, projects such as these using the blockchain’s power, security, and immutable nature to ensure that opinions are genuine and authentic. The Revain Platform is built on blockchain and uses a custom-built AI trained to evaluate all reviews to differentiate between “useful” and “unproductive” reviews based on positive and negative aspects of language, so the average Joe can rest assured the reviews are unbiased and constructive and then evaluate and decide for him- or herself, whether the Libra is, in fact, a good idea or not.