Facebook’s David Marcus responds to common questions around Libra

03 Jul, 2019
by David Borman
Facebook’s David Marcus responds to common questions around Libra

Today Facebook/Calibra's David Marcus posted a response to some of the questions and "misunderstandings" surrounding the Libra. However not much new information is given, so much as repackaging of the vague promises we have already received.

The post opens with Marcus saying he has made this response to add clarity to the discussions around Libra. He reminds readers that "Facebook, through its subsidiary Calibra, is just one of the initial 28 Founding Members that are coming together to form the Libra Association. It’s easy to assume from the headlines that Libra is only associated with Facebook, but that is not the case."

The first question addressed is the Libra blockchain. Most detractors have pointed out it is neither public nor decentralized, and therefore not really a blockchain. Marcus responds by admitting that while it won't initially be permissionless, he reiterates the promise that the chain will be "gradually transitioning to a permissionless state in the years to come." This unclear commitment was previously made in the whitepaper, and no new details are given for how it will get there.

As for decentralization? Marcus states, "I’d argue that one hundred geographically distributed, industry-diverse organizations is quite decentralized."

He then addresses why the Libra Association has no charter, to which his response effectively comes down to the notion that they are working on one now.

The next topic is whether the Libra can really address "banking the unbanked," To this, Marcus explains that the Libra should lower the barrier for entry into financial services:

"With Libra, anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services."

Again, a good idea, but no additional details as to how this will be achieved.

Then the issue of regulation comes up, with the expected response that the Libra Association will work with regulators and have strict KYC practices in place for all on-ramps and off-ramps. No big revelations there.

Next up is the very important "Can Facebook be trusted to manage financial services?" The answer is not very reassuring. Basically, Marcus says that since Calibra is not Facebook, even though Facebook created it, then we don't need to worry. He promises that Facebook won't look at our financial data. From the post:

"Facebook created a subsidiary — Calibra — that will operate a wallet service on top of the Libra Network, and while Facebook, Inc. owns and controls Calibra, it won’t see financial data from Calibra."

Later adding:

"Bottom line: You won’t have to trust Facebook to get the benefit of Libra. And Facebook won’t have any special responsibility over the Libra Network."

Again, the problem is that we have already heard this and zero new details are given as to why we should have any faith in these claims.

Ultimately, we are largely where we began. This statement gave no new information and simply restated the same promises we have heard before. Will anything of substance come to light? Stay right here with Chepicap for all updates.

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