After years of speculation, Facebook has finally released a whitepaper outlining it's new cryptocurrency/blockchain called 'Libra'. Many presumed Libra would be a corporate dominated control system for finance, but Facebook have thrown a curveball to try to deflect away from that concern. What we have is something that takes features of Steem & EOS and then combines them with control from a cartel of highly financed groups to oversee it all.. But don't worry, the system is 'decentralised'.. Anyone can have a say in the running of the blockchain - as long as they have $10+ Million to pay up front!
Yes, you heard right - this * cough * decentralised cryptocurrency has an entry fee for node operators of $10 million - so less 'decentralised' and more 'highly centralised among the most wealthy'. While Bitcoin and other cryptocurrencies promise something close to actual decentralisation that empowers individuals, it seems the - as expected - the Facebook token really does the opposite, while using the 'decentralised' buzzword to try to appear 'revolutionary' and 'trustworthy'.
As Techcrunch's piece on this story explains:
The Libra Association — crypto’s new oligarchy
Facebook knew people wouldn’t trust it to wholly steer the cryptocurrency they use, and it also wanted help to spur adoption. So the social network recruited the founding members of the Libra Association, a not-for-profit which oversees the development of the token, the reserve of real-world assets that gives it value and the governance rules of the blockchain. “If we were controlling it, very few people would want to jump on and make it theirs,” says Marcus.
Each founding member paid a minimum of $10 million to join and optionally become a validator node operator (more on that later), gain one vote in the Libra Association council and be entitled to a share (proportionate to their investment) of the dividends from interest earned on the Libra reserve into which users pay fiat currency to receive Libra.
While Techcrunch acknowledges that the companies who have so far paid the $10 million entry fee (which includes Visa, Paypal, Mastercard, Stripe, Ebay Vodafone, Uber & Spotify) will likely represent a real oligopoly of power atop the pyramid of this new digital currency - they point out that Facebook has stated that they intend to introduce a Proof of Stake design that will truly decentralise the system (albeit leaving 20% of the control in the hands of the aforementioned large corporations). This is basically exactly the same as the way the Steem blockchain functions.
In fact, Steem is SO much like Libra that I feel I need to draw some comparisons here as it seems that the mainstream news sites are completely ignoring this detail:
- Steem operates on a Proof of Stake algorithm.
- Steem allows users to send transactions of currency to each other across global borders instantly (With ZERO fees).
- Steem has integration with Social networks built in.
- Includes a $1 pegged token (SBD) akin to Facebook's aim of having their token be valued around $1.
However, Steem is not only battle proven - having been live for 3 years already - but it has the following extra benefits:
- Free transactions.
- Uncensored social media.
- Fully open source.
- Inspires creativity through rewarding of posts/comments via a rewards pool.
- Node operators do not need to pay any fees - leading to true decentralisation.
In fact, this last point is so important that I could make an entire post on it alone. The Facebook model - as far as I have understood - currently forces the network to be run only by entities that can afford the $10 million fee. This ensures that the network will be highly likely to be warped for the benefit of those in such elevated positions. Steem, on the other hand, has no such entry level and average people can choose to run a witness server (node) to run the blockchain for relatively minimal costs. This is a huge difference in terms of blockchain governance and distribution of power.
I also find it telling that even the logo of 'libra', far from being the actual zodiac sign of libra is actually the STEEM logo rotated 90 degrees and mirrored!
So what IS going on?
I have said, ever since Steem started to gain traction, that Facebook and other sites would potentially move to shut it down as it represents an existential threat to them. An uncensored social network that literally pays you money to post, SHOULD be a huge competitor to Facebook.. But how could they shut it down?
Well, as @jpbliberty on Steem highlighted through their upcoming class action lawsuit against Facebook for breaching of anti monopoly legislation - they appear to have tried to leverage their market dominance online to shut down other cryptocurrencies, such as Steem, while they developed their own in the background. Since Facebook and Google collectively carry around 66% of all internet traffic, when they ban adverts for a product, it has a huge effect. Since Steem could not advertise on their platforms following the crypto ad ban, it meant that Steem could effectively be silenced - giving time for Facebook to figure out how to maintain their power position online.
Could it be that their choice of logo is a middle finger to the Steem community? It would not surprise me at all. After all, they are calling the token 'libra' - inspiring the idea of 'freedom' - yet charging transaction fees and aiming to make profits in the process.. All while Steem already operates for free as an alternative!
Since so many continue to face censorship and extreme violations of privacy on Facebook and their other services, it would be really great if more people paid attention to what is likely really going on here. Let's choose liberation over Libra!
Wishing you well,