Libra: the good, the bad, and the ugly

Since the announcement of Libra by Facebook, many articles have been written about this topic. I am constantly asked about it and this is a topic of interest at Vertex. Personally, I am inspired by this topic. I also see the merits of many opinions against it. For this post, I will share some key points for review a year henceforth.

Libra is:

• An international payments infrastructure
• An enabler for open payments solutions including different wallets (e.g. Calibra from Facebook)
• A stable token that facilitates the payments network, which can be further viewed as a store of value. There are also views to take it one step further to treat as an ETF

The Good:

• It is from Facebook, with over 2 billion users around the world, and especially strong coverage in developing countries
• Credibility given its size
• Grand vision to help the unbanked population, at least on paper
• Openness: fairly decentralized from 2020 with a promise towards permissionless in another 5 years

The Bad:

• Privacy: It is from Facebook! Given its negative news related to privacy in recent years. One observation is that users from emerging countries are likely to prioritize utilization over privacy, at least it seems so for now.
• Intention: a common view is that Facebook is doing it for its own good, to monetize its user base. My Indian colleague recently highlighted one Facebook failure in India before — its Free Basics. I do not know the full history, but at least it seems Libra is a much more open project than Free Basics.
• Openness: there are views that Facebook is dominating it. I thought it managed to achieve a balance of leadership at the beginning with a clear plan towards being open.

The Ugly:

• Libra made it clear it is established for payments. Yet everyone, especially central banks, views its true potential in disrupting the current fiat monetary system. No government wants to cede the power of currency issuance. Suffice to say, the history of mankind also appears to be a history of governments sharing its powers with citizens.
• AML/KYC concerns from regulators: This is the really dirty work to be taken care, but frankly speaking, the crypto industry has been preparing for this for years, so maybe it is not that hard for a new project

In the final analysis, pandora’s box is open. My two cents is that this trend is inevitable, either Libra or some other project will change our world in the future. It is for industry practitioners and regulators to work together to ensure it is properly rolled out, powers fairly managed and everyone’s interest protected.

Originally published at https://medium.com on July 22, 2019.