By The primary appeal of cryptocurrencies lies in its decentralized nature. Ever since the concept of cryptocurrencies came into existence, people have been drawn to it because it has no central point of failure. Somehow I feel like the market always tends to compromise on decentralization because it has its limits. The role of decentralization is yet to be realized in a blockchain-based network and the co-extending question that comes to my mind is up to what point we can compromise decentralization for a particular use case. It is quite evident that compromising on the part of decentralization one can get better throughput of functionality. Facebook’s Libra has justified the aforementioned case quite meticulously.
Libra’s Gameplan
Approximately 2 billion people all across the globe have been deprived of bank accounts because of various reasons some of which include lack of education, poor credit records, and improper identifications. Identification is basically a very real issue that acts as a barrier to commerce. On the other hand think of the entrepreneurs and angel investors who basically run Wall Street, they trade billions every day and do not want their identity exposed for various reasons. Libra has been trying to play the middleman here trying to be appealing to both the classes of people. If we consider the technical aspects of Facebook’s masterpiece, we’ll find it more decentralized than most of the blockchain networks that are out there at this moment. But if we take a closer look, the scene is quite contrasting.
So is it actually decentralized?
Libra is a permissioned and trusted blockchain network; this means one can become a valid node in the network only if they disclose their identity and invest a minimum of $10 million in holding the Libra investment token. It was quite evident that developing a cryptocurrency controlled directly by Facebook would not be trustworthy because of Facebook’s history with various privacy and security issues on their social network, and it would also be completely centralized in nature. The token’s Whitepaper has a fix for this dilemma. The token would basically work just like Bitcoin with a ledger kept by multiple nodes which will enhance the security of the network and maintain transparency as well. In addition to this, Libra won’t be in control of Facebook, rather it would be operated by an independent organization called the Libra Association. This organization consists of large profit-making corporations which include big names like PayPal, Uber, and Visa. There would be a small slot for non-profits but the majority of members are billion-dollar companies.
A bunch of corporates in control
The interesting part is that all major policy decisions would be made by a two-thirds vote by the members of the committee or basically the holders of the Libra investment tokens. The people who buy and use Libra tokens have no say at all. Wasn’t decentralization supposed to be empowering the people? Looks like that’s not the case. Once again this is a monopoly of the wealthy where the technology that was supposed to free us from the system ends up giving control to a bunch of corporations that are hiding behind the mask of decentralization but is, in fact, more centralized than what we can think of.
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