Anatha
Balancing Facebook’s Libra Coin with Urgent Global Needs Edward DeLeon Hickman Jul 2, 2019 · 6 min read
Photograph by Ninno Jack Jr
Upon first reading of Project Libra’s whitepaper, it seems as if Facebook is making a genuine attempt at reaching for the brass ring of the crypto industry and aiming to “bank the unbanked”, via its centralized, permission-based transaction network. This is an ambitious feat, because any corporate organization that launches and manages a transaction network is required to follow a rather large body of regulatory norms. While it’s not impossible that Facebook and the consortium behind the Libra project can afford to jump through the myriad legal hoops necessary to operate as a money transmitter, the real question is how can any organization bank the unbanked while following KYC/AML compliance rules?* On the face of currently available information and known regulatory
On the face of currently available information and known regulatory constraints, unless Libra can make a special provision for accounts transacting under certain volume thresholds to allow them to sometimes ignore following normal money service business guidelines, then Libra will really just be a more efficient (and admittedly more technically exciting) version of our current industrial age legacy financial tools. The same financial systems that already locks out over 1billion people who do not have ID documents, and therefore cannot be included in any system that requires them to identify themselves, right from the outset. Of those that cannot identify themselves, 81% live in Sub-Saharan Africa and South Asia, meaning this is the exact market we have to serve if we wish to seize the brass ring and bank the unbanked. I will refrain from judging Libra too harshly until they actually build what they have indicated they are going to build, and we all get a good look at the finished product. For one thing, it’s guaranteed that the reality of Libra Coin will doubtless be very different to the vision they’ve expressed in their documentation published thus far, in which they do admit considerable ambiguity — this is unusually candid, in a space where wild unsubstantiated claims are the more typical experience in project whitepapers, and the frank approach to timeframes and technological uncertainty is refreshing. Our industry is shifting and changing so fast, no project is static, and to claim otherwise is disingenuous. All networks are living breathing entities that change with the discoveries of the development team and the demands of regulatory arbitrage, as well as what is technologically possible, and many of these factors have considerable regional constraint — Libra users in one country may end up with a very different experience to those who live under a different regulatory umbrella, whatever the founders would wish for them as a global vision.. So before we judge Facebook’s entry into the race for building the best information age economic platform, let’s see how well it integrates both into the overall crypto ecosystem and its end users day-to-day lives.
Photograph by Quinn Bu ng
Will they deliver what the majority of the world needs? I will gladly dance with the devil himself if it means we get to bank the unbanked. If Facebook’s intrusion into the crypto space allows us to help billions of people locked out of the economic systems most people just refer to as “the world”, then we might as well put on our dancing shoes. Anything we can do to include the billions of human beings who suffer intolerable economic conditions is, at this stage, an acceptable risk. Rather than judge Libra too harshly, let’s focus on getting people above 2 dollars a day or more globally to effectively wipe out extreme poverty. Let’s turn poverty into a disease we cured, and then we can circle back to have a serious debate about what constitutes the absolute best information-age currency and economic platform we wish to tie our destiny. The good news is that these things are really fluid, and switching back and forth across platforms will be as easy as installing a new app. However, while I welcome Project Libra’s attempt to bank the unbanked, I also have serious doubts about whether they will be able to do so with their current, planned model. This is before we even get into a discussion about privacy and data security, and whether or not Facebook becoming a global powerhouse in information-aged banking is in our best interests, mind you. Do we really want to rush headlong into allowing a company with Facebook’s history on data privacy to suddenly also have access to a global network of private financial data? I’m of the mind that Libra cannot compete with even marginally decentralized, public, transaction ledgers in the long term… but that Facebook’s foray into this space may provide the perfect entry point for the vast majority of its 3.78 billion “active users” (a number I seriously question, incidentally, given the number of fake accounts, bots, and spammers one encounters on social media everywhere…) At the very least we can count on Project Libra making the term “cryptocurrency” better understood and more deeply embedded into the global discussion about how to move the world forward — and that’s generally a net positive for all of us involved in the industry and beyond. Only time will tell if Libra can deliver on its promise to bank the unbanked… but I don’t think we should stop building the platforms that we know can deliver on that promise in the meantime. As ever the cryptocurrency markets remain in their infancy, and there is still a lot of “we don’t know, what we don’t know” going around.
Photograph by Hans Eiskonen
I continue to assert that the platforms of the future will be platforms that are ethically aligned and human focused. People will support the systems they most identify with, as people begin choosing their preferred currency the way we choose our clothes or the music we listen to, a notion presently beyond the lived experience of almost every person on the planet. So while either Libra or any of the “true” cryptocurrencies may provide the transaction capacity we need to run the future of our civilization, can we also say that we would choose them, if there were better alternatives available in the marketplace that are more aligned with the things we individually wanted for the world?
The marketplace as a “rational” actor is a terrible mischaracterization of how the market behaves. It is capricious, and yet sadly single-minded — the one constant is greed. The good news here is that greed will serve us in this instance, as the most popular transaction networks invariably also increase in market cap. So if we choose networks we identify with philosophically, the greedy will come out to support it just the same. It’s one of those rare instances where voting your conscience by putting your wherewithal, resource, and economic energy into things you align with will also be the most profitable option available to you. Those are two objectives that rarely merge so when they do, you can expect big change to follow. Whether or not Libra can muster that kind of trust and support it needs from Facebook’s user base remains to be seen. I will, however, be watching with rapt attention as the offering unfolds in the marketplace. * Libra discusses moving the network from centralized to decentralized over time but since they are starting off centralized we must consider it thus until later as that is not an easy navigable jump.
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Edward DeLeon Hickman Based in Honolulu, Edward DeLeon Hickman is an innovative leader and CEO in the realms of cryptocurrency and blockchain. Follow
Anatha Fairness and prosperity for all: this is the power and possibility of decentralization. Follow
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