Anyone who has followed the news lately might have heard about it: there’s allot going on about Facebooks Libra. What started as an idealistic project with ambitious goals now seems to end in a discussion about the power and influence of big tech.
What is Libra?
Libra is an initiative by Facebook in collaboration with large finance and tech companies to create a worldwide financial payment system. This payment system is based on blockchain technology. Libra’s vision is one that resonates well with the vision of DeFi Capital. Libra is supposed to stand for a decentralized payment system which allows people more freedom and autonomy about their wealth and this is exactly what we are about. Libra’s whitepaper has many examples about this vision, for example:
‘’We believe that many more people should have access to financial services and to cheap capital.’’
Now there’s about a third of the world population that does not have access to financial services. Allowing this large group access to financial infrastructure like Libra, creates the opportunity for financial progress in areas that need it the most. It seems an idealistic and worthwhile endeavor to be of service to this group of people.
Latest developments about Libra
Ever since the announcement of Libra in June this year there’s a lot of controversy about it. Among others, central banks are afraid it might be a risk for financial stability. With the Cambridge Analytica scandal fresh in our minds, the French government said that it will actively block Libra’s development in Europe citing risks for consumers and monetary sovereignty.
After these announcements Libra’s downward spiral went in overdrive. Politicians, central banks and especially financial regulators are experiencing extreme difficulty to positively look at Facebooks latest developments. First the financial companies backed out of their cooperation, after that even travel giant booking.com. The companies still collaborating with Libra are mainly tech companies like Lyft and Uber.
Our opinion
When we read Libra’s whitepaper, we had some very mixed ideas about it. On the one hand it seemed like a great confirmation of DeFi Capital’s vision: a decentralized financial system. A system that provides access to financial services based on blockchain technology.
However, on the other hand we’re experiencing doubts about Facebook being the one leading this world currency initiative. A company that does not seem bothered with user’s privacy also allowing full access to user’s financial traffic does not feel right. Also, the claim that the network would be decentralized is only marginally true. Is paying 10 million for access to one of 21 servers of Libra really the idea of decentralization? Not if you ask us.
The end of a decentralized financial system?
It’s definitely not the end. According to us blockchain technology is all about financial innovation. Facebook has shown us through Libra that in the near future anyone can create their own currency. The infrastructure that allows for this is being built as we speak. This is exactly what DeFi Capital is investing in. We want to actively participate, invest and be a part of the realization of decentralized finance.
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