Can We Trust the Facebook Consortium?
It has been a busy two days for Facebook as the social media giant earned the attention of the world following the launch of its project Libra. As of late, a Hong Kong programmer lanced another attack on the project’s governance structure, highlighting a dangerous vulnerability.
Libra in the Spotlight
Facebook’s cryptocurrency has caught the attention of media all over the world.
With this project, Mark Zuckerberg aims to allow users to transact using the Facebook ecosystem that currently counts 2.4 billion users, practically creating a global digital currency. However, despite the high expectations, the project has been criticized by most of the crypto community due to several contradictions found in its white paper.
One of the criticisms made by most of the community is that Libra does not present any of the characteristics of a public blockchain and therefore is not decentralized. In the documentation provided by Facebook, it is written that Libra doesn’t even have blocks, and its infrastructure resembles a federated network like Corda.
As a consequence, Libra is not considered a competitor to decentralized public blockchains such as Bitcoin, but more to centralized payment networks as Paypal. Even David Marcus, Director of the Libra project, confirmed on Twitter that Bitcoin and Libra are two very different things.
“Many want to pit Libra vs. Bitcoin. In my mind these two are not in the same category. BTC is a decorrelated (investment) asset. Libra is designed to be a stable medium-of-exchange. I have been, and remain a fan of BTC, but for very different purposes.”
First Disclosed Vulnerability
According to a user named “gazhayes,” the current implementation of trusted validator nodes are core to the security model. This essentially means that those few entities have full control over the protocol and thus confirm charges of centralization.
The supposed Hong Kong-based developer continues with more worrying comments:
“This means the protocol is whatever they decide it is. These entities can change the rules whenever they want. This means they can freeze your coins, take your coins, issue new coins, or really whatever they want – the sky is the limit.”
As informed on BTCManager, Libra’s validator nodes are “more than a dozen” industry players including heavyweights such as Paypal Holdings, Mastercard, Uber, Visa, Coinbase, Xapo, and Spotify who had to pay a fee of $10 million to become founding members.
Nevertheless, it shouldn’t be shocking to understand that those validators have ultimate power on the protocol. In fact, on Libra’s website, it is expressly written under the heading “Decision Making” that validator nodes, represented in the council, have the ultimate power. It continues by specifying that the most important decisions require a greater than two-thirds supermajority.
As we can see, Libra’s path will not be an easy one. And the technical side is not the only one to have been targeted. Less than a day after the project was formally announced, Facebook’s cryptocurrency was also targeted by American authorities for an examination of risks to the global economy.