Facebook’s GlobalCoin faces ‘trust’ challenges

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There is going to be a lot of Facebook news this week, and probably for many weeks to come. The Libra Association is scheduled to launch with a testnet this week, but a report on Coindesk suggests that Facebook’s GlobalCoin will face significant challenges, and that it should wait until 2020 to launch its testnet.

Coindesk says, “a source with knowledge of Facebook’s operations said the project’s software has a long way to go until it can be used. Sources attribute the delay to blockchain industry incumbents being reluctant to work on a project that doesn’t appear to have the hallmarks of a true cryptocurrency.”

Based on conversations with seven knowledgeable sources, CoinDesk confirmed Facebook’s plan is to connect users’ financial information to their personal Facebook profiles. Such data would likley be under Facebook’s control, hosted in company databases.

Sources also compared GlobalCoin to Alipay, which allows digital payments across social platforms yet is also associated with Chinese government surveillance, and cited political lobbying as a cornerstone of Facebook’s broader effort. This is not good news, following the Cambridge Analytica scandal.

Coindesk says, “This has created a rift between various partners from the blockchain industry, which were reluctant to work on a project that offered users little control over their digital identities. Sources say Facebook entered fruitless talks with startups Tendermint and Stellar, then even expressed an interest in acquiring MobileCoin, the startup advised by Signal creator Moxie Marlinspike.”

Furthermore, “Blockchain consultant Maya Zehavi told CoinDesk she is concerned the GlobalCoin consortium with Visa, Mastercard, PayPal and Facebook could create a system with limited accountability yet ample power to exclude individual users from commerce.” And its says there is a minimum $10 million charge for prospective GlobalCoin node operators.

Mehavi told Coindesk, “They are creating an anti-competitive moat,” and added, “It creates a silo of data rails without any guarantees about data sharing among the different participants, and the computation being done to access the services. Meaning some computation being done could kick you out of Uber, Facebook and Shopify, if you become a risk-management issue.”

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