What Facebook's Libra just reminded us about cryptocurrencies
About a week ago, PayPal announced that they are leaving the Libra Association with the following statement,
"PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,"
Source
The departure is particularly significant as PayPal and the Libra project shares a strong bond given that David Marcus, the Facebook executive leading the initiative, used to be president of PayPal. In addition, Facebook’s blockchain team also has many former PayPal employees. On top of that, PayPal, the pioneer of internet payment, is the perfect mascot for the Libra project. Considering all these, PayPal is in my opinion the "anchor tenant" of the Libra project and naturally it is a huge blow for Facebook/Libra Association to see them leave. Below is a somewhat sour statement from Libra on this event,
“Building a modern, low-friction, high-security payment network that can empower billions of financially underserved people is a journey, not a destination. This journey to building a generational payment network like the Libra project is not an easy path...
We recognize that change is hard and that each organization that started this journey will have to make its assessment of risks and rewards of being committed to seeing through the change that Libra promises.”
Source
Just when you thought Libra has suffered enough this week, yesterday came the news of another 5 members announcing their departure from the Libra Association. In this announcement, Mastercard Inc., Visa Inc., EBay Inc., Stripe Inc. and Mercado Pago all expressed their intent to leave the Libra Association.
Mastercard Inc., Visa Inc., Stripe Inc. and Mercado Pago, in addition to PayPal, are all payment related companies. Their membership in the Libra Association is clearly an implicit "non-compete" agreement to ensure that these payment companies do not attempt to create their own alternatives to Libra. With them leaving, PayU, a lesser known payment company will be the only company representing the payment industry on the "Founding Members" list of Libra Association.
Compare it to what we had earlier, it is a stark contrast...
What this reminds us about cryptocurrencies?
When Libra was first announced in June this year, I made a post on it. In the post, I compared Libra with Bitcoin in a table and here it is:
| Bitcoin | Libra | |
|---|---|---|
| Decentralization (governance) | Yes | Quite centralized even if there are 100 members in the association as planned |
| Decentralization (infrastructure) | Arguably Yes | Centralized at start but promised to be decentralized later |
| Open and Permissionless | Yes | Open-sourced and will eventually be permissionless |
| Anonymity | Pseudo-anonymous | Pseudo-anonymous (but might be challenged considering Facebook own so much personal data) |
| Security | Proof of work is probably the most secure | Reasonably secure as I see it |
| Immutability | Yes | Largely immutable |
| Speed | Slow but improving with layer-2 solutions | Promised to be fast |
| Value preservation | Of its 10 years of history, Bitcoin has proven to be an appreciating asset | Promised to be able to preserve value well |
| Censorship Resistance | Largely yes | Unlikely. Since Libra aims to be compliant with regulations, it is likely that it can be censored |
| Adoption | Small but growing | Likely to be able to gain mass adoption considering the companies involved in the project |
Remember that a cryptocurrency is an alternative to the current fiat system and it is a challenge to governments' control on money. Hence, it must be the opposite of what the fiat system represent in order to succeed. A government controlled currency is permissioned, non-censorship-resistant and centralized. Think about it this way, governments' control over money is an important source of power for them. The rise of cryptocurrencies will eventually threaten this power they have. At that point, the governments will do whatever it takes to stop cryptocurrencies. If cryptocurrencies do not have the following traits, they can be stopped very easily:
- Permissionless: No one should be able to dictate if one is allowed to participate in the cryptocurrency infrastructure or not. It should be open and permissionless. Bitcoin is permissionless as you don't need permission from any central entity to run a Bitcoin full node. That is not the case for Libra.
- Censorship-resistant: The use of the cryptocurrency should be censorship-resistant. No one should be able to prevent you from spending and owning a cryptocurrency. The morality aspect of whether a currency should be censorship-resistant is still widely debated. However, we can't deny that it is something that is not even possible under a central fiat system. Bitcoin is censorship-resistant while Libra is not.
- Decentralized: There are a few ways to measure the level of decentralization, the governance, the infrastructure and the ownership just to name a few. A fiat system is clearly centralized and controlled by governments. Bitcoin, in comparison, is much more decentralized. I will not say that Libra is completely centralized but it is certainly more centralized than Bitcoin.
Is STEEM unstoppable?
This alone can be one full article, but I will just give a brief overview. The short answer is "somewhat yes". STEEM is permissionless. No centralized entity needs to approve your witness node or full node, you can just run it as you please. Of course witnesses need to be voted if they want to be profitable. But the idea is that even if the top witnesses are taken down by the government, somebody else can fill their spots quickly and that is the importance of being permissionless.
STEEM is censorship-resistant. You do not need to do a KYC in order to own and spend STEEM. You own your account as long as you have the keys to your account. You can spend, vote and power-up/down as you please as long as you have your keys.
Now here is the problem. STEEM is only somewhat decentralized. While we have a relative abundance of witness nodes, we actually do not have many RPC full nodes. Based on the recent post from 
Conclusion
Facebook's Libra reminded us that cryptocurrencies must be unstoppable. To be unstoppable, they must be permissionless, censorship-resistant and decentralized. There is no other way around it. Because Libra is permissioned, government can stop participants from joining the infrastructure. Earlier this week, two U.S. senators cautioned Visa, Mastercard and Stripe to reconsider their involvement in the project. Senators Sherrod Brown of Ohio and Brian Schatz of Hawaii said that Libra poses a risk to not only the financial system, but the payments companies’ broader business. And that is probably why these companies back away from Libra.
With all these being said, Libra is actually an interesting idea with tremendous potential. That is why the US government immediately felt the threat. Incidentally, the OpenLibra project was announced during Devcon. It is a fork of the Libra project with emphasis on open governance and economic decentralization. We cannot predict how the the Libra saga will unfold, but I am sure it is going to be quite a ride.
Side note
This is my first time posting through Steemleo.com and I have to say I am pleasantly surprised by the interface. They are displaying the running market price from TradingView of the stock market and some popular cryptocurrencies. I hope to see more Tribe pages customizing their site to fit their niche. Great work 
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This article is created on the Steem blockchain. Check this series of posts to learn more about writing on an immutable and censorship-resistant content platform: