2019.06.17; Monday June 17th, 2019: Facebook hires Silicon Valley oligarchs as rulers of Globalcoin - Decrypt

Published by DB, June 19th, 2019

Facebook appoints fellow Silicon Valley oligarchs as rulers of future crypto economy

Uber, PayPal, Mastercard and Visa are all getting in on GlobalCoin. It’s like EOS, just a lot less accountable.

3 min read

June 14, 2019

Facebook’s upcoming cryptocurrency will be run by a consortium of around a "dozen" companies—each paying Facebook $10 million for the privilege—that will include Uber, PayPal, Mastercard and Visa, according to the Wall Street Journal.

Stripe, MercadoLibre and Booking.com will also reportedly be involved, though it remains unclear how.

The social media giant’s stablecoin, dubbed GlobalCoin, is set to release its white paper on June 18. Developed as part of a highly secretive internal program called Project Libra, GlobalCoin is expected to be pegged to a basket of fiat currencies—including the US dollar, the Japanese yen and the euro—and is set to roll out across around a dozen countries some time next year, according to the BBC. Facebook has also reportedly sought to work with regulators and online commerce businesses, and is seeking outside investment to quell growing concerns over its data practises.

It’s all starting to sound rather like the system used by EOS, Ripple and Tron, three prominent blockchain networks that rely on DPoS—"distributed proof of stake"—in which a select group of validators collaborate to verify transactions.

In the case of EOS, delegates who are generally unaffiliated with the principal entity—Block.one—vie to win over voters and secure a place in the 21-member strong roster of operating "block producers."

The obvious gripe with this system is that deferring power to a close-knit group of collaborators makes it trivially easy to collude and capture the network. Case in point: last week, one of EOS’s most trusted block producers fell to what some described as a coup orchestrated by cabal based primarily in China.

But at least they can be voted out. In Facebook’s case, these delegates will be the company’s fellow Silicon Valley titans. Indeed, rather than assuaging fears over Facebook’s enlarging dominance over, well, every facet of human existence, the Journal’s report makes it clear that "GlobalCoin" will operate fully under the aegis of a Silicon Valley oligarchy.

What’s more, buying into Facebook’s system, as Visa et al have done, is a whole lot different from getting voted into a system. Could users hold GlobalCoin’s node operators accountable in the same way they (sort of) can EOS’s?

Neither is it clear what the $10 million price tag is for—is it pure revenue for Facebook? A price tag on the raw transactional data the buyers will be likely privy to? A buy-in-bond to keep them honest?

And if they do a shoddy job with our data, do they get their money back?

https://decrypt.co/7464/facebook-enlists-fellow-silicon-valley-oligarchs-to-run-its-cryptocurrency