It’s a good day to be in blockchain.
Whether or not you agree with Facebook’s privacy policies, think Bitcoin is a fad, or have a vested interest in watching cryptocurrencies succeed, today’s announcement from the Libra Association is worth consideration.
The concept of digital currency as a legitimate store of value long ago entered the mainstream, and most people have been exposed to a range of poor investment advice along the way. This announcement seems similar on its surface: a new coin, and the ambitious promise of a global and unfettered reach.
Bitcoin was supposed to do the same thing. So what’s new?
Over the next few days I will break down the Libra announcement and various aspects of the project to make it more accessible to those outside of the industry. There are some fundamental differences in the starting conditions of this network from traditional cryptocurrencies.
My goal, as always, is to provide you with a careful analysis and a healthy dose of optimistic sarcasm. If there is a particular topic you’d like to see covered or explained in more detail, drop me a line at firstname.lastname@example.org.
For today, I want to focus on a small line item hidden about halfway through the white paper. It reads:
An additional goal of the association is to develop and promote an open identity standard. We believe that decentralized and portable digital identity is a prerequisite to financial inclusion and competition.
In my opinion, this is the most important aspect of the project. Facebook has access to billions of accounts and an unparalleled ability to detect authentic humans from the noise of fake accounts. Their team has come under fire recently for underperforming in this aspect, but the Libra project’s success will hinge on their ability to securely create and promote an open identity standard.
Banks in the U.S. spend a lot of time implementing procedures to make sure their users are, you know, people. If Libra can succeed in created a widely adopted way to authenticate a real human from a bot online, then we will be able to build new systems that span across finance, health, and government.
An open identity standard would separate the era of Web 2.0 from 3.0 — we’ve brought the information online, now it’s time to bring the money.