Why Facebook's Libra Project Doesn't Help Switzerland's Crypto Valley
Facebook’s official announcement today regarding its cryptocurrency project, named Libra, didn’t come as a big surprise. The earlier news that it had set up a non-profit foundation in Geneva, in Switzerland’s Crypto Valley, did.
Many locals, and even those outside of Zurich, Zug and Lausanne, hailed the revelation as further evidence that this Alpine country, often dubbed “Crypto Nation” was “the place to be” for cryptocurrencies and all things blockchain. And yes, certainly the fact that a US-based giant of the tech industry chose to travel to Switzerland and set up here is no small news.
After all, Palo Alto is quite nice. And true - American regulators haven’t been so very friendly to cryptocurrencies lately, nor to Facebook for that matter.
But not everyone is so thrilled. And it is pretty clear from the lineup of backers, that the decentralisation of the Libra project - for all its promise - is minimal.
Which is just one reason that Libra won’t help Switzerland’s Crypto Valley.
Here are a few more:
The devs aren’t here
In spite of all the fantastic use cases and business innovations made possible by blockchain and cryptographic technology - it’s still a developer’s world. The Calibra wallet, which Libra aims to introduce into Facebook Messanger and other applications may go a long ways towards improving user experience in cryptographically-secured transactions, but that’s only part of the story. Developers and tech implementation will continue to be under the tight control of the mothership in California - as evidenced by the 30-some blockchain jobs being advertised by Facebook.
In Crypto Valley, developers are few and far between already, although once Swiss universities start churning out graduates, that may change. For Libra to have a long-term impact, it would need to have a big enough technical presence in Switzerland to influence and support future generations.
Regulators are everywhere
Wherever Facebook and Libra would set up shop, their goal is global. And that means that the challenges and ambitions that they face won’t be significantly affected by having a foundation in Switzerland - or the Caymans or Lichtenstein for that matter.
Using a Swiss foundation checks one of the proverbial boxes of a “true crypto project” - as they were organised in 2017 and early 2018 in Crypto Valley - but with the monumental goal of creating a world currency for all things, all over the internet, Facebook and Libra will be doing most of their work in courts and parliaments outside of Switzerland.
It’s an innovation-killer
What happens when a tech giant takes over the world? The game is over, that’s what.
Adoption among Facebook’s billion + users is a great storyline and a legitement step forward, but once global standards are adopted and one company (er…group of companies) has control of the market, there will be a whole lot less room to develop and explore new possiblilities.
Switzerland has always been about constant, incremental innovation and the Crypto Valley ecosystem has long fit into that mould - with international startups bringing more and more new dreams and ideas.
Enter Facebook - and…that’s it.
It’s not really blockchain
Yes, it’s kind of a dirty little secret…but looking closely at Libra, it seems clear that the “blockchain” part of the project is a bit light-weight.
It is not based in Ethereum or any other current public blockchain. It introduces a new programming language and a consensus mechanism, but does not inherently guarantee that there will be immutability or traceability - or even privacy for that matter.
But, of course, a blockchain is not actually necessary to do what Facebook seems to be aiming for - leverage its scale for a world-wide payments system in the footsteps of WeChat or AliPay.