Facebook’s Libra stablecoin may be years from becoming a reality, but that didn’t stop a group of blockchain companies calling itself OpenLibra from announcing plans to fork the stablecoin.
News of the preemptive split came at the Ethereum developer conference Devcon 5 in Osaka, Japan on October 9. Lucas Geiger, co-founder of blockchain infrastructure firm Wireline, described the OpenLibra project, as aimed squarely at the corporate control of Libra.
Essentially, OpenLibra would be pegged to the Libra coin, a cryptocurrency which will be backed by a basket of fiat currencies to keep its price level.
Using the tagline “lock the door open,” the newly launched OpenLibra website called itself an alternative “platform for financial inclusion… that places emphasis on open governance and economic decentralization.”
The unveiling of OpenLibra “is sending shivers down my spine,” tweeted OpenLibra member and Ethereum Core developer Lane Rettig, during the announcement. “I am so excited about this initiative to ‘lock the door open’ for libra tech.”
OpenLibra’s claimed goal “is to replace the existing financial infrastructure, and compete with traditional banks (and central banks) across the world.”
More precisely, OpenLibra called that Facebook’s goal. The group just wanted to create a version that is decentralized, permissionless, and surveillance free, the website said.
The group said it believes the social media giant’s digital currency is likely to succeed in becoming a “transnational force,” over which governments will “have little legislative power.”
It added, “[i]f Libra becomes the internet’s central bank, the need for a more inclusive form of governance becomes urgent.”
Silence from the Libra Association
Facebook wouldn’t go nearly that far, having called Libra nothing more than a way of buying goods and transferring money easier and cheaper.
Neither would Dante Disparte, the governing Libra Association’s head of policy and communications. On October 4, he told Modern Consensus that the group’s still-lofty goal was to create “a modern, low-friction, high-security payment network that can empower billions of financially underserved people.”
Facebook had always insisted that it will be just one vote in the governing Libra Association Council, a group of companies that will pay $10 million for membership. They would also gain a share of the interest earned in the basket of currency backing the stablecoin.
When asked about the OpenLibra announcement, the Libra Association would not be drawn beyond, “no comment.”
Libra without Facebook
Despite announcing plans to fork a blockchain before it even launches, OpenLibra’s website called its plans “non-adversarial.” The Libra-compatible coin would embrace “what is powerful,” about Libra while “replacing what’s concerning,” it said.
These concerns included Libra being governed by a closed group of corporations, that those corporations would get all the profit—that interest from the currency backing Libra—and what it called the potential for “surveillance finance.”
It defined this as, “[o]ne’s ability to engage financially (e.g. borrow in Libra) will potentially be determined by their social graph and online activity.”
OpenLibra also unveiled a GitHub site for MoveMint, a permissionless version of the Libra virtual machine—the layer on which a blockchain’s smart contracts run—that will run on the Tendermint blockchain. That is run by Cosmos, which was another OpenLibra supporter.
Zuckerberg steps up
The Libra project has attracted harsh criticism from financial regulators and elected officials around the globe, and particularly in the United States and European Union, who see it as a potential threat to their control of the global economy. As it could immediately be used by Facebook Messenger, WhatsApp, and Instagram’s combined 2.7 billion users, Libra could become a worldwide, non-governmental currency almost overnight.
On the same day OpenLibra was announced, Facebook CEO Mark Zuckerberg agreed to testify before the U.S. House Financial Services Committee on October 23. Its chairwoman, Rep. Maxine Waters (D-Calif.), was an early and vigorous opponent of Libra. She almost immediately called for work on the project to be halted until a regulatory framework was in place.
On July 17, the committee raked Facebook representative David Marcus over the coals, with Rep. Waters saying it “threatens to concentrate government influence in the hands of a few elites.” Marcus runs the Calibra cryptocurrency wallet division that is Facebook’s formal representative on the Libra Association
Still, the attacks by regulators, privacy advocates, and politicians have had an impact.
On October 4, one of the most prominent of the 28 founding Libra Association members, digital payments firm PayPal, pulled out.