Publisher's Synopsis
Is Libra a cryptocurrency?"IT'S FAIR ENOUGH TO SAY THIS USES CRYPTOCURRENCY TECHNOLOGY."This is kind of a contentious question. Relative to the US dollar, the euro, or the yen, it's decidedly a cryptocurrency because there's no central bank. There's also a public ledger, although only some people are allowed to mine the coin. So I chatted with some experts to find out whether Libra is a cryptocurrency."It's fair enough to say this uses cryptocurrency technology," says Matthew Green, an associate professor of computer science at Johns Hopkins University. (Facebook contacted Green "a few weeks ago" and asked him if he'd look at its white paper as an outside reviewer. This was unpaid work Green would have had to sign a nondisclosure agreement to perform. He declined.) "It's more restricted in the way the blockchain works, but even that's not totally unprecedented."Compared to the OG cryptocurrency, bitcoin, well... it looks less like a cryptocurrency. For instance: bitcoin is a permissionless system. You participate through proof of work by competing to solve a puzzle that lets you add a block to its chain. What that means, essentially, is that anyone can participate. This is one of the most significant ideas behind Satoshi Nakamoto's 2008 paper: bitcoin requires consensus, not trust."I ACTUALLY AGREE WITH THE FOLKS WHO'VE BEEN SAYING THAT THIS ACTUALLY ISN'T REALLY A CRYPTOCURRENCY AT ALL."Libra, by contrast, is permissioned, meaning only a few trusted entities can keep track of the ledger. That makes it more like a digital currency rather than a cryptocurrency, says Lana Swartz, an assistant professor of media studies at the University of Virginia who's studied the bitcoin community extensively. "I actually agree with the folks who've been saying that this actually isn't really a cryptocurrency at all," Swartz says.On the other hand, Libra is assigned to pseudonymous "wallets," and transfers are done through public key operations, says Nicholas Weaver, a researcher at the International Computer Science Institute and a lecturer in the computer science department at the University of California, Berkeley. "So yes," he told me, "it is a cryptocurrency." Weaver also notes that the permissioned model means less computing power is needed. Bitcoin wastes a lot of energy, preventing so-called Sybil attacks in which an attacker fills the network with computers the attacker controls and wreaks havoc.The only conclusion I have come to is that there is no stable definition of "cryptocurrency," so I am going to just call Libra a cryptocurrency for the sake of ease and keep it moving. If you'd like to put an asterisk on that, I can't blame you.
