(Bloomberg Opinion) -- On Tuesday, Facebook announced its new cryptocurrency Libra with a white paper and prototype of the client software. Regulators are already tripping over themselves to regulate Libra, but the cryptocurrency isn’t even complete. Not just in need of updates. Libra is incomplete in the sense that its creators are still figuring out what to build.
Libra’s documentation is a monstrosity, a 12-page white paper accompanied by 96 pages of technical detail. The papers are far from expository. There are vague references to empowering the unbanked and transitioning from centralization to decentralization, and an unspecified shift from permissioned access to permissionless with open participation in governance. The documents not only describe a lot of functionality that hasn’t been built but also refer to major architectural features that have yet to be invented.(1)
“Make it up as we go along” is reasonable for a seed-stage startup, but not something one would expect from a half-trillion-dollar tech company — especially not one that’s collecting $10 million checks from prospective members.
I spent an afternoon installing Libra with the goal of creating my own digital asset, and it was not an empowering experience. Most of the features were unavailable or unimplemented, and there was little functionality beyond the ability to place fake coins in a wallet. It’s odd that a company like Facebook would release software in such a state.
The experience is a far cry from Facebook’s developer tools for its social network. The Facebook developer platform offers a set of programming interfaces for developers to integrate with the open “social graph” of personal relations, and when it launched in 2007, an ecosystem immediately sprang up to support it. In that case, Facebook erred on the side of being too openhanded with the tools it made available, and had to tighten access later on. Numerous companies built their business models by leveraging Facebook’s developer platform, from Cambridge Analytica to Zynga. Stanford even offered a computer science class to teach students to create Facebook apps.
A developer platform may be the ultimate plan for Libra. The Libra “blockchain” was implemented in a trendy high-performance language called Rust, with open-source code hosted on Github, where hundreds of prospective Libra developers have already gathered to provide input. It’s possible that the Libra Foundation members will eventually provide funding for Libra app developers the same way the Ethereum Foundation provides grants to support those who build smart contracts for the Ethereum blockchain.
Given the nonfunctionality of the current software and ambiguity of the white paper, it’s clear that Libra’s announcement was intended to solicit feedback from regulators rather than to win over users. Lawmakers are not known for their ability to accommodate rapid iteration, so it makes sense that Facebook would put out a rudimentary proposal before investing more energy and reputation in crypto.
Regardless, the burden is now on regulators to define the boundaries rather than complain about a Cambridge Analytica type of scandal later on. Officials should have learned that if you give people tools, they will develop things in ways that will surprise you. Regulators do not like to be surprised.
(1) From the white paper: ”We do not believe that there is a proven solution that can deliver the scale, stability, and security needed to support billions of people and transactions across the globe through a permissionless network. One of the association’s directives will be to work with the community to research and implement this transition.”
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Elaine Ou is a Bloomberg Opinion columnist. She is a blockchain engineer at Global Financial Access in San Francisco. Previously she was a lecturer in the electrical and information engineering department at the University of Sydney.
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