Facebook recently unveiled its own digital currency, Libra, and as more analysts dig through the white paper, they are discovering the potential for the Libra to be a threat to many individuals’ privacy and security.
Bill Black: Facebook’s Libra Currency Monetizes Identity And Threatens Privacy https://t.co/ACTeoABJtw
— zerohedge (@zerohedge) July 8, 2019
Bill Black, who teaches Economics and Law at the University of Missouri-Kansas City and was the Executive Director of the Institute for Fraud Prevention from 2005 to 2007 talked with Marc Steiner of Zero Hedge about the privacy concerns with Facebook’s Libra. Bill started off by emphasizing that Facebook does not actually control the Libra and that the “Libra can be changed at any time to do virtually anything by a two-thirds vote of an ‘association’”.
“This association is made up of the usual for-profit actors in the world— the big credit card companies, etc. And more private for-profit entities can buy-in. So they can make Libra into most anything that is conceivable to make, and any promises that it won’t be used in certain ways are completely hollow because Facebook is not going to run Libra like we would trust.” … “Even if Facebook gave us promises, which it’s done in the past and lied about, and somehow we believed that this would never occur again, and Facebook had turned over a new leaf—Facebook doesn’t control it! A bunch of other really nasty heads of these control it.”
Bill Black then goes on to detail just how much information, and thus power, these entities can have over individuals if people start to use the Libra to actually makes purchases.
“So lenders are already trying to figure out, for example, are you a much riskier borrower if at 2 a.m. you’re buying porn, as opposed to buying sundries at Amazon type of thing? All right. So that’s not so great directly, but it also means that there’s information that’s embarrassing. And that means that there is a market for blackmail, as well. And also, of course, intelligence agencies go into these kinds of services and go “ha, ha, ha, what kind of dirt do they have on Fred, because we would like to get Fred to be an agent?”
Consequences from lack of privacy
Many people often think of personal privacy leaks as threats that come from the government, such as the US government now requiring social media details from Visa applicants or criminals trying to steal money. However, an often overlooked fact of a lack of privacy is that companies such as lenders and insurance companies will use this information to further evaluate individuals and adjust costs appropriately, as Bill mentions. As Bill also discusses, this does not necessarily require Facebook to get into those businesses, but simply if Facebook decides to harvest that data and sell it to the respective parties.
While this is simply correction of asymmetric information through third-degree price discrimination, which economically, makes a more complete market, individuals might still be upset if this information were to be revealed without their knowledge through their Libra spending activities. Further, there is the fact that the Libra has the potential to be controlled by almost any large, private party that can either control two-thirds of the network or collaborate with others to be able to control the collection of said data.
Dash provides spend-ability without trade-off of privacy
One of the main advantages of having such major businesses and payment companies support a digital currency like Libra is the larger likelihood that businesses will accept it, but this comes at the cost of sacrificing personal data. Dash has been making efforts to grow consumer spend-ability, now at over 5,000 merchants around the world, to become a viable substitute for traditional payments.
Hey @DZack23 it looks like AWDY? needs an update, specifically on $Dash: 1) data hasn’t been updated in 4 months, and 2) Dash now needs ~60%+ of masternodes as well to control the network with ChainLocks (# of entities should now be thousands). When can we get an update?
— Joel Valenzuela (@TheDesertLynx) July 7, 2019
Additionally, Dash’s Masternode system enables the network to offer feature such as InstantSend, PrivateSend, and ChainLocks while also being robust against take overs from large corporations. The cost to control enough of the Dash network to unilaterally make decisions, now over 60% thanks to ChainLocks, becomes exponentially more expensive since the price of Dash will rise as more people look to buy Dash from current holders. The Dash Network employs numerous checks and balances between the DAO Treasury, Dash Core Group, the new Trust Protectors, the Dash Investment Foundation and Supervisors to ensure that the network acts in consumers best interests and protects their privacy rather than special interest groups.