The trouble starts if Facebook’s new currency succeeds

Facebook obviously knows this history. It knows that a fully decentralized Libra would not be usable. But it also knows that the natural solution—a centralized currency controlled by Facebook—would not be trusted. The white paper solves this problem by seizing both horns of the dilemma, claiming that Libra is both decentralized and centralized. Libra is supposedly decentralized because it is based on blockchain, the technology used by bitcoin, which ensures that records are kept by multiple users rather than by one, and in this way enhances security and transparency. Facebook itself will not operate Libra. But Libra is also centralized via the creation of a governance body. That body is the Libra Association, to be located in Switzerland. This body is supposed to prevent the emergence of a bitcoinlike oligarchy to rule over Libra.

But it’s hardly clear that, in practice, the Libra Association will act any differently from the oligarchy that dominates the bitcoin world. The white paper provides a few details about how the Libra Association will work. It currently has 28 members, with that number expected to rise to 100. (To get the system started, the members put money in the Libra Reserve, which will enable the creation and circulation of an initial pot of Libras.) Major policy decisions will be made by a two-thirds vote. A small number of nonprofits are given slots, but the majority of members are large profit-making corporations, including PayPal, Facebook/Calibra, Uber, Visa, Mastercard, the telecommunications firm Vodafone, and various venture-capital powerhouses. Ordinary people who buy and use Libras have no votes.