Facebook is preparing to jump into the unknown.
Behind closed doors and under a badly kept secret, they are preparing to come out with their “cryptocurrency”.
No one on the outside seems to know what this Facebook coin will be like. But some experts and media observers have already blown their trumpets hard.
“Facebook coin promises to be successful where Bitcoin has failed,” they shout. “With billions of users, it’s not hard for Facebook to get to the top,” they continue.
They are wrong on three fundamental points …
Far from it!
Bitcoin was created to fulfill the following key promises: to create an open, public shared database; eliminate the need to entrust sensitive information to any third party; and enable secure, private and final payments.
All these promises have been fully fulfilled.
Bitcoin resides in an open, public shared ledger that brings together countless users.
There are no third parties. The miners who run the network do not know – or care – who exactly sends or receives Bitcoin. Their activities are limited to confirming that each transaction complies with the network rules.
The network has never been hacked.
The underlying technology – Block Chain Technology (DLT) – has never allowed confidential information to leak.
All personal information is encrypted, private and securely protected.
Once a transaction is written to a block chain, that recording remains there forever. No one has the power – or the opportunity – to change that.
If you use the Bitcoin network to make a transaction, no matter how big or small, you have all the benefits:
This makes the Bitcoin network an untrusted system . In other words, you never have to entrust your money to a central authority or intermediary – not even to check compliance.
The result: Bitcoin deployment is progressing better than ever . The volume of transactions has doubled over the past year. Transaction fees are now much more affordable. And the Bitcoin Lightning Network has grown steadily since its opening.
That is not true. Facebook’s business model is based on collecting a huge amount of users’ personal information and selling it to the best provider.
User data is their most valuable asset. And all this data is owned, controlled and monetized by the company alone.
Moreover, despite Facebook’s apologies for an endless series of privacy violations , this business model has not disappeared.
So how should the alliance between Facebook’s private, closed, centralized business and public, open, decentralized technology work? This is a good mystery. Even Facebook CEO Mark Zuckerberg himself admitted he “hasn’t really figured out how it will work yet.”
In fact, there is only one solution here: Facebook is creating a digital currency backed by US dollars in its bank account.
This would place the digital assets in a computer network over which it has full control. And the end result would be a completely centralized payment system that is no different from Visa or PayPal.
The idea is that Facebook will implement the blockchain and adapt it to their needs. He would use it to create tamper-proof recordings. And that technology would somehow make its social media platform more secure or private.
Honestly, the use of blockchains or other DLTs is not the main reason why records stored in cryptocurrencies are more secure and private. The main reason is that they are not controlled by any central authority; no one has the power or ability to change or delete entries.
They are tamper-proof only because there is no owner or authority to commit them.
Taking this technology out of its core system and stuffing it into a central organization like Facebook will also lose the benefits of security and privacy.
It’s like planting an evergreen plant in the desert. Like putting a Boeing 777 aircraft engine in a 180-meter Azzam yacht.
It just doesn’t work that way.
Translation: Lucreds Plus OÜ