Facebook has today announced its new cryptocurrency and has revealed that its “ambition is for the Libra network to become permissionless”.
The Libra network website claims that a key distinction in the blockchain space is the one between permissioned systems, “in which only a defined set of entities can shape consensus and governance”, and permissionless systems, “where anyone that follows the rules of the protocol and contributes the right types of resources” has a say.
The team said that the distinction is important “not only from a technical perspective, but also from an economic one”.
What’s the difference?
The Libra team described how permissionless systems have “low barriers to entry and innovation” and can be “resistant to censorship attacks”. This type of network architecture can “encourage healthy competition among infrastructure providers” as well as developers of applications on top of the network.
“Since nobody can exclude others from the market or censor their transactions, permissionless systems provide stronger guarantees to participants that no single party will be able to unilaterally change the rules of the network to their advantage at a future date. At their core, permissionless systems make irreversible commitments to operating as open networks where changes can only be implemented if they are democratically supported by a majority of constituents.”
The website reads: “To ensure that Libra is truly open, our ambition is for the Libra network to become permissionless.”
However, the team also said: “The challenge is that as of today, 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.
“With the testnet, the association starts the journey toward building a permissionless system.
Five years away
“We believe that for the Libra network to achieve its full potential, it needs to be permissionless. As a result, one of the association’s directives will be to work with the community to research and implement this transition, which will begin within five years of the public launch of the Libra Blockchain and ecosystem.”
The project has revealed that in both its permissioned and permissionless states, the Libra Blockchain will be open, meaning any consumer, developer, or business can use the Libra network and build products on top of it.
I'm going to run a Libra validator node. 😏https://t.co/jwJiAZSiFe pic.twitter.com/pjxvXXskQd
— Julien Bouteloup (@bneiluj) June 18, 2019
Can it compete with other public blockchains?
In its glossary, Libra said that “on a permissionless network, anyone who meets certain technical requirements can access the network or operate a node”. This statement is obviously true for other major public blockchains like Bitcoin and Ethereum that allow any participant to contribute towards either consensus or the ability to send transactions (uncensored) across its public blockchains.
The network will kick off in 2020 using a Byzantine Fault Tolerance (BFT) consensus approach among a group of validator nodes run by its Libra Association members. It has been revealed that the current ‘buy-in’ to run a node is around $10 million (of Libra investment tokens) and that this node network will have the ability to exert centralised control over the Libra Blockchain.
Becoming permissionless will allow any participant to run a node (and take part in consensus) but also have a say in what may or may not be allowed to be processed on the Libra Blockchain from a technical perspective.
If the project can fulfill its claim to be truly permissionless and open in five years’ time, then it may actually be a viable competitor to not just the mainstream banks, but also the truly open and decentralised cryptocurrencies that dominate the digital assets industry today.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.