IS FACEBOOK TODAY’S COMPUSERVE?
distributed trust models. Regulators should be cautious about biasing legislation to favour incumbents, however, and ensure an open evolution of the true capabilities of distributed trust. EVOLUTION Such legitimacy reduces the major barriers to new business models built on a shared, distributed trust infrastructure. This creates a major opportunity for new forms of organizing designed without the burdens of past organizational inertia. There is a good chance that libra’s partners will gain short-term power with this move. Technology diffusion processes can reward first movers. But those companies were not initially designed to survive in such distributed trust models, and are plagued by organizational inertia. So the creation of libra, and the legitimacy it will give to the underlying technologies, paradoxically will ultimately speed the demise of the very same organizations. Bitcoin’s price, for example, has soared since the libra announcement, even though bitcoin itself is likely to be eventually disrupted by others. The stars of the modern, platform-based Internet are likely to eventually join the ranks of Compuserve and MCI Mail. They will be replaced with the next generation of organizing designed for these new models of distributed trust — and not burdened by the inertia of the centrally controlled past. Perhaps Facebook is the Compuserve of 2019.
platforms of the last technological wave. On top of that, Facebook will separately offer a proprietary centrally controlled wallet, Calibra, to facilitate libra transactions. The libra white paper promises an eventual relaxing of that centralized control to a “permissionless” model. But it offers no realistic path or requirement to do so. It asks participants to “trust us” that a truly distributed trust model will come in the future.
So the creation of libra, and the legitimacy it will give to the underlying technologies, paradoxically will ultimately speed the demise of the very same organizations.
LEGITIMIZATION History suggests Facebook’s introduction of libra will ultimately help legitimize distributed trust technologies. Major players endorsing libra adds legitimacy to distributed trust technologies. The initial actions of Compuserve and MCI Mail led to government legislation. The increased focus on distributed trust generated by libra will, too. Part of this is due to past breaches of trust by Facebook. In fact, there are already calls for regulation in the United States, Europe and Australia. Regulations and public discourse will help to bring further legitimacy to Marc-David Seidel is RBC Financial Group Professor of Entrepreneurship & Associate Professor, OBHR Division, University of British Columbia.
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August 2019
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