Facebook Accused of Mooching Its Libra Idea from an MIT Report

For Facebook and the Libra stablecoin, the attacks are never-ending. Well, the latest in this stream of attacks seem to be coming from a group of academics.
Earlier today, news medium CoinDesk reported that the Libra whitepaper, which was released a little over a month ago, has been called a knock off of another digital asset; Tradecoin. The supposed cryptocurrency provides similar benefits to Facebook’s currency and works in an eerily similar fashion.

The whitepaper for Tardecoin came out in 2018 as a part of the Open Science publication from the Royal Society. It was written by Alex Lipton, Thomas Hardjono and Alex “Sandy” Pentland, all of whom are fellows at the Massachusetts Institute of Technology (MIT), and it spoke of a transmission coin which, just like Libra, is backed by a basket of tangible assets.

The only difference between the two assets is backing. While Tradecoin was theoretically backed by crops or oil, Libra (if it gets developed, that is) will be supported by government-issued bonds and securities in some of the most popular fiat currencies.

Also, Tradecoin was set to be governed by a consortium of companies; much like the Libra Association, a Swiss-based group that consists of several FinTech companies, venture capitalists, cryptocurrency exchanges, and others who paid a $10 million buy in to partner with the social media giant.

Both Libra and Tradecoin were supposed to help with making payments, serving members of the unbanked population and bringing them into the financial system.

The plagiarism accusation is being particularly leveled by Alex Lipton, a man who, apart from his extensive academic record, also has some experience in the FinTech space. He worked as the head of the quant division at Bank of America, while also holding positions with firms such as open-source infrastructure provider Sila and tech-focused firm Clearmatics.

Speaking on the accusation, Lipton said, “Without being particularly obnoxious, I can tell you that the actual structure of Libra is pretty much lifted verbatim from the paper which Sandy Pentland and Thomas Hardjono and I published last year.”

The MIT fellow was especially irate that the Libra whitepaper didn’t mention the authors of the Tradecoin whitepaper or so much as acknowledging them for the work they put in. Lipton went on to offer his criticisms of Facebook’s digital asset, claiming first that the company’s choice of partners in the Libra Association was a deviation from what the original Tradecoin authors had in mind.

Lipton went on to add that Libra could be issued in a non-immunized fashion against the financial paper, adding that since earning interest on cash is a tad difficult, Libra will need to purchase more government securities to ensure government backing.

He also pointed out that a typical application of Libra would see it function as money. When it becomes that, it would only increase the cash in circulation and go on to increase the risk of inflation, especially in developing countries.  It’s expected to function beyond just options for buy cryptocurrency. The app would be one of the few platforms favouring the circulation of the new digital coin because currently very few exchanges or auto trading robots like Bitcoin Trader and Bitcoin Future offer it.

For now, it’s highly unlikely that the social media giant would even dignify these plagiarism allegations with a response. Given how much scrutiny the stablecoin already has to endure from the government, industry experts, and international organizations, the company pretty much has its hands full as it is.