The introduction of Libra by a tech giant like Facebook validates the sustainability of blockchain technology, Garrick Hileman, Head of Research at Blockchain tells The Sociable.
Be sure to check out Part II, Part III, and Part IV of our 4-part interview series with Garrick Hileman of blockchain.com!
“Libra boosts the belief that this is the financial infrastructure of the future, and it’s time to get on board with it, rather than trying to fight it”
“Companies like Facebook with billions of users would not pick a blockchain solution, if they didn’t think it could grow to accommodate billions of users. That’s a huge endorsement of the sustainability and capacity of blockchain,” he says.
Libra coin is not just another cryptocurrency. The Libra Association is backed by the likes of Mastercard, Visa, Spotify, Uber, Lyft and other big names. However, that hasn’t boosted general confidence in Facebook’s venture into high finance.
If anything, it’s being viewed with suspicion.
According to FT, two of the Libra Association’s founding backers expressed concern about the regulatory spotlight and were considering cutting ties.
Can we then expect Libra to strengthen belief in blockchain technology?
Read More: Politicians on both sides agree big tech needs regulation, American citizens are split
Though increasingly popular, blockchain technology still has problems like storage and speed. So how sustainable is it and will it survive the future of ever increasing data?
Blockchain Transaction Speeds
Hileman does believe that as a technology, blockchain is still maturing, and we must be patient to realize its potential.
“We still have a long way to go in building its capacity to go beyond the thousands of transactions per second that we can do today,” he says.
Read more: Facebook the accidental philanthropist with Libra?
Today, Visa and Mastercard can process tens of thousands of transactions per second, with a 40,000 estimated peak capacity. Platforms like Bitcoin, and even faster systems like Stellar, can only do 1,500 transactions per second approximately.
Still, Hileman says, it’s not a serious problem.
“Blockchain technology can actually create a new financial system that can address many of the problems that were made clear in the 2008 financial crisis”
“So we still have to match the speeds of Visa and Mastercard, but there’s been progress and it’s a problem that I personally am not too worried about. For example, we already are as fast as something like PayPal,” he says.
Facebook’s Libra, he thinks, strengthens the hope in blockchain even more.
“Libra boosts the belief that this is the financial infrastructure of the future, and it’s time to get on board with it, rather than trying to fight it,” he says.
Finance Needs Speed
Compared to the speed of traditional financial systems, crypto transaction speeds are way ahead.
Hileman cites an example of how he was expecting some money from China for a teaching job in Cambridge. The money wired from China to his UK bank account took a week via the traditional banking system.
“It would have been faster for someone to withdraw the cash, get on an airplane, and fly to London with the cash than it was to send it electronically,” he exclaims.
“In today’s world, with email and text messages being sent for free and being received instantly, this is unacceptable. This is the dark ages of finance that we still live in, in many cases,” he adds.
He does believe that such a case isn’t true everywhere. In some places, international payments are almost free and instantaneous, which means that some markets are further along than others. Yet, some markets have a lot to work on.
“Companies like Facebook with billions of users would not pick a blockchain solution if they didn’t think it could grow to accommodate billions of users”
“Many markets are stubborn and are not changing fast. Sub-Saharan Africa is one of the biggest problem areas, where international remittances can take days and cost 20%. Often, those funds are going to people who are on the economic margin and it really should not be penalized with a 20% fee. That’s outrageous and criminal in my opinion,” he says.
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He believes projects like Libra can help address such problems and the proposed European ban will prevent that.
In just 10 years, blockchain’s growth from Bitcoin to today has been phenomenal. Hileman believes it’s the fix that our financial system needs.
“Blockchain technology can actually create a new financial system that can address many of the problems that were made clear in the 2008 financial crisis, which are still with us today and have not gone away,” he says.
“In order to fix the financial system, you need to change the software, the infrastructure, the protocol, to enable the type of transparent, fairer, and more efficient financial system we all want and deserve.”
It remains to be seen if Libra is able to display ‘transparency’ in the near future, considering Facebook has been in trouble for the same often enough.