In a Bitcoin Q&A on Facebook’s GlobalCoin, computer scientist and Bitcoin advocate Andreas Antonopoulos maps out how Facebook’s upcoming stablecoin, which will be used to send money across borders, will disrupt banking, and why it is not a true cryptocurrency. He argues that there are “five pillars” that define a true cryptocurrency – public, open, neutral, borderless and censorship-resistant – and that none of them apply to GlobalCoin.
Technically, GlobalCoin will rely on miners, like Bitcoin; however, unlike Bitcoin, GlobalCoin will operate in a closed system that will have to comply with the law of the land in various jurisdictions. Also, unlike Bitcoin, in order for a miner to join the network and operate a full node, each will reportedly have to pony up $10 million.
“Fundamentally, the thing to understand here is that what Facebook or any company like Facebook is proposing is not a cryptocurrency. It doesn’t have any of the fundamental characteristics of cryptocurrency. It doesn’t stand on the five pillars of an open blockchain.”
“Anything that’s created by a centralized organization … cannot achieve any of these five pillars. And the reason they cannot achieve it is because the law prevents them from doing so. So first of all, they can’t be censorship-resistant.”
“They can’t be censorship-resistant because they are legally required to prevent the transmission of funds to certain entities. These entities include sanctioned countries like Iran, North Korea, Venezuela, etc.”
“It also can’t be borderless because you’re prohibited from sending money to certain countries which means that you have to be able to identify both who is receiving this money and where they are. In order to identify who and where they are,