Facebook’s recent announcement of its new cryptocurrency, Libra, has sparked ire and controversy. Co-founder of Ethereum and founder of ConsenSys, Joe Lubin, may have summed the criticisms up best when he wrote, “Libra is like a centralised wolf in decentralised sheep’s clothing.”
Facebook, today, may be one of the most maligned tech companies in the world. Its data breaches have fostered an unparalleled level of distrust in the technology itself, and the corporate decision making has provoked a series of PR disasters, especially the company’s handling of the aforementioned data breaches, and its wilful role in the foreign and domestic misinformation campaigns that amounted to criminal interference in the 2016 US presidential election.
Attaching the Facebook brand to the trust and excitement surrounding the decentralised tech revolution would certainly improve the company’s image and return it to its once-lauded DIY, tech-forward early Silicon Valley days. But Libra does not ingratiate Facebook into the DLT space; it does quite the opposite. Instead of earnestly adopting the innovative work being done in the space, Libra merely extends its highly centralised and disproportionate network control into the financial services space. In fact, as Joe Weisenthal of Bloomberg puts it, “it’s not so much a cryptocurrency, but a global operating system for moving fiat money around.”
Libra, in other words, takes the sceptical custodianship of Coinbase, the centralised control of Ripple, the fees of PayPal, and the data security of a centralised tech giant, and presents them in a blockchain. There is one aspect of the project, however, that has got lots of the crypto advocates excited: the adoption of HotStuff. HotStuff is a major innovation in the world of Byzantine Fault Tolerance, one of the cornerstones of decentralised consensus.
“Who knows, perhaps Facebook’s Libra will continue to inch toward the freedoms pursued by Bitcoin, Ethereum, and the whole DLT space; their project does, for example, claim that it will eventually transition toward permissionlessness”
The primary author of HotStuff, Dahlia Malkhi, recently tweeted out the major projects utilising her team’s new algorithm; including Libra, Cypherium, Thunder Protocol and Celo HQ. Which begs the question, what is the difference between these projects? After all, if they utilise the same consensus mechanism, how different can they be?
As it turns out, very different. Cypherium will be the first public and permissionless network to deliver the speed and security of the HotStuff algorithm to its users. Libra only uses this technology to expedite communication between its handful of centralized, permissioned nodes. The technology of BFT protocols has been historically agnostic toward what projects use them for and why.
Facebook’s Libra takes on this new and exciting protocol but it does so primarily for the great network capacity that HotStuff enables. It is quadratically faster than traditional BFT protocols, which becomes exceedingly clear as the network grows. As Facebook anticipates an immediately high network volume, it requires an efficient, secure, and speedy backing.
While Cypherium certainly anticipates a high network volume, the project amends HotStuff to become public and permissionless. By nature the HotStuff algorithm is permissioned. As Ted Yin, the first author of the Hotstuff paper, explained in a recent interview, “In theory, any permissioned protocol can be converted into a permissionless protocol. Because classic consensus protocols (whether BFT or non-BFT) can be reconfigured through the consensus itself to add or delete nodes. But because of the potential for a Sybil attack, this protocol based on accurate member information requires additional PoS or PoW admissions mechanism to open the system.”
Cypherium’s new CypherBFT consensus amends HotStuff so that users will be able to admit themselves without a central administrative permission, making the network fully decentralised and permissionless. Of course, users will control their own private keys, transact autonomously, and freely associate. For our project, HotStuff is about to bring its cutting-edge speed and security to the underlying ideals of the decentralised movement. In this way, it is a vastly different use than Facebook’s: for Cypherium, HotStuff reflects the project’s desire not to alter the space towards a system concentrated power, but rather to scale the truly decentralised world envisioned by the first-generation projects in the space.
Of course, at the end of the day, both of these projects do implement the same algorithm. They share a fundamental compatibility and it will certainly be possible for these blockchains to interact, even to implement cross-chain transaction between the two. And who knows, perhaps Facebook’s Libra will continue to inch toward the freedoms pursued by Bitcoin, Ethereum, and the whole DLT space; their project does, for example, claim that it will eventually transition toward permissionlessness. For now, though, we need to remember not all HotStuff lends itself an equally optimistic vision of financial technology.
By Sky Guo, Founder and CEO, Cypherium