Facebook’s Calibra isn’t just about money – it’s about your identity

Mike McQuade

When I was reading through the description of Facebook’s Libra cryptocurrency, I didn’t find anything remarkable. Until I got to the end. On the last page of the whitepaper introducing Libra, I noticed that “[a]n additional goal of the [Libra] association is to develop and promote an open identity standard. We believe that a decentralized and portable digital identity is a prerequisite to financial inclusion and competition.”

Well, well. An open identity standard.

Forget the cryptocurrency (which may never launch in its current form). Identity is at the heart of the Libra proposition. One of the first questions that US Congress had for Libra co-creator David Marcus in a hearing in July was how parties will ensure that the user or beneficial owner of a currency or wallet is accurately identified. The question had already been answered by Kevin Weil, Facebook’s VP of product for the Calibra wallet, who was clear that Calibra users will have to submit a government-issued ID in order to buy Libra tokens, as you would expect.

It’s clear that the wallet addresses in a Libra transaction, the transaction amount and a timestamp will be public because they are on a shared ledger, but, as Libra made clear, any information related to anti-money laundering or “know your customer” regulations (ie, the binding of those wallets to real-world people and businesses) will be stored by the wallet providers, including Facebook’s own Calibra. Since Libra is open and anyone will be able to connect to the network and create a wallet, there could be many, many wallets. But you’d have to suspect that Calibra will be in pole position in the race for population scale; hence Calibra’s approach to identity is really, really important.

Now, if Calibra provides a way to convert a variety of government-issued IDs into a standard, interoperable ID, that will be of great value. Lots of other people (e.g. banks) may well want to use the same standard. In the UK, for instance, this would be a way to deliver the new Digital Identity Unit (DIU) goal, set out by the Cabinet Office and Department for Digital, Culture, Media and Sport, of one login for your bank account and your pension.

But it isn’t only the ID that needs interoperability; it’s the credentials that go with it. This is how you build a reputation economy. Your Calibra wallet could store your “IS_OVER_18” credential, your Uber rating and your airline loyalty card in such a way as to make them useful. Then, if you wanted to register for a dating site, you could login using Calibra and it could automatically either present the relevant credential or tell you how to get it from a Libra partner (such as MasterCard).

It seems to me that this may, in time, turn out to be the most important aspect of the “Facebucks” (as I cannot resist calling it) initiative. What if a Calibra wallet turns out to be a crucial asset for many of the world’s population, not because it contains money but because it contains identity?

If I obtain a Calibra wallet by presenting my passport, that’s fine. But suppose I live in a developing country and I have no passport or formal ID of any kind? Well, I think that, in the future, Facebook could make a good argument that your Facebook profile is a more than adequate substitute. After all, Facebook knows who I message, my WhatsApp address book, who I hang out with, where I go… Facebook can tell real profiles from fake and kills off fake “identities” all the time. My guess is that if you have had a Facebook profile for a certain amount of time, then that identity could be more than good enough to be able to open an account to hold Libra up to a certain value – and it’s good for society to bring those people and their transactions into the financial system.

Frankly, in large parts of the world, Know-Your-Customer (KYC) could be replaced by Known-by-Zuck (KYZ).

David Birch is principal of 15Mb

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