MIT Fellow Says Facebook 'Lifted' His Ideas for Libra Cryptocurrency

Avid students of the literature on monetary innovation might feel deja vu when reading Facebook's Libra white paper.

The Libra paper described a digital coin that would maintain its value because it was backed by a basket of fiat currencies and short-term debt.

Continuing the similarities, Libra Association, a group of 27 financial, tech and VC companies tentatively committed to Facebook's project, carried a whiff of the hypothetical consortium governing Tradecoin.

Of course, Libra and Tradecoin both would run on distributed ledgers.

"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."

Aims to integrate harmoniously with the existing infrastructure; for example, the Libra Association says it doesn't want to impinge on the purview of central banks.

Libra will issue coins which, if they work as intended, will act as money as well.

The white paper describes a stabilization mechanism whereby authorized resellers will purchase the coin in response to demand - and conversely when people want to sell Libra they receive fiat.

If Libra can capture 10 percent of, say, $3 trillion per day of dollar/euro foreign exchange trade, and the member companies' nodes charge 10 basis points as a transaction fee that's already $300 million a day, said Lipton.

Add on the benefit from interest payments expected from the collateral, which Lipton estimates could be about $10 billion to $20 billion per year, and the Libra Association's members are making a pretty penny.