Powerful governmental elites have historically controlled the creation of money. This period of history may be coming to an end.
A new entrant has thrown its hat into the ring – Facebook.
With its recent announcement of a new corporate digital currency project named Libra, Facebook may be triggering a realignment in established global power structures as a result.
As a blockchain enthusiast I love to talk about the potential of the technology to transform business and society. As a CPA, I’m also curious how it will impact the companies I run into in my daily work.
So, I ask…because I want to talk about crypto and blockchain in general but also because I hope to find a fellow enthusiast out there that I can talk shop with!
When I ask most people what they think about Libra, I’m usually met with a blank stare, or a shrug of the shoulders – this includes from my CPA colleagues, most of whom haven’t even heard of it.
I find myself somewhat amazed by this general response from people. Sure, more people have at least heard of Bitcoin, but try discussing things beyond that, and it’s clear most people do not have any idea of what is happening in the blockchain and cryptocurrency world.
But I believe, as do many others who follow the blockchain space, that this is going to change soon. The Libra digital currency initiative is likely to have a significant and lasting impact on society by bringing cryptocurrency out of the shadows and into the light of day.
Libra On a Mission
Here is Libra’s mission as outlined in its white paper: The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.
The Libra white paper quickly states in the opening paragraphs that “1.7 billion adults globally remain outside of the financial system with no access to a traditional bank” and that “Hard-earned income is eroded by fees, from remittances and wire costs to overdraft and ATM charges…”
These statements seem true enough and good reasons to embark on a digital currency that solves these problems and more. However, bringing some of these under served people into the Facebook fold will also help it to increase its gigantic user base, which is already over 2.4 billion monthly active users around the world.
Facebook intends to make the Libra the default digital currency for all users on its platforms, quickly making it a potentially dominate global digital currency.
Depending on your point of view, the success of Libra could be great or terrifying.
For consumers, the Libra, or most any company or government’s digital currency, may be a potential Trojan Horse.
This wouldn’t be the first time users were promised enticing benefits which then morphed into a captive audience that is manipulated and monetized for profit or control.
We should welcome the digital currency innovation but maintain a fair amount of implementation skepticism.
Specific to Facebook, there have been numerous stories about their surprising use of customer data in the past. The Libra coin will not be private, so users will be generating much more juicy personal data ripe for the taking with each transaction made on Facebook platforms. Facebook promises they won’t use customer data inappropriately and they are taking precautions; however, you should remain skeptical.
Unless Libra becomes fully decentralized like Bitcoin (it isn’t), be wary of promises.
So, if you don’t mind Facebook potentially looking over your shoulder at what you spend your Libra on and selling that data to the highest bidder, you may happily use their cryptocurrency without hesitation (hint: They will make it SUPER EASY to use as a default payment method – and who doesn’t like easy?!).
ANDREAS M. ANTONOPOULOS
Silicon Valley is coming for the banks in a way that's never happened before.
For the more privacy and independence minded however, using a cryptocurrency contained in a captive environment where the rules of the game can be changed on a whim is simply unacceptable.
These individuals will opt for Bitcoin, Zcash or Monero among others, each offering more decentralization and privacy for financial transactions.
It’s not just the privacy and independence crowds that appear to have problems with Libra. The US Government and the big banks are two significant players that have taken a keen interest in this new kid on the “money printing” block.
Big Brother Has Awoken
In fact, the United States House of Representatives Financial Services Committee has requested that Facebook cease development of its cryptocurrency while it studies the potential impact it may have on financial markets, among other things.
Big banks may also be starting to feel the heat and the threat posed by the Libra and other internet companies.
Andreas M. Antonopoulos, one of the world’s foremost bitcoin and open blockchain experts, stated in a recent lecture that "Silicon Valley is coming for the banks in a way that's never happened before." He likens the banks to the old music industry recording companies that misunderstood the threat posed by downloadable music, which eventually came to be dominated by Apple Inc.
Antonopoulous also pointed out how the banking industry had 10 years to figure out digital currencies but didn't do anything about it, and now it may be too late to stop the likes of Bitcoin and Libra.
Money Printers, The Exclusive Club
Nation states have historically tended to jealously hold exclusive claim to the ability to print money out of thin air, using the regulated banking system to protect and facilitate that dominance.
Non-government digital currencies like Bitcoin, and now corporate digital currencies like Libra threaten those monopolies. As a result, there is a digital new world order emerging right before our eyes.
It’s still early days for Facebook’s Libra, and there are multiple hurdles it will have to clear in order to make it to market in a recognizable form as described within its white paper.
One thing seems clear however – the project will bring digital currencies out of the shadows and into the mainstream, upsetting some big apple carts in the process.
The race to a cashless society is upon us, and things will never be the same again.