Facebook announced the soon-to-debut of Libra, its new cryptocurrency, last week, saying that it hoped to bring billions of the unbanked into the digital economy, providing them with basic financial services through their cellphones, eerily echoing Facebook’s original mission to bring the world closer together with its social platform, in case you missed the irony.
We all know how that worked out.
As Quartz pointed out, “Libra’s users would access and swap a digital token, with financial institutions holding the currencies and government bonds that underpin its value.” But the (first) question is: who will get the transaction fees? If Facebook’s history with content creators/news organizations and who gets the lion’s share of the advertising dollars, again, we all know how that worked out. And note: Libra/Calibra (which is the Facebook wallet) is not really decentralized: it’s ultimately Facebook-controlled – a phrase which we do realize is redundant – and while The Sun points out that “Libra is supported by a reserve of the world’s best assets and the world’s most trusted central banks, who gave the cryptocurrency “general cautious support”, according to David Marcus (Facebook’s VP of Blockchain),” and again, how did partnering with Facebook work out for The New York Times et al?
What man cannot remember…
Then there are the matters of security, privacy and universal access to data that Facebook has, as well as censorship issues. Yes, people will be able to happily and easily disperse payments via the ubiquitous Facebook platform/wallet, but it’s one thing that the company has the power to (in some cases) seemingly arbitrarily remove your Facebook page, but quite another when it literally has control of your money. In case you didn’t know, for some time now, Periscope has been censoring content and not only removing broadcasters’ channels (they do allow the broadcaster to relaunch again quickly, readily and easily), but in the meantime, whatever money that content creator had earned from that channel that was shut down, Periscope/Twitter keeps and broadcasters have no recourse to reclaim their earnings – a practice that has received absolutely no attention from the media at all. So, there is a precedent and who’s to say that Facebook can’t and won’t do the same?
Banks and payment platforms are also becoming censorship tools – re the content payment platform Patreon et al – and with Facebook now firmly getting into the mix, this bodes no good and only serves to give Facebook even more power and control – globally – and the power to influence any government or financial institution on the planet. In fact, he does become, in a sense, leader of his own nation.
And this is someone who isn’t even accountable to his own shareholders.
As Elizabeth Warren tweeted: “Facebook has too much power and a terrible track record when it comes to protecting our private information. We need to hold them accountable—not give them the chance to access even more user data. #BreakUpBigTech https://t.co/eQr06VMMyx”
Libra is in no way similar to bitcoin, which is decentralized, and this new cryptocurrency would give Facebook virtually unfettered access to your – and potentially a significant part of the world’s – financial data, considering the reach of Whatsapp, Instagram and Facebook itself and considering Facebook’s many security breaches, this is extremely dangerous. And lest we forget: Facebook counts among its users a larger population than both China and the US combined.
Facebook’s first target will be the unbanked in Third World countries, for whom Facebook is the internet. Now Facebook may well also the sole banking system/financial infrastructure for this considerable segment of the population.
Make no mistake about it: Libra/Calibra is not the warm and fuzzy new tool that will be the solution for the unbanked of the world. Instead, it’s yet another surveillance tool in Facebook’s considerable and growing arsenal. Facebook is already under scrutiny for anti-trust issues and in typical Facebook fashion, has yet again gone on the offensive and worse: by infiltrating the banking and financial systems of the world, Facebook is adding more bricks to what can potentially and very soon become an impenetrable walled garden. Onward and forward.
Addendum: Libra won’t be available until 2020, and if you’re chomping at the bit for a solution such as Facebook is purportedly offering, try Stellar, which was no doubt Facebook’s blueprint for Libra/Calibra Wallet. Stellar, however, is distributed.