I’m extremely bullish on cryptocurrency. There are many extremely good reasons why it might behoove people to migrate to a currency that is not governed by a nation-state and is 100 percent transparent for all to see. I’m not even going to link to the trillion opinions on this subject that riddle the internet. You can Google it.
However, when Facebook announced that they’re planning to launch their own cryptocurrency, called Libra, the immediate thought that passed through my mind was: “Is that really a good idea?”
And the answer I arrived at in about five seconds was: “No. Absolutely no.”
The problems inherent in this idea don’t have anything to do with my personal feelings about Facebook. (Though, to be perfectly candid, I very much do not like Facebook.) The problems are much, much deeper. Let’s start at the rock-bottom and and just consider what currency is and how it became the bedrock of human civilization.
Yuval Hirarri writes:
Gold coins and dollar bills have value only in our common imagination. Their worth is not inherent in the chemical structure of the metal or paper, nor in their color or shape. Money isn’t a material reality—it is a mental construct. It works by converting matter into mind. But why does it succeed? Why should anyone be willing to exchange a fertile rice paddy for a handful of useless gold coins? Why are you willing to flip hamburgers, sell health insurance, or babysit three obnoxious brats when all you get for your exertions is a few pieces of colored paper?
People are willing to do such things when they trust the figments of their collective imagination. Trust is the raw material from which all types of money are minted. When a wealthy farmer sold his possessions for a handful of gold coins and traveled with them to another province, he trusted that upon reaching his destination other people would be willing to sell him rice, houses, and fields in exchange for the gold. Money is accordingly a system of mutual trust, and not just any system of mutual trust: Money is the most universal and most efficient system of mutual trust ever devised. Even people who do not believe in the same god or obey the same king are more than willing to use the same money. Osama bin-Laden, for all his hatred of American culture, American religion, and American politics, was very fond of American dollars.
What created this trust was a very complex and long-term network of political, social, and economic relations. Why do I believe in the gold coin or dollar bill? Because my neighbors believe in them. And my neighbors believe in them because I believe in them. And we all believe in them because our king believes in them and demands them in taxes, and because our priest believes in them and demands them in tithes. Take a dollar bill and look at it carefully. You will see that it is simply a colorful piece of paper with the signature of the U.S. secretary of the Treasury on one side, and the slogan “In God We Trust” on the other. We accept the dollar in payment, because we trust in God and the U.S. secretary of the Treasury. The crucial role of trust explains why our financial systems are so tightly bound up with our political, social, and ideological systems, why financial crises are often triggered by political developments, and why the stock market can rise or fall depending on the way traders feel on a particular morning.
Look at the word that’s repeated over and over: trust.
Without trust there is no possibility of currency retaining its value. I’m not going to part with my ox or my daughter in exchange for some piece of metal or paper that might be worth something today, but nothing a week from now.
With all that in mind, if I asked you to come up with the name of a company that the public doesn’t trust, how many sounds would come out of your mouth before you produced one that rhymed with “lace brooke”?
For me it would be the very first one. Though I wouldn’t quibble if the sounds you started with rhymed with “Mehxxon” or “Bonsanto.” But of course, those guys aren’t dabbling in undermining the nation-state as the sole creator of currency. (Probably because they’re too busy poisoning our oceans and farmland. They understand the principle of keeping your evil in a single lane.)
The point is that Facebook is one of the least trusted companies in the world.
There’s a Wikipedia page devoted to the long history of (totally valid) criticism that have been levied at the company. Go have a look! I’ll wait.
Does that read like the resumé of a company that should be operating a currency?
It’s a company that has stumbled from one mess to another; that only exists because mySpace allowed themselves to be turned into a site that looked like a bathroom stall at CBGBs; and who, to at least some degree, sleepwalked through being used as a Russian tool to turn the executive branch of the U.S.A into the clown rodeo.
And now they want you to trust them to control a money supply?
A technology company build by a bunch of amateurs (you heard me!) in PhP and which is under constant (and totally legitimate) attack for some combination of corporate malfeasance, incompetence, lack of ethics, bad judgement, customer abuse, customer surveillance, technological incontinence, inadvertent exposure of people’s private info, and an endless litany of general buffoonery and doesn’t just want to become a bull in the china shop bank (a la Paypal 1999), but wants to operate their own currency?
It seems to me quite obvious that if a giant software behemoth was going to launch a currency (crypto or otherwise) the most obvious contender for this project should be Amazon. At least Amazon has all the necessary tech in place and contrary to Facebook, they actually know what they’re doing (your mileage may vary).
But even that would be problematic. The entire idea of cryptocurrency is to decentralize control of a currency from gigantic nation-states that have all sorts of incentives that may (or may not) align with yours. The entire idea is to move the stability of currency away from where quantitative easing and Fed policy and other governmental intrusions can affect it.
Trading Big Government oversight of currency for Big Tech oversight is not what people in crypto signed up for. If you don’t trust the U.S. or the E.U. to manage the money supply, would you really trust Facebook or Amazon or Apple or Google?
Because you shouldn’t. At least the interests of a nation-state are distributed incredibly widely. The interests of a corporation are singular: To make more money. From you.
Libra needs to be laughed out of existence immediately. Either by dint of collective popular opinion or by way of government oversight, it ought not be allowed to move forward.
We’re not screwing around here, folks. Facebook has done quite enough damage to the nation-state by letting people share cat videos and Lock Her Up memes. They should not be allowed to mess with one of the three core functions of government.
I don’t like sounding mean, but playtime is over, Mark. Do not pass GO, do not collect $200 billion dollars.