Libra Is Not A Gateway Cryptocurrency – Noam Levenson
Oh Facebook. I remember when you were just a kid, full of people’s lunch menus, workout pics, and the occasional political ramble (ok, so some things never change). Now you’re trying to create a cryptocurrency. It was easy to be excited when Libra was first announced: “This must mean big things for Bitcoin and for cryptocurrencies of all sorts.” That excitement quickly faded.
It’s honestly a shame Facebook is even calling Libra a cryptocurrency. It’s one big facade. They’re the con man promising you a decentralized, tamper-proof digital currency when all you’ll be getting is a glorified PayPal that will steal your anonymity and sell your data like hotcakes.
I don’t blame people for seeing Facebook’s Libra as a big step forward for blockchain and decentralized technology. They see that Libra puts crypto on the radar. They think that if people are willing to use Libra, they’ll be willing to use Bitcoin. I get it.
But Libra is not a gateway cryptocurrency. It’s not the start of a worldwide shift towards digital currencies. In reality, Libra is EXACTLY why crypto matters at all. It’s the answer to the classic question: “Why do we need Bitcoin?”
Great question. I wondered the same thing.
- Why would a company that’s getting regularly slammed for censorship, election manipulation, and data abuse suddenly make a move into the realm of finance?
- Why would Facebook thrust their necks out in an environment where people are already wary of “sell-us-your-soul” social media platforms?
- Why would they take on the U.S. SEC and House Financial Services Committee in what they must have known would be a costly slog through a cumbersome regulatory environment? I’m sure that Zuckerberg is anything but excited to go before Congress again. And all this for something that is barely distinguishable from PayPal?
No. Upon initial review, it’s easy to think that perhaps Facebook made a mistake. Or maybe it was purely an opportunistic gamble. Jump on the cryptocurrency bandwagon before it fully leaves the station and Google makes an entrance. Spearhead regulatory efforts to earn the praise of both crypto-fundamentalists and Facebook shareholders. But that’s not it. This isn’t just a “let’s-be-the-first-to-do-this” mentality. This is part of a much, much broader move by Facebook, and the Feds should be happy to hop on the Libra train (whether they will is hard to tell. I don’t think our lawmakers have a good enough understanding of either finance or technology to see the writing on the wall).
The recent exit of seven of the Libra Association’s founding members shows just what Facebook is willing to endure to get this through.
The public outcry over data concerns and the regulatory shit show is Facebook’s price to pay, not an unforeseen consequence. In fact, I would imagine it’s all going relatively according to plan.
The reality is that Facebook’s business model has shifted dramatically from its inception. No one under the age of 40 is posting regularly on Facebook and FarmVille has long since faded to irrelevance. They have billions of dollars and a finger on the social media pulse, so they regularly buy up those companies that catch lightning in a bottle (think Instagram, WhatsApp, etc.). They make them an offer they can’t refuse and then add that app into the United Apps of Facebook. God Bless.
But they’re clearly not content to stop there.
I expect that what Facebook envisions is to be the all-in-one digital identity manager. They’re already doing this. Look anywhere and you’ll see the convenient “Login with Facebook” button. You can use Facebook to prove your identity so you can swipe away to your heart’s content on dating apps. And the Facebook cash cow just keeps on growing as they drill deeper and deeper for that precious data. Drill baby drill.
Published at Wed, 30 Oct 2019 17:31:49 +0000
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