Technopolis Part II: Facebook and PayPal Coin Minting Builds on Where the Dutch East India Company Left Off 300+ Years Ago
It’s been a long time in the making — a multinational company becoming a state — bearing a coat of arms, minting some coins, raising a flag, and building its own military.
From the time of the Dutch East India Company to Meta (Facebook) trying and failing with Diem (Libra), large, private, corporate entities have been vying for statehood, which has included minting currencies, for 300+ years.
If you came here from Part I of Technopolis, welcome! If you did not come here from Part I, read that one before continuing forward here. However, if you already read Technopolis Part I, then please proceed to the section: “Paypal Was Not The First Company to Issue Coins: The Libra Story” that follows the next paragraph.
Paypal Was Not The First Company to Issue Coins: The Libra Story
All of that talk about a tech company minting coins these days comes from the PayPal newsroom. However, PayPal was not the first dominant corporation to try to do so. Of course, the Dutch East India Company was the first one in history, however, in recent years, Facebook (Meta), did it before PayPal. Here is the Facebook coin minting story.
24-year old Morgan Beller entered the halls of Facebook’s Menlo Park Campus in 2018 with the idea to build a stable coin. Coming from a tenure that included a partnership with A16Z and a brief stint with the team here at Medium.com, Beller held the reputation of a moving force in Silicon Valley at a place in her life before most kids are off of their parent’s health insurance plans.
Beller and her colleague, David Marcus, who many consider the George Clooney of Silicon Valley, spent the following year organizing a team of 28+ other companies into what became the Libra Foundation.
The other companies were created to make it seem as though Facebook was not directing its efforts (Financial Times).
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The Little Los Alamos in Silicon Valley
Beller and Marcus spent much of that year in secret rooms where high levels of company clearance was needed to prevent leaks. In essence they created a little Los Alamos within Facebook’s Menlo Park campus. The formation of the group bore the name the Libra.
The first iteration, according to the Financial Times, was for Libra to be similar to Bitcoin. An open-source, community owned group that no one owned. However, unlike Bitcoin, the idea for Libra was for it to be backed by something real — US treasuries and various currencies — for it to essentially be a stablecoin.
Of course, that initial vision did not last.
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An Alternative Currency or a Replacement Currency?
Until this day, there was a wide debate over whether it was a replacement for the US dollar, or if it would supplement it. After all, Libra’s initial announcement was held at the San Fransisco Mint, which used to print US dollars.
Regulators were immediately scared of Libra from its inception.
Treasury secretary Steven Mnuchin at a press conference warned: “[Libra] and others have a lot of work to do before they get us comfortable.”
Losing Steam, or Never Started With Any?
Fast forward a few iterations, and Facebook’s Libra lost momentum, or perhaps, never had any momentum to lose in the first place besides internal momentum. A combination of lack of favorability from regulators, Cambridge Analytica, and privacy concern from users.
To be fair, it did not seem to have a chance from regulators. During an early testimony with the House, Sherrod Brown, the Democratic senator from Ohio, established the atmosphere.
He stated, “[Facebook] is akin to a toddler who has stumbled upon a box of matches. Facebook has repeatedly set the house on fire and labeled each instance as a lesson learned.”
The Republican senators matched the hostility. GOP senator Martha McSally voiced her distrust, saying, “I lack confidence in your team. Rather than rectifying the situation within your current operations, you are embarking on a new business model.”
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Companies Started Pulling Out
Then PayPal was the first to officially pull out of the project on the day after Libra’s supporters were supposed to sign a declaration of commitment to the project in Washington D.C. They decided to instead focus on their core businesses (Financial Times). PayPal cited that they wanted to focus on their core business at the time.
Around the same time, Mastercard and Visa began to reconsider the project. Stripe was also warned by Congress that if they remained part of the scheme, they should expect increased Congressional surveillance. Facebook knew it had to rebrand the digital currency.
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Shrinking in Scope
Beller from the initial team left. Instead, Facebook wanted to build a team of former politically-favorable bureaucrats who would be more aligned with what regulators would like to see at the helm of a project with this much of a monetary impact.
Together, those regulators worked closely with the now liquidated Silvergate to morph the project, now called Diem, into something more appeasing to the US Treasury. The government had a relationship with Silvergate because it was a regulated bank, so this seemed to be the last remaining mystery that needed to be solved for Diem to get the greenlight to move forward.
A launch date was set.
However, in what seemed like a reading from a prewritten script, the Fed’s general counsel, Mark Van Der Weide, told the Diem team some horrible news.
The government was uncomfortable greenlighting any project until the government would have time to create a “comprehensive regulatory framework” for stablecoins. Van Der Weide also expressed uncertainy about a coin with the potential to “massively scale” like Diem (Financial Times).
Silvergate bowed out (but later bought the Diem assets when it ultimately failed).
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Desperate Last Ditch Effort
After failing with Silvergate, Facebook had one last chance Hail Mary to make this right.
They asked Gemini, who already had a successfully regulated stablecoin in the Gemini Dollar, to act as the sponsor for the Facebook stablecoin.
Gemini, owned by the Winklevoss Twins, who Facebook’s CEO Mark Zuckerberg screwed over to create the company, demonstrates the sheer desperation that Facebook had to issue this stablecoin.
Yet, this resulted in another misstep, perhaps the final one.
A lot of the deal with Gemini rested in the hands of Linda Lacewell, who was the Superintendent of the New York Department of Financial Services (NY DFS).
In the process of gaining regulatory traction with the NY-DFS, Lacewell, who was appointed during Governor Andrew Cuomo’s tenure, exited the position once news broke out Cuomo’s sexual harassment allegations.
Another plan to put the Libra, now called Diem, fell through.
The only next logical choice? A sale.
“Mark is a smart businessman. There’s only so much money you’d throw at it.”
Stablecoin Yardsale
Diem attracted interest from US banks, notably Silvergate, which acquired its assets in January for its stablecoin ambitions. Diem’s impact lies in pushing regulators to understand digital currency, prompting investment frenzy.
Then, nearly a year later after the sale to Silvergate, on March 8, Silvergate chose to dissolve. With the dissolution came an asset liquidation sale. However, it’s not entirely clear if the Libra (Diem) assets were sold off. This part of the liquidation is currently unreported from the research I did in preparation for this article.
Does the attempt at Coin minting make Facebook a Technopolis?
The failed coin minting is only one criterion. However, there are other components of a technopolis to judge Facebook on. Among those components are military power, culture, and land ownership.
Military Power
An AI firm initially engaged in developing military intelligence and navigational proficiencies for the US Department of Defense will now be harnessed by Facebook, operating under the new name Meta, to shape the metaverse.
The acquisition of the synthetic data startup AI. Reverie by Meta in August has resulted in its integration into the Reality Labs division. This division is dedicated to the construction of a collective virtual realm.
Earlier this year, AI. Reverie secured a three-year contract with the US Air Force, valued at a potential $950 million. The contract was intended to bolster the Air Force’s command-and-control systems and develop an advanced battle management system through the utilization of AI. However, this contract was concluded prematurely in August, coinciding with Meta’s acquisition of AI. Reverie.
Cultural Impact
“What did we poor humans do before the advent of Mark Zuckerberg’s collegiate brainstorm? Let’s see, we smiled when we “liked” something, we dialed the phone to “update” friends and “tagging” was a kids’ game.”
In Conclusion
In the tapestry of time, the corporate-state metamorphosis is a story woven across centuries. From the Dutch East India Company’s coinage to Meta’s modern ambitions, the desire for sovereignty endures.
The journey begins with historical echoes as Meta, formerly Facebook, seeks metaverse dominance and AI. Reverie integrates into Meta’s Reality Labs, merging technology and military strategy. Simultaneously, Facebook’s cultural impact transforms communication and expression dynamics.
The Technopolis narrative, a fusion of commerce and governance, reflects the unyielding human pursuit of power and innovation. In this ongoing odyssey, corporate aspirations for statehood echo through the ages, reminding us that the quest for dominion evolves but persists, inscribed in the annals of time.
Technopolis, inspired by Neil Postman’s 1993, Technopoloy, refers to a cultural state where technology assumes a dominant role, shaping not only practical aspects of life, but also deeply influencing societal values, beliefs, and thought processes.
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Read Technopolis Part I Here
