Is Facebooks stable coin the dawn of money as the ultimate system of control?
It’s time for permissionless currencies, the choice is yours
I landed in Buenos Aires this morning. At the small Carrefour around the corner, I had to show my passport to pay some items with my Spanish credit card. I will check this commission later, it will probably be between 3% and 5%. Next move, to change €60,-in my real wallet to Pesos at an exchange centre. The procedures for just changing national currencies seemed like applying for a new passport. They made a copy of my passport, I needed to write down my hotel, and they asked my profession. To exchange money, MY money. It took me 10 minutes. It felt that my privacy was breached and I felt controlled. In 2019, governments and the corporations running the governments still are very eager to follow and control the money flow.
Wouldn’t it be great if I could just open my WhatsApp, and swap some Facebook coin AKA Libra to the digital device or phone of the taxi driver, store cashier or waiter in the classy tango bar at the corner? In one go, Facebooks stable coin backed up digital currency project ‘Libra’ would be the super app of decentralization, leaving Bitcoin miles beyond with its constant capsizing value.
Or is the day that a centralized blockchain will be applied to validate exchanges of a corporate-initiated currency like Libra the day that is anything but Libra, free. On the contrary, this might be the day that Money became the ultimate system of control.
Either way, the choice is (still) yours.
There is a solution for all. The choice is yours.
In this digital era, it does make much more sense just to exchange money digitally. Imagine nobody has anything to say any more about your money. You exchange it directly with another digital device, and some kind of network validates this transaction, directly. The network is not interested in your political color, your sexual habits or need to experiment with consciousness-shifting substances. The swap to other currencies goes also instantaneous. Welcome to Bitcoin, the blockchain and the Internet of Money. The new era of permissionless banking with your smartphone. It saves time, the feeling of being controlled, and commission thus money. And it brings financial freedom, as in the same measure that it demands responsibility.
Centralized digital money on the blockchain: money shifting from governments to corporations
The opposite of the aforementioned scenario is centralized money where exchanges are validated on centralized blockchains owned by corporations. Like a possible Facebook coin. Now, who would like their exchanges of money be validated by a company that sells your data at the backdoor and thus makes you a product? A company that owns Whatsapp were last week hackers stole data by making a phone call?
We are slowly moving into cashless societies, moving into digital money where more centralization means more power and permission. When you vote at the wrong party, attend the wrong protest or make a lot of money suddenly, your money might be frozen instantaneously until you have proven your innocence. Still interested in Facebook’s coin Libra, or freely translated ‘freedom’?
Millions and possibly billions will. Want to know Why?
Because we are used so much to centralized middlemen and moreover, so used to Facebook. People are even still willing to pay Facebook for their service, so there is definitely value that Facebook brings the world. In general, people don’t care who validates their money exchange. When it comes with funny emoticons and easy credit possibilities, probably even more people join the FB coin.
And here comes the scary thing. Facebook is one of the biggest tech companies on the planet. They own shiploads of data of literally billions of people. That data combined with payment traffic is gold for both governments and intelligence services as for hackers. I would say that at this point in time, the security risk is just too high combined with Facebook's track record for not giving a F*** for your privacy. The recent Binance hack showed once again that money on privately owned servers can be hacked. In fact, every day almost worth of $3 million gets hacked on central owned crypto exchanges worldwide. Facebook would become the biggest centralized currency exchanger in the world. And I doubt whether they would even need a blockchain to validate the transactions on their centralized networks. Smart databases might as well do the job.
The economy of trust
I can imagine that one day soon presenting anything on a blockchain is chic and trendy and draws people in. Maybe history will repeat and a lack of transparency about its intentions would be necessary for Facebook to draw people over the line. Blockchain technology is too complicated for the average 18–24 Facebook user to grasp, let alone decentralization. FB will do an amazing job selling this new product, they have the biggest client database in the world, very clever user interfaces and most importantly: the majority still trust Facebook enough. For any economy or currency to work, you need trust. The trust that also tomorrow you will be able to pay with this currency. Nobody will believe for years to come that you wake up and WhatsApp gone broke.
Remittance could be the holy grail
In December 2018, Facebook had worldwide around 36.000 employees. I recently met a Facebook employee. A very sympathetic guy that loves his job. Facebook is not all boehh and bahhh. It is made up of people that want to give the best service, and most of them also want to change the world for the better. I use Facebook every day, I use Facebook ads to promote my bitcoin gift shop. Well, that means, when they cancel their ban on anything that has to do with crypto.
A possible future problem is that it is a company with an enormous monopoly on(our) data, and has proven to not be transparent enough. And in fact,
There is a huge opportunity for Facebook to move away from becoming the 21st century Darth Vader of data exploitation.
The Facebook Libra coin has an enormous potential to help to solve an enormous pain point for millions of people. From Africa.
Remittance would be a field where it could make a difference and in one go clean up its reputation for good. The Libra can ‘Free’ millions of Africans from the enormous remittance costs for sending money home. Everybody in Africa has a phone, or 2. Many have WhatsApp. In Kenia people are already used to exchanging money via telephones. Mpesa. You buy phone credit, and this credit can be used to buy stuff or pay bills with. Voila, telephone credit money.
So imagine an immigrant in the world going from the local fiat into Libra, sending a WhatsApp with this money encrypted over the FB-blockchain to his family, and… and then we have the next problem to fix. The going from FB-coin into the local currency or into the Mpesa. Facebook could create an exchange partner to make this happen or become one themselves. For this, they would have to solve privacy issues, security issues, liquidity issues, and KYC identity issues. The choice depends on how much Facebook is willing to invest to get a piece of the $570m yearly remittance market.
What happens when your social media behaviour raises your income
Did you happen to see the black mirror episode where everybody is so eager to get digitally rewarded through likes that all behaviour is directed towards this agreeable social behaviour? Falling down this social ladder swiftly results in social isolation. This scenario is not that far fetched if the facebook likes would actually grant you facebook coin: Money.
Facebook is integrating its Libra in an Ads-rewarding program. Meaning that you can earn Libra by watching ads. Another centralized effort to copy the BAT (Basic Attention ) token, but at least we get some money back for our attention. But what if we would start earning Libra’s by getting more likes? Then please watch again that specific black mirror episode, and think again.
The question on the background: who makes the blueprint for socially acceptable behaviour? The answer: The Blue F does. This is already happening on its platform. Some content is banned, ads for bikinis are forbidden, ads that promote a change in your health through a product are not validated. And most ironically, ads for cryptocurrencies or related products are not validated. Shortly before the worldwide announcement of Facebook coin in the make, suddenly the social media mastodont declared that soon crypto ads will be allowed. This is a perfect example of middlemen using its permission granting power.
It's all so hypocritic. First calling crypto criminal activity, and then after discovering that crypto can't be stopped and you can make more money with it, embrace it.
This is the exposure of a multinational without ethical core values that is a slave to its business model.
It displays a core lack of responsibility and vision. Let's hope now that beyond the remittance solving campaign is not only the drive to make more. On the other hand, why would Facebook be really concerned about changing the miserable lives of the poorest people on the planet that pay the highest commission?
True empowerment means taking full control over your life and being fully responsible for all aspects of it. When we give this power away to a middleman, a government or one of the biggest corporations in the world that knows more about us than ourselves, we become dependent on their policies, their permission, and their rules. In the past, there was no way around this, because we needed a third party to validate our transactions.
True decentralization can only happen when people take full responsibility. That is the price it asks. Becoming your own bank with your money encrypted on a wallet on your phone means recovering total control over your money. Data empowerment means moving away from platforms that own our data and make money with it. It will result in deciding what we do with our privacy, your data, and monetize it at your choice.
The result is that we don't need any permission anymore from anybody to trade, to exchange money or data.
With centralized blockchains and new social platform coins like FB coin, there will be nothing new at the horizon. Even worse, FB coin will create the biggest digital bank in human history with its own terms and regulations, it's centralized decision power who can join and by which rules. When you don't comply or rebel within that ecosystem, it will be very easy for them to block your account and digitally expel you to a lonely island. Well, in the end, maybe you are much better off there anyway, sitting under a palm tree with a cocktail in your hand instead of your phone.
The Bitcoin and truly decentralized crypto community will be there waiting for you with open arms. With no question asked or terms and conditions boxes to tick. To jointly celebrate the sunset of centralized greed based systems of control.
Lucien Lecarme, Buenos Aires, May 17th, 2019