Not too long ago we speculated on the limited information about the then unnamed Facebook project that we now know as Libra. Some of the details we discussed about the project ended up being accurate, along with the impact it could pose for central banks and states around the world. How quickly the project was presented, and the reaction to it by our expected stakeholders could not have been predicted so easily, however.
The fact that Libra draw so much apprehension from world governments in so little time is enough to understand how serious the ramifications and consequences detailed in the article are. So let’s analyze how these last events unfolded and what could happen from here.
Libra started with a bang introducing its white paper and overall plans for the development of a global digital currency. As previously mentioned, it comprises of a basket of other fiat currencies plus other low volatility financial assets, such as government bonds. To begin with, even using the word “white paper” gave considerable recognition to Bitcoin (rather than just blockchain technology), which was the first of its kind and still holds the first mover advantage in this space. However, except for short periods of time, Bitcoin still remained relatively contained for almost a decade, failing to make its breakthrough. This is most likely because it hasn’t yet figured out how to effectively solve issues like scalability and stability, perhaps the top two major obstacles to real mass adoption. Libra — and Facebook in particular — on the other hand, not only aims to solve these two with one shot (albeit rather ungracefully) but also adds another crucial factor, twisting the knife even more: its major global network effect and user friendliness. This quickly rang the alarm across the world, as fiat currencies and traditional actors — including POTUS Donald Trump — felt they were in for a rude awakening by the impending ricochet effect.
A False Flag
The US Congress hearings mostly came back to the (valid) concerns over user privacy, which was arguably understandable considering Facebook’s long and ongoing track-record. However, many smart citizens would know that a government suddenly concerned about privacy rights seems disingenuous at best. Considering the multiple scandals behind agencies like the NSA, many commentators argue that what is really terrifying most legislators is the lovecraftian scenario of losing the control of money by the state, a concept so unfathomable — not only by politicians and others in positions of power — but for regular people alike, that it proved to be too much to handle at this point.
The mere vision of this unique monstrosity coming to life and acting like some sort of financial syphon for all fiat currencies and central banks didn’t appear to be something to take lightly after all.
A Small Victory
Facebook eventually ended up backpedaling due to the amount of animosity encountered. One could speculate that the company “mistake” was to ask for permission in the first place. After all, companies like Uber or AirBnB and other similar insurgents didn’t ask for permission and rolled out the technology. They moved fast, broke models and eventually established as leaders in their own sectors. At the same time, it almost seems obvious that Facebook is preparing for a long, exhausting war, establishing allies along the way, gaining trust from regulators and making irresistible promises. As a result, governments and critics alike, little by little may start warming up to the idea. It’s important to note that Facebook may have been the first but it won’t be the last. It’s not beyond the realm of possibility that states around the world may, sooner rather than later, start compromising and conceding power and control, thus passing the torch to new financial overlords.
But for now, the end of the world appears to be cancelled until further notice. The first warning shot was so loud that shook the biggest and longest standing structures to the core. The result can be considered a victory for the powers that be, but ends up feeling more like a time-out than a proper closure. For Facebook, losing a battle in order to scout the territory may end up being more than a fair price to pay in order to win the war.