Something changed on the 18th of June 2019. The day that Libra went public. Facebook’s long rumoured cryptocurrency project, which has rallied 28 world-leading partners, came out of the closet, and with it this new asset class seems to have landed its first concrete, large scale application. With over 2.7 billion users spread across all of its platforms1(Facebook, Messenger, WhatsApp and Instagram), and in response to recent strides into the payment sector and digital wallets by the likes of Samsung, Apple and Tencent, it was time for the group led by Mark Zuckerberg to finally wade into the great cryptocurrency arms race unfolding before us.
With the white paper out there, all eyes have now turned to US Congress: they sent an official letter to Zuckerberg on the 3rd of July requesting that the project be suspended while they analyze the potential consequences of releasing a non-sovereign currency on a global scale. They are, however, focusing on the wrong point.
The question isn’t whether Libra’s cryptocurrency will emerge, as is currently proposed, in 2020. In the same year that Bitcoin will celebrate its 10th birthday, having survived a constant onslaught of attacks from both legislators and financial authorities, it is no longer relevant to ask such questions. Cryptocurrencies have become part of the economic landscape, and their mass adoption is now only a few months to a few years off.
Instead, we should be questioning the drivers behind Mark Zuckerbers decision to launchhis cryptocurrency, especially since the world became aware of Facebook’s gaping privacy issues as a consequence of the Cambridge Analytica scandal.
To fully understand the real motives behind Libra’s project we first need to put ourselves in the skin of a tech savvy 30 something from Silicon Valley. When your wealth is, for all intents and purposes, unlimited, and you are genetically predisposed to egotism, what kind of challenges are there to keep you getting up every morning? Earning more money? You’ve already got all of the money. More power? More glory?
The billionaire tech guy’s brain is now only preoccupied by three things:
- How can I be the first person to beat death?
- How can I play Star Trek, but for real?
- How can I make sure that I am the first president of the future world government?
The first two questions generally attract engineers (founding members of Google, SpaceX, or Blue Origin2, for example). Mark Z. has opted for the third. He has made his fortune, which ensures winning elections3, so that’s a good start. However, there are three pretty key things required to cement your stature as a head of state: a community, a currency, and an army.
The community is already there. Facebook Inc. is now larger than the American, European, and Chinese populations combined.
First stage complete, Zuckerberg is now creating his own currency through Libra, whose financial mass is expected to surpass that of the dollar (1.7 trillion paper dollars were in circulation as of the 31st of January 2019 haccording to the Fed) within 2 years of its launch. That works out to be around 630 dollar equivalents per user.
And then there’s the army. No, we’re not talking guns and swords, we’re talking about a digital army on a new age crusade. Don’t laugh, you’ve already seen the effects. Did you know, for instance, that with $44 million laid out on 175,000 different banners, President Trump spent 1.6 times more than his rival Hilary Clinton? Did you know that the American President owes his victory to a difference of only 77,759 votes, which allowed him to win the states of Wisconsin, Pennsylvania, and Michigan? 77,759, or 0.003% of Mark Zuckerberg’s "manipulable" network.
So, the question is not whether Libra’s cryptocurrency represents danger for the balance of banking and financial systems. It is a bit more fundamental than that. What do you think will happen when project Libra proposes 600 dollars per month of its own currency for votes in ‘world presidential elections’? It sounds crazy, but there is nothing currently in place to stop this happening (aside from the fact that such elections are still fantasies - but for how much longer?).
What do you think will happen when the dollar loses its status as the top worldwide currency by volume to Libra, which has key partnerships already in place with players like MasterCard, Visa, Stripe, PayPal, Uber, eBay and Vodafone to ensure adoption?
China has already made its move. In an article published on the 8th of July in the South China Morning Post, the director of the Chinese Central Bank confirmed the creation of a national cryptocurrency in response to that of project Libra6. Where the old art of war was army against army, since 9/11 we’ve experienced asymmetric warfare that has played out digitally with deep fakes, hacking and cryptocurrencies in the arsenal. Via their cryptocurrency it will be China looking to win the battle to be in control of the next biggest currency.
And this is only the beginning. Behind cryptocurrencies are the technical foundations that allow for the algorithmic decentralization of most of the services that we use on a daily basis. After music, cinema, hotels, taxis, banks - and now money - have already been disrupted, we are entering what might be called "the final disruption": the end of modern capitalist society as we know it.
REFERENCES
1. Facegroup group figures
It is difficult to determine the exact number of users, but the latest estimates suggest:
● 1.7 billion Facebook users (since the deletion of more than 583 million fake accounts in early 2018)
● 1.6 billion WhatsApp users
● 1 billion Instagram users
2. Silicon Valley moguls background
Elon Musk : Degree in physics from the College of Arts and Sciences. He began a Ph.D. in applied physics and material sciences at Stanford University but did not complete it.
Jeff Bezos : Degrees in electrical engineering and computer science from Princeton
3. Who wins the elections...
In her article ‘How Money Affects Elections,’ published on the 10th of September 2018 on the information website fivethirtyeight.com, Maggie Koerth-Baker explains that between 2000-2016, 90% of those who spent more money won the election for a seat in the House of Representatives. The year 2010 is an exception with only 86 %. No comment. ☺