Representatives in US and France have turned against Facebook’s plans to launch a stable coin on a blockchain based payment network.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” Maxine Waters, Democratic representative and chair of the House Financial Services Committee, said before adding:
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony on these issues.”
Rep. Patrick McHenry, the ranking Republican on the committee, said: “We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the financial system.”
While in France Bruno Le Maire, the Finance Minister, went a lot further.
“This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants,” Le Maire said in parliament.
The Big Four
Facebook’s entrance into this space isn’t too surprising. Ever since big names in Silicon Valley started talking about how blockchain could disrupts the big four – Facebook, Google, Amazon, Apple – some wondered when they’ll enter, and who will be first.
As it happened, it didn’t take long at all. Just a few months later and at the peak of crypto prices, Mark Zuckerberg, the Facebook CEO, said:
“Encryption and cryptocurrency take power from centralized systems and put it back into people’s hands, but they come with the risk of being harder to control.”
Control is one word you don’t want to hear from someone with as much influence as Zuckerberg, not least because this Facebook coin does appear to be all about control.
Google sort of followed shortly after, with Sergey Brin, its co-founder, basically saying they are thinking of how they can pour resources to the blockchain so that they’re doing it way better than anyone else.
Apple might be thinking of following, but in a different sort of way, perhaps to just add a blockchain key store to iPhones or some sort of new crypto related features.
While Amazon is sort of limiting the blockchain aspect to just their cloud service. They don’t even accept bitcoin for payments, with this company doing well enough to not quite need much innovation.
The Facebook Game
Facebook is something else, with this coin having less to do with payments or much else, and more with maintaining complete dominance over social networking.
It’s the old monopolistic approach of buying up your competitors or just copying them, sinking them under while giving your users no option but to keep feeding you data.
When Kin, the chat app for mainly teens, started talking in 2017 of how Facebook dominates and how they can compete through the token model, it is now quite clear that Facebook was listening and very carefully.
Telegram then made it a wave. A new token business model was to rise and was to disrupt the tech monopolies.
That’s when the Securities and Exchanges Commission (SEC) came in, probably egged on by VCs worried they themselves were to be disrupted. So putting a halt to booming innovation, leading to now louder and louder calls for SEC to be broken up as it has become too centralized, too big, too easily coopted and corrupted.
Facebook however didn’t need SEC. Their solution to potential competition was what it has always been: copy them or buy them up.
Here, there was nothing to buy up, so they had to copy it. Copy the blockchain on one hand, copy fiat on the other, mix them together, push them through Instagram, Whatsapp and of course Facebook, and so continue to dominate if not dominate even more.
Facebook Coin, Friend or Foe?
The connection of money to social profiling has been perfected in China to the point in airports you don’t hand over a ticket. You instead have a face scan at the “ticket” machine, and so you’re told whether you can fly or what your flight details are.
WeChat is one of the biggest social network in China. It also accounts for some 50% of all payments made by ordinary Chinese citizens.
They didn’t bother with the blockchain bit because “they come with the risk of being harder to control,” but arguably nor has Facebook really. In the technical paper they call it a programmable database.
As Facebook has so much say over Libra, and arguably total control over the app that accesses it, Calibra, this can become the importation of China’s social credit system to the west.
Unlike China, US has laws against anti-competitive practices, but sophisticated corruption in US has reached the point where they don’t even bother pretending of enforcing them any longer.
So it’s perhaps left to Europe to prevent the merger of complete control over a certain money and over the biggest social network.
Had they used an ERC20 token running on ethereum, for example, or had they used bitcoin, then that’s fine. They don’t have control over either ethereum or bitcoin.
Yet according to Zuckerberg that’s the problem, so they’re planning to go with their own database to undercut and front-run any potential competition.
Some say their use of the blockchain validates the technology and they will familiarize individuals with crypto, so that can benefit bitcoin or eth.
The vast majority in this space, however, appear to be against Facebook coin, with plenty of memes already out.
Some argue the stern words by law makers regarding Libra is what this space will face if it rises to become that big.
That debate however was settled in 2014 when George Osborne, the then British Chancellor, bought a bitcoin.
There’s an ocean of difference between something like Libra and something like bitcoin or ethereum.
The latter are controlled by the people, and of course it is the people law makers represent. Something like Libra is effectively controlled by one man, with absolute power so corrupting absolutely.
Libra is more of a global bank tied to your social profile. Bitcoin on the other hand doesn’t know anything about you unless you choose to reveal your bitcoin address.
Though it is digital, Libra is hardly any different from the digital numbers in your bank account. If Zuckerberg wants, they can just delete those numbers. By accident of course, not because you are, say, a law maker who wants to break them up.
In bitcoin it is pretty much impossible to in any way tamper with anyone’s account, just as no one can delete the cash in your pocket.
That’s because bitcoin is actual cash, but of a digital nature. You and you alone have total control over your own bitcoin unless for convenience or whatever reason you want someone else to manage your holdings.
It is because bitcoin is actual cash that it has become what it is. Without that cash quality, then it’s not really a crypto.
“If the kleptocracy controls technology and the means of distribution, then they simply accumulate more wealth at the expense of their citizens, draining wealth in cryptocurrencies rather than dollars or euros.” – Commodities Futures and Trading Commissioner Rostin Behnam.