Facebook is already managing tons of our personal data. With the new cryptocurrency Libra it could extend its reach considerably, and potentially gain access to the financial data of billions of people.
Probably not, or at least Facebook is not alone in doing this, but in light of what is happening with our private data and how Facebook and other Internet technology companies are able to sort through all that we do online (and perhaps even offline with drones and more) we can at least joke about it, until it will become too serious.
Today the official announcement was made that Facebook has
plans for a new, global financial system with a broad group of partners from Visa Inc. to Uber Technologies Inc. on board to create a cryptocurrency it expects will one day trade much like the U.S. dollar and inject a new source of revenue.
Called Libra, the new currency will launch as soon as next year and be what’s known as a stablecoin–a digital currency that’s supported by established government-backed currencies and securities. The goal is to avoid massive fluctuations in value so Libra can be used for everyday transactions across Facebook in a way that more volatile cryptocurrencies, like Bitcoin, haven’t been. (See on Bloomberg: Facebook Wants Its Cryptocurrency to One Day Rival the Greenback)
“We view Facebook’s introduction of the Libra currency as a potential watershed moment for the company and global adoption of crypto,” wrote Mark Mahaney, an analyst at RBC Capital Markets. “In terms of scale and importance, we believe this new financial infrastructure could be viewed similar to Apple’s introduction of iOS to developers over a decade ago.”
There is already strong opposition to this plan, especially in Europe, starting with French Finance Minister Bruno Le Maire.
Facebook’s white paper on Project Libra
It is illuminto read the white paper about Project Libra, to understand the ultimate goals of this project. From the start, in the document’s Introduction we learn that:
Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.
and later in section 3 of the white paper, The Libra Blockchain:
The goal of the Libra Blockchain is to serve as a solid foundation for financial services, including a new global currency, which could meet the daily financial needs of billions of people.
I cannot avoid noticing the words “billions of people” and “billions of accounts”
Finally from section 4, The Libra Currency and Reserve
We believe that the world needs a global, digitally native currency that brings together the attributes of the world’s best currencies: stability, low inflation, wide global acceptance, and fungibility. The Libra currency is designed to help with these global needs, aiming to expand how money works for more people around the world.
Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra.
For more detail you can read Facebook’s white paper on Project Libra here.
It’s a very ambitious plan! The Vision, as articulated on their website states that:
Libra is a global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology. People will be able to send, receive, spend, and secure their money, enabling a more inclusive global financial system.
We need something to help simplify the many financial hurdles and unnecessary costs of transactions that exist today, especially when making payments between countries. We also need surely need a more inclusive global financial system and Facebook wants to position itself at the center of this amazing transformation and greatly profit from it.
Facebook has already more users than the population of the U.S., China and Brazil combined, and its practices are already influencing the online social behavior of billions of people, and the financial success of countless businesses who depend on it. If Facebook starts using its own currency, it will really start looking more like a nation-state or, more appropriately, a global government with a global currency, global population, and global rules, and Mark Zuckerberg will be the Emperor!
I wonder what people like Jeff Bezos and Jack Ma are thinking of doing about this. Are they just going to sit and watch? And what about Elon Musk? He will probably need a payment system when he finally gets to Mars 🙂 . Or is he planning to buy back Paypal from eBay and use that instead? Are these guys going to leave all the fun for Mark Zuckerberg? Hopefully not.