After several months characterized by continuous rumours, an official statement has finally been released: Facebook is going to have its own currency, Libra. Joy of joys? Not really, and not for everyone.
At least not for those who have not stopped to the details and have tried to gather an overview of the situation and long-term forecast.
And according to such forecast the future seems to be doomed.
Mainly, the future of politics, which has silently given up its role as a guide and a regulator without fighting at all.
The system applied by Mr. Zuckerberg is simply smart and has helped crypto-currencies to overcome the limits they could not overcome by themselves. However, when it comes to Facebook nothing is as free of charge as it seems. And the group of big companies put together by Facebook to create such new nonprofit association named Libra, may soon turn into a cartel which would own a whole e-commerce eco-system, the technology needed to use it and, especially, needed for billions of users to adopt it (potentially Facebook+Instagram users together and many more). Should they all agree, they would be able and free to make products/services payable only by Libra.
And maybe not only online but also offline, in the real world.
Then, we would be faced with a proper currency, held and managed by a lobby that does and undoes at its pleasure.
To quote Mr Daniel Jeffries, thanks to Libra, Facebook will be the first platform to really challenge the sovereignty of state sponsored money, the traditional bank system and the power, usually assigned to governments, to print and circulate money (Libra, a Cyberpunk Nightmare in the Midst of Crypto Spring).
Libra but not free
Libra will have an open source code, will enable users to make pseudo-anonymous transactions and, at least at the beginning, it will be an authorized blockchain which, only later on, will be freed from the need to obtain any type of permit. It will also enable users to send and receive money even without a bank account as if they were sending messages via Messenger or Whatsapp.
Starting from 2010, the independent structure Mr. Zuckerberg is preparing, Calibra, will allow users to own an electronic portfolio where to accrue one’s crypto-currency so to use it by means of a dedicated app for paying for several services, such as bills or underground tickets). And God knows what else. ( The functions of Libra,Facebook currency).
Libra is a steady currency. We can forget Bitcoin fluctuations and changes in the exchange rates from 1 thousand to 18 thousand Euros in a few days. Initially, it seemed an amazing novelty. But under the golden surface there is only tin… Libra is sustained by legal money: people will pay real money to get the crypto-currency which will be issued on demand.
Once transferred/used, it will be eliminated. And while the validators (the cartel with the power to authorize transactions ) will make money for real and will be able to exchange it, invest it or accrue it and get the related interests from the traditional bank system, users will get nothing at all. Since Libra value, differently from Bitcoin, Ethereum and the other crypto-coins’, cannot increase. Basically, it is a collection of different real currencies which maintains the inflationary monetary policy enforced by central banks.
The “The Hundred” lobby
As said before, Facebook has (so far) put together 27 businesses, all of which big names in the digital and financial worlds, such as Booking, eBay, Farfetch, yft, Spotify and Uber, Mastercard, Paypal, PaYu, Stripe and Visa, to set up a nonprofit organization.
Such companies are expected to be powerful and, considering their number -100- they will be the only ones to be entitled to authorize transactions. Facebook is, ça va sans dire, one out of the above mentioned 100 members, and through its new affiliate named Calibra, will hold no more than 1% of the voting power. The remaining 73 businesses will have to be selected on the basis of really strict criteria. For instance, they will be asked to have over 20 million users/customers per year and a stock value over 1 billion dollars or 500 million dollars of customers’ receivables.
It is obvious that we are not dealing with the standard purchasing portfolio owned by a website, but actually a true global network of businesses which will have data concerning all the transactions made by users, since they will be the ones validating them. They will certainly have to bear costs, especially energy costs, but by investing an estimated 300thousand dollars/year, they will get a huge amount of users’ data. The reference market boasts a users’ base of 2,38 billion people, two seventh of the global population.
The validators will get the 21st century oil, i.e. data, and the others will be allowed into the system as resellers of Libra services but without having the chance to access users’ data. The paradox is that such data, including the financial ones, will not even been paid for, they will be spontaneously given in by users every time they will use Libra. And especially when opening Calibra (Let’s stop the Libra FUD).
And politicians are silent
Meanwhile, politicians are silent and motionless. Have you understood what is coming? And why, over the past 20 years, nobody has tried to do what Facebook will do with Libra? Why, in 2019, we still don’t have a system accepting micro-payments? Offline, physical coins are needed; online there is no system allowing users to pay 5 cents for goods without the extra burden of the transaction cost. Libra may resolve this issue. And at that point its success would be unstoppable, like its progress . People would never be willing to give it up. And governments authority would pay the highest price.
What do you think about Facebook crypto-currency? Tweet @agostinellialdo.
To find out more about the digital world, you may read my latest book entitled: “People Are Media”
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