Fallout Over Facebook’s Libra Cryptocurrency Begins

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Fallout Over Facebook’s Libra Cryptocurrency Begins

To many, Facebook’s entry into cryptocurrency with it’s Libra project seemed simple. Make a token and release it to the public, right? Wrong.

Since dropping its whitepaper on the public last week, Facebook has come under heavy scrutiny the world over. Taking a look at headlines from different countries, consortiums, trade groups, and regulatory bodies leads to one conclusion: Nobody seems to want Facebook’s crypto project to move forward. 

In the USA, House Representative Maxine Waters of California even went so far as to call for a moratorium on the project before suggesting there was no way that Libra could be allowed to compete with the US dollar. Let’s back up for a second though – can’t a crypto be issued without anyone’s say so? ICOs seem to do it all the time by simply building an ERC20 token on Ethereum before opening the floodgates.

For Facebook, the procedure is much different, and here’s why.

Facebook Has More People Than China

Yes, you read that right. If Facebook were its own country, it would have the largest population in the world. Facebook is so big that even China pales in comparison. This often overlooked fact leads to what is at the crux of the matter. 

Global regulators are worried that if Facebook creates its own global currency that can outcompete sovereign nation-state currencies like USD, EUR, and JPY, it will become far too powerful. Should Facebook’s Libra coin become a de facto world currency, it may destabilize other world currencies and lead to an unprecedented era of corporate omnipotence. 

In Margaret Atwood’s novel Oryx and Crake, an Earth in the not-too-distant future is dominated by warring corporate states that have replaced nations. As the Facebooks, Amazons, Googles, and Ubers of the world continue growing without any signs of slowing down, it isn’t hard to imagine Atwood’s vision coming true.

However, while it may be tempting to side with regulators who are concerned about Facebook gaining too much global power, one needs to read between the lines as well. Countries like France, England, and the USA are less concerned about Facebook overreaching for power than about maintaining their own. Every concerned nation is, first and foremost, looking to keep their currency and economy intact and centralized behind systems they can understand.

Blockchain is an entirely different animal, and the prospect of a consortium of corporations including the likes of Visa, PayPal, and Spotify holding Libra’s reins is troubling for old bankers.

Libra and Facebook Are Separate – Kind of

One thing that global regulators are failing to grasp is the way in which Libra and Facebook are, in reality, separate entities. Libra is an open-source protocol registered under a Swiss foundation. Despite being a permissioned network, the node operators within the network govern it alongside Facebook – Facebook being on equal terms with the others. 

Yes, Facebook, along with its investors, is funding the project integrating it with their traditional platform. Nevertheless, one can exist without the other, which makes for an interesting dynamic that may present immense legal tangles. 

As of now, only a few preliminary jabs have been traded between world governing bodies and Facebook, so bust out the popcorn and take a seat – it’s going to get interesting.

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