In its continuing effort to be as tone deaf as possible, Facebook went ahead and announced that it is going to try to launch a cryptocurrency.
It is going to be called Libra, it is going to be run by a subsidiary called Calibra, and if there is some kind of digital hell in our future, it will be part of it.
Cryptocurrencies seem very similar on the surface, and for the most part they were up until several years ago.
Make no mistake though, this is a whole different beast. Let’s take a look at the good, the bad, and the ugly.
Lofty Goals
Facebook is rolling this out with the best aspects in the spotlight:
- It will be asset-backed and secure
- Assets will be held by a network of custodians
- It will be usable across platforms for a variety of transactions
- It will be global
- It will not involve costly and timely currency exchange fees
- The software will be open source
- It can be exchanged for traditional currency
And the company’s claim that it will provide an alternative for the 1.7 billion people who do not have a bank account is far-fetched but feasible.
Of course, except for the asset-backed aspect, these highlights are basic features of cryptocurrencies going back to the foundation of Bitcoin.
As for those assets, the plan is to include pretty traditional fare, like bank deposits and short-term government securities.
At first it will be governed by authorized entities by the governing association — a collection of technology, credit sector, and VC firms. Eventually it is expected to move to an open blockchain structure.
So far, we have what looks like a pretty good start to an asset-backed coin here.
Questionable Motives
Here is where we start talking about the bad and downright creepy aspects of Libra.
Facebook has said Calibra will only share user data with it and third parties when it has customer consent or in other “limited cases.”
Among those limited cases?
“To provide basic functionality to the people who use Calibra,” and “to facilitate and improve the Calibra product experience, market Calibra products and services.”
Basic functionality? Product experience? Marketing?
That could be interpreted very easily to be just about anything. So much for limited cases and not sharing information with its parent company Facebook.
After all the privacy lapses. After “updating” privacy options that automatically opt in users and claiming that it amounts to customer consent.
We’re right back to classic creepy Facebook. But wait, there’s more!
With this transactional data, it can get even deeper into analytics on buying habits. It can and will mine that data for all its worth and find ways to share it for money with third parties.
There is nothing to stop Facebook from making Libra a preferred currency in extractive ways.
It can charge extra to advertisers, businesses, and marketplace users who don’t want to use Libra for “processing fees” and collect fees for cashing out, creating incentives to get in and never get out.
In essence, it can create its own global economy and build a moat around it.
What Makes A Cryptocurrency Worthwhile
The way this is structured is downright creepy. Calibra’s “governing association” will have preferred — and for a long time, exclusive — access to an unprecedented level of global transaction data.
It isn’t even clear why Libra needs to be a cryptocurrency, or even use a blockchain, with the way this is going to go down.
Instead it is more of an alternative fiat currency that is not directly controlled by a government.
Cryptocurrencies were founded to take currency control away from governments, yes, but does anyone really want to pass oversight and control over to a cabal of corporations?
Facebook and the 27 other companies that have signed on certainly do. The rest of us absolutely should not.
We’re entering a period where cryptocurrencies are rising again and it’s time to take another serious look at them.
Facebook wants to take advantage of that and claim as much of the business cryptocurrencies will drive as it can for itself.
But it is the truly independent coins that are worthwhile and this will only turn into another chapter in Facebook’s embarrassing and creepy attempts at dominating how people interact with each other and the world at large.
A lot of investors walked away after the last boom and bust, but some monumental developments have been quietly happening while cryptos were being ignored.
Outsider Club founder Nick Hodge has been researching one of them, and it’s a great way to get in on the best cryptos out there, like Bitcoin, Ethereum, Monero, and Litecoin. Check it out.
