Going by word of mouth, it would seem that Facebook is steadily losing popularity among its user base, but the ambitions of the corporate giant are certainly not shrinking.
Steven Mnuch, the US treasury secretary, has today voiced his opposition to Facebook's proposed cryptocurrency, named Libra.
Mr. Mnuch raises his concerns and says that currency could be used by "money launderers and terrorist financiers," and as such, it is a national security risk.
Mr. Mnuch emphasizes that the currency will need to have high privacy standards, which although great in some aspects, does mean the currency can be used with very little oversight.
Cryptocurrencies "have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human human trafficking."
Mr. Mnuch
Mr. Mnuch may have a point, but there are already purpose-built cryptocurrencies for exactly this purpose, such as Monero (and Bitcoin to a large extent).
It would appear that this issue is actually about something far more serious - the control of money. Modern economics relies of a fictional currency created by governments, and our entire economy relies on authority and trust in that currency in order to function. This setup is actually hugely powerful, as the government has the power to largely control the strength of its currency, its rate of inflation and other important factors. In theory, this can be used purely to serve the people - in practice, there are many competing interests and considerable corruption in the system - but overall, most of us put up with the imperfections for the reward of a modern, capitalist, borrow-heavy lifestyle which most people utterly adore. It sure beats Soviet Russia, living under a dictator, or living in anarchy.
Any government will perceive a cryptocurrency as a threat to its power and authority.
David Marcus is a Facebook executive in charge of rolling out Facebook's Libra, and it seems that he would agree that the government is likely somewhat anxious about their proprietary currency. In an attempt to ease their mistrust, he says,
"The Libra Association, which will manage the (Libra) reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena.
Mr. Marcus will today attend the Senate Banking Committee, with experts predicting that the overseer of Libra will play a submissive and obedient role. He will attempt to sooth the concerns of government, with similar statements as he has made in the past.
"Monetary policy is properly the province of central banks," he said. "Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals."
Mr. Marcus
The Banking Committee will need more than a few well-intentioned (sounding) sentences to change their mind. They are more than aware of the power Facebook has, and the amount of money Facebook could control using Libra - and if there's one thing you can trust a large corporation to do - that is to make whatever decision will make the most money.
Mr. Marcus will attempt to convince the committee that cryptocurrencies are an unavoidable reality in the next decade. It may indeed be wise to control a potentially dominant cryptocurrency via an American company in Facebook, so that the government doesn't entirely lose all of its financial influence. Indeed, it could even extend its financial control overseas through Facebook. This would be a win-win for Facebook and the USA government.
"If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different."
Mr. Marcus
Looking at the interest of the people, it would not be wise to give a corporation too much power over our monetary system - they are sure to abuse this huge power given the right money-making opportunity. Perhaps it would be better to have a global de-centralized currency that doesn't act in the interest of any particular party, but instead acts as a limited resource. Then again, we would be giving up a lot of the economic control which we are enjoying right now.
Is the future of the world a global de-centralized cryptocurrency, many cryptocurrencies blended with national currencies, a monopolistic currency controlled by a very powerful group... or something entirely different. We won't know for the time being, but we will get one step closer after the Senate Banking Committee delivers its verdict in the near future.
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