Facebook’s (FB.Q) Libra project endured another wild setback in France when Finance Minister, Bruno LeMaire, put the kibosh on Zuckerberg’s cryptocurrency dreams.
We’ve been talking about Libra for months now, and while this is far from the last hurrah for the proposed cryptocurrency, it’s fairly indicative of the reception it’s likely to receive from world governments.
“I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil, “ LeMaire said.
Before blockchain there was always this lingering sense that someone could take advantage of you in any transaction. We’ve developed lots of social rituals, cues, conventions and behaviours to both deceive and sense when we are being deceived. My father always told me to look a man straight in the eye and shake his hand with a good strong grip, and he would know that I’m on the level.
Satoshi Nakamoto’s decentralized blockchain system mitigated the need for trust in transactions. Everything one did regarding the blockchain was recorded immutably in the ledger providing automatic accountability, and eliminating the need for faith, and thereby, bad faith actors.
Libra, by definition, as a centralized coin offering and blockchain protocol, is the opposite of everything that Nakamoto wrote about in his white paper. This is a company with a reputation for stealing and reselling data, manipulating and experimenting-on his user-base. They have proven themselves, at times, to be incompetent and duplicitous, and have turned a blind eye to atrocity while punishing the ostensibly innocent in a ham-fisted fashion.
Dante Disparte, the head of policy and communications at the Libra Association, the non-profit organisation developing the currency, said Le Maire’s comments underscored the importance of the project’s backers working together with regulators around the world.
He said the association wanted to work with regulators to achieve a “safe, transparent and consumer-focused implementation of the Libra project.”
There’s one reaction that fits:
The history of facebook suggests that this is a company that should not be given administrative control over a toddler on a tricycle let alone a serious contender for the world’s reserve currency.
“The monetary sovereignty of countries is at stake from a possible privatization of money … by a sole actor with more than 2 billion users on the planet,” Le Maire said.
But it’s not just one actor.
The libra project is backed by Visa (V.NYSE), MasterCard (MA.NYSE), PayPal (PYPL.Q), Lyft (LYFT.Q) and Uber (UBER.NYSE).
That’s an awful lot of power centred in the hands of some of the world’s elite financial institutions. Institutions, I might add, that place their own pursuit of profits before everything else. Normally, this is to be recognized and lauded, but not when considering the world’s reserve currency: if there’s anything that should be regarded as a democratically controlled public good, it’s that. The 20th century is an object lesson for what happens when too much power lands in the hands of too few.
And this is where we come to Mark Carney, the governor of the Bank of England, who we wrote about earlier this year:
“Even a passing acquaintance with monetary history suggests that this center won’t hold. Let’s end the malign neglect of the international monetary and financial system and build a system worthy of the diverse, multipolar global economy that is emerging.”
And then this gem from a story earlier this week:
“Any time anybody tries to produce money, the federal government is going to be on their tail,” said Richard Timberlake, former professor of economics from the University of Georgia.
Ultimately, the real reason Libra is going to fail isn’t because of the company behind it (although that doesn’t help their case), but because it threatens to wrest control of the world’s economy away from those in power. If real change were to happen it would need to come from a democratic platform that power couldn’t reach.
Like decentralized currencies.
—Joseph Morton