So why are we talking about this in August 2019? After all the runner beans are now climbing and flowering in all their glory, the apple crop is blooming on the trees, the tomatoes are ripening in the greenhouse and the pumpkins are trying to take over the world. We are harvesting a lovely crop of french beans from the mysterious German climbing beans. We are pickling beetroot and harvesting carrots. But quite aside from all this, Facebook has just published a “White Paper” which sets out its vision for a new corporate currency called “Libra”.
Now Facebook has joined the crypto race
Keen as mustard to take its place
Pegged to fiat currencies at global rates
To challenge banks and Nation States
Suckerberg's keen to get much bigger
That's the plan he's trying to figure
Launch the “Libra”, take on the world
We'll soon see his scheme unfurled
But creeping tyranny is in the wings
Waiting its chance to do bad things
When digital currency replaces cash
It's human freedom they're trying to smash
This is not a move to make one glad
The “Libra” will very likely make us sad
This is not a thing one should endorse
When corporate greed is the driving force
I don't suppose you need me to tell you that there is a great deal of difference between money and cash! We glibly use the term money as a “cover-all” expression for all the different types of money we may use – bank money, Apple Pay, Paypal, coins and notes – and perhaps even crypto-currencies.
But we understand very well that “cash” is what we might call “free” money. Once we have those coins and notes in our pocket (or under our bed) no government or corporation can really stop us from using them (or not using them) however we please. Every tradesman is likely to have two prices for each job – one for “digital” bank money (recorded by the state via the banking system) and another (cheaper) price for cash which the state may find it difficult to lay its hands on.
As we shall see, the best crypto-currencies are also “free” money just like cash only easier to use on the internet or fpr transfer over long distances between countries. Digital money is money that exists only as 1s and 0s within the memory of a computer – you cannot hold digital money in your hand as coins or notes. With the important exception of crypto-currencies, all digital money has to be “held in trust” on the computers of some external agency. Usually this is a bank regulated, and at least partially controlled, by some national government..
The integrity of crypto-currencies, on the other hand, does not depend on “trust” but on the power of the blockchain and the privacy of cryptographically protected private keys.
Facebook has a vision for “Libra” as a new style corporate-created digital money. This has big implications both for banks, for governments and for you and me. If we wish to live in a “free” world then it's vital we have at least some money (at present cash and crypto) which is outside the control of state and corporation. Any move to a cashless society is a recipe for tyranny – when even your ability to buy food may be cut off on one pretext or another by an over-arching power. China, with its comprehensive system of social credit scoring, is already well on the way to being such a society.
The Facebook White Paper is a long and turgid document and its vision may well be heavily modified before Libra becomes a reality (possibly next year). So far Libra has hardly even made front page news. After all most modern mass media journalists are lazy beggars who are not keen to research challenging subjects – easier to write about lying politicians or sex mad soap opera stars. But, make no mistake, this mega-corporate vision is likely to have significant consequences – not just for the slow witted traditional banks but also for governments as well as you and me.
Where Facebook has started, others may follow – particularly Amazon and Google. As is its custom, Facebook makes great play of its supposed good intentions in launching this new corporate money. It is supposed to bring cheap banking to the millions who at present have no access. The value of Facebook money (the Libra) will be guaranteed by being based on a basket of well established fiat currencies (e.g. the dollar, the pound, the euro etc.). When you buy Libra for fiat money (whether dollars, pounds, or other) then your money will be exchanged for Libra and then held in a central bank account in Switzerland. The whole process will be managed by a large consortium of well establshed “validators” (such as Visa, Paypal, Facebook, Mastercard, Coinbase, Uber, etc. etc. - there are more than 30). The “validators” will maintain records on a blockchain and take profits from investing the fiat money which they receive from purchasers of Libra. Once you have your Libra then you can spend it, save it or send it with a user friendly App designed by Facebook. You can even run your business with it though how far Facebook will co-operate with state tax authorities remains unclear!
Oh yes – and Facebook promise they will never use your financial dealings to give them extra information to combine with your Facebook profile. They are good at making promises!
You will find an excellent exposition about all this by Andreas Antonopolous on youtube - HERE I can thoroughly recommend you find 30 minutes to listen to what he has to say.
In summary Antonopolous believes that the “free” money we need if we are to live in a “free” society should satisfy 5 conditions. It should be:
Open – Anyone should be able to use it in any way they want
Borderless – It should work in the same way in every and any country on Earth
Neutral – There should be no control on how you use it – either on what you buy or who you send it to
Immutable – neither its value nor the way it works should be under the control of any outside power whether state or corporate
Auditable and Transparent – the way it works should always be open to inspection
Most of the emerging crypto-currencies meet all these requirements as do the major world currencies when they are in the form of coin or notes such as the Euro or Dollar. While over thousands of years gold and silver have always been the safest form of “free” money.
Clearly the new Facebook currency fails on the first four conditions – we don't yet know about the fifth. So nobody can claim that the Libra is a true crypto-currency. It will have a Committee of the great and the good managing it, an office and a Chief Executive (in Geneva). This means that state controls will prevent it being used in “rogue” states such as Iran or any others that the US does not like. “Libra” will certainly not be allowed to operate in China or Russia. It also means Facebook will almost certainly have to provide national governments with all the information they need to levy taxes. And, at the end of the day, we only have Facebook's promises that they will not misuse the new personal information their currency will provide.
In short, the Libra is anything but a “free” currency. It is a direct and calculated move (by both corporations and nation states) towards a “cashless” society where they have greater control over the masses and there will be no “free” money. No doubt with 2 billion potential users the Libra will also pose a serious threat to the traditional forms of monetary control used by nation states to “manage” their economies. Those holding Libra rather than bank money will be outside state control – although we don't yet know if the Libra management in Geneva will have its own wider economic objectives! The Libra will certainly destroy the retail banking sector just as iTunes and the internet destroyed the old established music industry.
So Dear Reader, you may think this is all rather gritty stuff – perhaps not related to harvesting carrots or picking beans! But so long as we all remain trapped in a world controlled and managed by mega-corporations (the merchants of greed) and war-hungry nation states, we need to be constantly vigilant for all devices which may limit our freedom. A cashless society is one such device and the Facebook proposals for Libra are yet another significant step toward this dystopian future.
As Antonopolous says, we are likely to see a world split into two halves – the East (under China) dominated by state controlled cashless money whilst the “free” West struggles to manage the four competing money systems of cash, crypto, bank (state) money and corporate money. It will be interesting to see how it all plays out.
For those of you have not already done so I strongly advise you to take a deep breath and research buying at least one of the more modern crypto-currencies. There is a bit of a learning curve I will admit, but those of us who fear the world of Big Brother need to try to understand and support what may become an important part of being “free”.
I hold Dash myself as I think its inventor, Evan Duffield, is a very smart (if slightly strange) guy. Bitcoin is the outdated “dinosaur” of cryptos – best avoided. Good luck.