Facebook is moving into cryptocurrency, aiming to create some type of stablecoin that will make it possible for users within its gargantuan network to transfer value to each other. Why Facebook doesn’t simply use an existing cryptocurrency is, of course, a mystery.
Perhaps it fears to open the minds of users too much: from cryptocurrency they might graduate to better social media platforms, like Minds.com.
What will the real value of another token pegged to the US dollar be to the crypto community? We can assume that over such a broad swath of users, the thing is bound to see some real utility. We can expect the same for Telegram, who’ve decided to build a blockchain from scratch – something to compete in the ever-deepening sea of smart contract platforms like Tron and Cardano.
But if the coin is just issued by Facebook, at its discretion, without any real decentralized governance, does it even qualify as a cryptocurrency? That much is debatable. We’ve talked before about the properties of a cryptocurrency, and why JP Morgan’s internal stablecoin just doesn’t fit the bill.
There is some delineation, too, between algorithmic stablecoins like MakerDAO’s Dai, which is a collateralized asset and pegged currencies like Paxos Standard. The Dai essentially relies on the market to determine the validity of its tokens – coins are backed by at least 150% their value in Ethereum, which provides a pretty good cushion to ensure liquidity.
As Minds.com CEO Bill Ottman has said, it’s fabulous that Jack Dorsey and Mark Zuckerberg, proprietors of the tools of mass distraction for a whole generation, are interested in sound money. It’s good that they’re investing resources into blockchain technologies. But if they don’t walk the walk, why should we listen to them talk?
The name Jack Dorsey has gone parabolic in crypto circles recently due to his participation in the Lightning Network torch event and friendship with Elizabeth Stark. Dorsey still supports censoring unpopular speech, though, which Bitcoin and cypherpunks as a whole despise.
Typically, we understand that censorship is the least effective tool for any debate. In too many cases, it provides undue interest and influence to the censored. Most of those trolls banned from Twitter are, in fact, disgusting people. But now they’re all shacked up at Gab, with fewer and fewer people to call them on their sh*t. But Twitter gets it wrong from time to time. See the whole #learntocode debacle:
Facebook’s crypto plans are still pretty unclear. One thing is for certain: the blockchain can be used for anything at all. It can be used to increase personal freedom – or take it away. Blockchains store value, track supply chains, and enable tamper-resistant voting. The technology can probably also be used to successfully launch an uncontrollable version of SkyNet.
Here’s a thought, though. If you think Chainalysis’ analytical tools are scary, imagine what a cryptocurrency built by Facebook might reveal. If it knows, for example, that you held the token, and then someone else held it, and then someone in Iran managed to hold it, would that trace back to you? How much user data will be present in these tokens? Will they have a prayer of being fungible or tradeable on regular crypto exchanges?
Whatever they do, the blockchain natives will continue to do better. That’s my opinion until I see evidence otherwise. Facebook should just create an open money API and let the various players in the blockchain space compete for dominance on it. They’d probably make more money that way and have less need for blockchain engineers.
Last modified: March 4, 2021 2:43 PM