Facebook is in the hot seat this week, as Congress asks burning questions about the company’s Libra “cryptocurrency.” I use quotes, because in the purest sense, a cryptocurrency is decentralized, trustless, and permissionless. Libra is none of these. Instead, Libra is more likely to become…
Facebook is in the hot seat this week, as Congress asks burning questions about the company’s Libra “cryptocurrency.” I use quotes, because in the purest sense, a cryptocurrency is decentralized, trustless, and permissionless. Libra is none of these. Instead, Libra is more likely to become a private currency that enables a turnkey totalitarian state with all-encompassing surveillance.
While the Libra Association is purportedly an independent, decentralized entity that governs the project, Libra’s consensus system is so corporate it’s offensive to call it a true cryptocurrency. It’s effectively a meta-corporate entity, with the likes of Visa, Mastercard, PayPal, Uber and Spotify at the helm.
As far as being “trustless,” why wouldn’t you trust Facebook? The company was recently fined $5 billion for breaching consumer privacy. Now you want to trust them with your personal data AND finances?
The term “permissionless” in the context of blockchains means that no centralized gatekeeper can determine whether or not you can participate in the network. The 27 other founding members of Libra paid a pretty penny to be validator nodes in the network—an initial minimum investment of $10 million worth of Libra Investment Tokens issued by the Association—and had to meet very specific criteria laid out by Facebook. These entities form an elite and centralized group of gatekeepers who will control permission on the Libra network. This is just another central planning committee.
Now Facebook can deplatform you AND your bank account, which is a super powerful tool for whomever is controlling it—whether that is big tech or government, or perhaps both. Considering Facebook’s pattern of selectively deplatforming users on the basis of their political beliefs or similar, tightly integrating a payment system with Facebook’s existing social media platform is an extremely dangerous proposition.
Corporatism, the control of a state or organization by large interest groups, sounds like an accurate description for Libra and an evolutionary step towards fascism. Libra espouses the very altruistic mission of empowering billions, especially the unbanked, with a simple, global currency and financial infrastructure. I retain a healthy amount of skepticism.
The real question is who’s in the driver’s seat—big tech or government? In this scenario, I see the answer as both. While this looks like a battle between legislators and big tech, the reality is that they could wind-up collaborating to create a competitor to Bitcoin that is government-regulated. I don’t think it’s a coincidence that news outlets are asking whether Bitcoin was created by a serial criminal concurrent with the discussion of Libra.
The US government would likely see Libra as an opportunity to surveil the public more thoroughly, similar to how WeChat has been operating in China. Libra claims it will keep transactional data separate from social data, but Facebook’s track record and core competency of strip mining users’ privacy makes that claim implausible. This system sets up a total reversal of the essence of blockchain: instead of a new kind of banking that returns the power to the people, Libra sets up the ultimate surveillance state.
The social credit system in China, where every single action you take is tracked by the government and rolled into a social credit score is exactly where Libra is headed. Libra would be one more step on the road to a totalitarian state, one in which the government sees your every move and tracks your every dollar. It’s easy for the government to act like a neutral or even antagonistic party questioning Libra in Senate hearings.
Behind this veil of congressional mistrust of big tech lies enough powerful interest groups and venture capitalists to benefit from a symbiotic relationship, whereby they acquire and monetize data that allows the government insight into every citizen’s lifelog. Furthermore, the possibility of code-based, behind the scenes monitoring via cameras and microphones embedded into every citizen’s hip pocket render the wiretapping and telecom scandals of the past tame in comparison. Ultimately, once the technology is widely adopted, the government stands to reap the benefits.
Is the tar and feathering of Bitcoin and congressional outrage a cover for the Trojan horse public-private conspiracy to install a renewed version of the US Defense Department’s lifelog, an effort canceled in 2004 (the same year Facebook was founded) to build a database tracking a person’s entire existence? Only time will tell.
About the Author: Jake Yocom-Piatt is the co-founder and project lead for Decred, a community-directed and self-funded cryptocurrency.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
Last modified: January 10, 2020 3:33 PM UTC