Nobel-prize winner Joseph Stiglitz, who has previously advocated for a full ban on cryptocurrency, doesn’t like Facebook’s Libra plans either.
Stablecoins might be a friendlier option to someone like Stiglitz, who believes crypto lacks all the properties of sound money.
Facebook’s project might present a challenge to banks and governments, but it will still be well-regulated.
Moreover, the coin will be based on the value of various fiat currencies – all of which Stiglitz openly supports, from an economist’s point of view.
But when it comes to Facebook’s plans, Stiglitz thinks it will just lead to more problems. In a new editorial at MarketWatch, he writes:
“The world has also made progress on financial transparency, making it more difficult for the banking system to be used to launder money and for other nefarious activities. […] The last thing we need is a new vehicle for nurturing illicit activities and laundering the proceeds, which another cryptocurrency will almost certainly turn out to be.”
However, if people decide to do crime with Facebook’s crypto, they’ll be giving the case to prosecutors.
Facebook has access to more data about more people than perhaps any organization in history, bar none.
That being the case, Facebook offering a financial product only amps up their knowledge.
Damningly, Stiglitz added:
Only a fool would trust Facebook with his or her financial well being. But maybe that’s the point: with so much personal data on some 2.4 billion monthly active users, who knows better than Facebook just how many suckers are born every minute?
Go ahead and commit a crime with Facebook’s Libra; see what happens. Facebook will comply with warrants for information, and it will have more data than any ATM or cryptocurrency exchange might ever have about you.
Nevertheless, Stiglitz thinks Facebook’s just creating another avenue for criminals. And that’s not the only problem with it.
According to the economist, only criminals will see real value in Libra.
“There are two obvious answers to the question of the business model: one is that people who engage in nefarious activities (possibly including America’s current president) are willing to pay a pretty penny to have their nefarious activities — corruption, tax avoidance, drug dealing, or terrorism — go undetected.”
Stiglitz sees that the cryptocurrency might have some use cases, but doesn’t think these override its potential for misuse.
He joins a growing chorus of regulators who are asking Facebook to step on the breaks with its plans to enter finance.
Facebook, for its part, hasn’t released a finished product and doesn’t plan to do so for some time. The Libra blockchain has generated a great deal of buzz, as people speculate on what the world’s largest social network entering cryptocurrency will do for the space.
Last modified: March 4, 2021 2:37 PM