Facebook’s Libra Can Destroy the World Order
Currency is more powerful than borders in defining nations, and Facebook wants to turn users into citizens.
It’s a common trope to characterize entrepreneurs and CEO’s as megalomaniacs, but Mark Zuckerberg is acting like a legit real-life Bond villain. As of writing this, Facebook is trying to get permission to launch its own form of cryptocurrency, Libra. While Facebook has a lot of obstacles to overcome for Libra to succeed, the potential consequences of Libra’s success are terrifying.
Libra really can disrupt and destroy the world order. (When I say “world order,” I simply mean “the way the world is currently ordered” not that Libra will take down the Illuminati or other conspiracy-theory uses of the word.) Our world functions as a cooperation (more or less) of nations. If any large corporation is able to create and popularize its own form of currency, it will erode the very concept of nations.
Currency, Not Borders, Define Nations
Money is such a strange thing, it has great value and no value at the same time. Whatever currency we use it only has value because of what it represents. The value of the American dollar has value because it represents the value of what we produce here in America. When we exchange dollars or use them abroad, they are accepted because people have confidence in America as a nation.
When nations fall, their currency becomes useless. That’s because the currency no longer represents anything. Likewise, the strongest nations and economies in the world, are what other countries use to compare with their own currencies. In a global economy, and an ever-more connected world, it is currency, not borders that define nations.
Without a currency, a country has no leverage and cannot quantify its productivity or value to the global economy. Likewise, when people outside of a country chose to use that country’s currency, it still contributes to the power and influence of that nation. Having a connected world has made borders almost obsolete, and there is nothing really stopping nations from forming without them.
A great example of this is Estonia. They have an e-residency program allowing people to set up and run businesses “out of Estonia” without actually having to be in the country. Since launching in December 2014, the program has brought over 54,000 entrepreneurs from over 160 countries. It’s earned over 17m euros in revenues to their economy via taxes, fees, and business links with Estonian companies.
How Libra is Different from Bitcoin
“But wait, isn’t cryptocurrency already a thing? What’s the big deal if Facebook has one?” A big reason the story of Libra is under-reported is because people see it as just another “Bitcoin scheme.” But there is a huge difference between Libra and Bitcoin: No one owns Bitcoin as a currency.
Bitcoin is completely open-source, and no one has control over it. That is part of the reason it is so volatile. The value of Bitcoin works more like gold, and rises and falls on pure demand. That is also why Bitcoin struggles to grow beyond its initial pool of enthusiasts.
Facebook would have ownership over Libra, and can then manipulate the currency much in the same way bad-faith countries try to do with theirs. It can also use the value of Libra to influence world markets, get a seat on economic governance committees, and even establish their own parallel banking system.
How Libra is Different from the Euro
The Euro has been a fascinating economic experiment, as it is also a historically unique effort of multiple countries pooling their resources together into one currency. Part of the controversy comes from the point I made at the beginning; the Euro takes away some independence from the countries that use it. The value for Euro countries to cooperate is that most of them are too small to have any economic leverage, and pooling together has made them a greater influence.
The biggest difference between the Euro and Libra is that the Euro is multiple nations coming together to boost their currency, while the Libra is a single corporation trying to subvert its own nation’s currency. The Libra won’t help America gain economic leverage, it will diminish it. The Libra will cut a small-nation sized whole out of America’s value, much like if a state left the Union.
The Euro is also governed responsibly (mostly), with board members and democratic process. The Libra, however, will be a tiny dictatorship governed by Mark Zuckerberg. There will be no way to regulate or govern Libra once it grows widely accepted.
How Facebook is Trying to Bait-and-Switch Regulators on Libra
To try and sneak Libra into the market, Facebook is proposing that Libra’s value be based on other currencies. With this proposition, Facebook hopes regulators will be fooled into thinking that Libra will be bound to the rules of the global economy. That is true, but only until Libra gains a large volume of users.
Sure, Libra would play nice in the beginning, but once a large enough chunk of the population used it, it would be “too big to fail.” To become a currency of its own value, all Libra has to do is reach the scale of a middle-sized nation, somewhere between 80–100 million citizens of Facebook. That is less than .05% of the active Facebook users it already has. Reaching that level of adoption is not far-fetched.
No, Someone Would Stop Facebook Before That Happened… Right?
If you think politicians and governments are going to save you from Facebook’s quest for world domination, think again. If the recent impeachment hearings have taught us anything, it’s that pretty much everyone sells their soul to whoever is in power at the moment. If Facebook was growing rapidly as a global economic power, you can bet your precious family photos that almost every politician in the world would be singing Mark Zuckerberg’s praises in the hopes of staying on his good side.
Sure, governments have armies, but those weapons are made by corporations. Many people, when retiring from the army, go into private security for corporations. If you think Facebook can’t raise an army to care for it’s growing currency, you are also mistaken.
I’m not saying all of this is a sure thing. There are already people raising the alarm bells on Facebook’s Bond-worthy plot for world domination. However, there is a very real chance it could happen. We should be a lot more worried about it.