How Facebook's Libra could endanger the economy? | bestbrokers.co.uk

How Facebook's Libra could endanger the economy?

Facebook's Libra is currently making the economic headlines across the globe. It was therefore a hot topic at the Chantilly (France) G7 meeting of finance ministers and central bankers. While that meeting was ongoing, the U.S. House of Representatives and the U.S. Senate were carefully listening to David Marcus, the manager for Facebook’s digital currency project.

This is a companion discussion topic for the original entry at https://www.bestbrokers.co.uk/blog/2019/08/19/how-facebooks-libra-could-endanger-the-economy/

Carlo -

Yes, a very good article that outlines many of the increasing concerns of the impacts from this relative newcomer to the financial arena.

Many that I already voiced in [a previous comment on here] in late July of this year. (Bitcoin vs. Libra: What should you invest in ? | bestbrokers.co.uk):

But let’s not forget that Facebook from inception until 2014 was primarily associated with social networking - underlined by their acquisitions of the likes of Instagram in Apr 2012 and WhatsApp in Feb 2014.

However, once you dig a little deeper it becomes readily apparent that the real strategy for the future of FB, from later in 2014 and onward, has been to capitalise on earnings growth through greater diversification - we have seen them buy out the immersive virtual reality experience provided by Oculus VR

the UK drone company Ascenta,

ProtoGeo Oy from the fitness and health monitoring market,

Vidpresso a leader in interactive video streaming and conferencing

and the UK/Israeli team messaging app Redkix

So it should have been no great shock to those ‘in the know’ when Libra was announced, especially in light of rumours running around the industry in late 2018 early 2019…

But has this been a step too far and/or too soon for MZ?

Many seem to think so and are seemingly joining forces to

It was back in June of this year that Mark Carney, governor of the Bank of England, set this particular ball rolling when he gave Libra a cool reception stating that Threadneedle Street would approach the digital currency with “an open mind but not an open door”.

He said the digital currency would have to meet the highest standards of prudential regulation and consumer protection, and address issues such as money laundering and data protection.

Libra has been promoted by Facebook as a freedom currency, to allegedly provide low cost online commerce and financial services to an otherwise unbanked population of over a billion people using, amongst others, its current Messenger and WhatsApp applications.

Despite this new cryptocurrency being developed alongside some of the world’s biggest payment companies it has still encountered substantial regulatory scrutiny in the US and Europe.

It is clear that the Cambridge Analytica scandal, Facebook’s management of its customers’ data and the company’s role in the spread of fake news and extremist videos is not so soon forgotten or indeed forgiven.

In part recognising these obstructions and in part seeming to offer an olive branch, the head of policy and communications at the Libra Association, Dante Disparte, emphasised the importance of the project’s backers, which includes the payment companies MasterCard, PayPal and Visa and Lyft and Uber, working together with regulators around the world in order to achieve a “safe, transparent and consumer-focused implementation of the Libra project”.

Perhaps such an olive branch was deemed necessary given the roasting that David Marcus (Mark Zuckerberg’s lead man on the Libra launch, AKA ‘Mr. Facebook Cryptocurrency’) received when he gave evidence in front of the US Senate Committee on Banking, Housing and Urban Affairs on 16th July this year.

He was categorically left in no doubt of the depth of the Senate’s anti-Facebook sentiments as they made it clear that FB “ doesn’t deserve our trust ” and in fact that it “ should be treated like the profit-seeking corporation that it is” .

As if all that wasn’t enough, most recently on 13th September we have had Bruno Le Maire French Minister of Economy and Finance Tweeting that "In the current conditions, we should refuse the development of #Libra in Europe while working on improving the efficiency of our common payment system. We should also work on the creation of a digital public currency”. Thereby making the French viewpoint on Libra crystal clear.

So it seems that there is a lot more to do before Facebook can launch Libra into the world – back from the originally presented date of mid 2020 for sure – if they stick to their promise of holding back the launch of Libra until Facebook has satisfied concerns of regulators the world over.

Amusingly, I have to mention that regardless of all of the above, Facebook is still in fast forward mode on the technology side ahead of launch.

After more than two months in beta testing with 50 security researchers and block chain experts, they have thrown open the testing doors to Joe Public by announcing a Libra Blockchain Bug Bounty ranging from £500 to £10,000 dependent on the scale of threat from the bug discovered. Fancy a go?

But now to the real point of this post.

Shock horror - I for one do not see Libra as a threat to the economy, financial stability or sovereign currencies!

If you care to take a read through the Libra White Paper you may note tucked away on the last page the following statement of intent: “An additional goal of the association is to develop and promote an open identity standard. We believe that decentralised and portable digital identity is a prerequisite to financial inclusion and competition”.

It has been clear to all that Facebook’s business model since inception has been to harvest and monetise personal data.

These two brief and seemingly innocuous sentences tell me that nothing has changed here. By implication they tell me that the real aim behind Facebook creating Libra is to set the standard for global digital identities for the future.

It’s not control of finance they are after but something much more valuable - the control and global dominance of digital identity data!