The Truth about Libra

Today Mark Zuckerberg is testifying before the House (Financial Services) committee. As a futurist, I’m watching this story closely. 

Libra as a financial tool wants to exist outside of the current financial regulatory framework. Libra has a bit the same vibe as Facebook in that it wants to “bulldoze” its vision and that’s something that a lot Congress people, regulators, bankers, and analysts realize is very dangerous. 

If China is doing massive (at scale) behavioral manipulation via a surveillance state, to compare Libra with the digital currency innovation that is occurring in China is also a dangerous comparison. 

Libra’s data manipulation on a financial data level could actually “imprison” the unbanked and the vulnerable in developing countries who are just emerging on to the internet. 

Even as Libra’s Founding members slipped from 28 to 21 recently, with the exodus of PayPal and other payments services, Libra is not taking “no” for an answer. 

Facebook has already abused its advertising and new media position. If it controls wallets, it could be very much more dangerous for bad actors and behavioral manipulation at scale. This is nothing short of a data war. It’s not just a push for FinServe innovation. 

If Libra was approved, it could spawn so many side businesses for Facebook, there would be an incredible risk for antitrust abuses. It would exist in the digital garden outside the framework of banking and financial regulations. Facebook doesn’t seem to honestly understand the risks of their Libra financial tool product. 

Since Libra will be pegged to either the U.S. dollar or a basket of national currencies, it could become a default online bank of incredible dominance. Because Facebook is already an advertising giant though, it is a conflict of interest. You don’t want the middle man of one industry to have a monopoly as the middle man of another. 

Mark Zuckerberg has this week been saying that Libra is the answer to combat Chinese emerging financial dominance. That sounds a bit like a DARPA argument. Facebook is being aggressive with Libra, instead of taking scrutiny on its heels.

Libra is an example of BigTech trying to clone crypto to sustain its own empire of data harvesting and monopoly abuse. That’s not good for innovation, that’s actually preventing a lot of startups from offering consumers more choices in the marketplace of social media, news and the kinds of utilities one actually does on Facebook in 2019, such as groups, marketplace, events and so forth. 

Google, Facebook, and Amazon are treading on dangerous ground without any sense of regulation — growing to valuations in Ads, the Cloud, and AI that threaten fair market competition, rising as super platforms. This distorts the future of capitalism and wealth inequality, where other companies would be unable to compete on a global basis. 

What happens if FAANG companies disrupt banks and then get into healthcare and education? Our entire society would be run by these pillars, these technological factions — that not only own our data but manipulate us in ways that could only copy the lines of behavioral modification China is investing in. 

In this light, Libra could be a precursor to how online empires unfold. This is why regulators and analysts believe Libra has so much potential for evil and could be dangerous. 

Zuckerberg today spoke about Libra as being a Hero for the unbanked in developing countries. It’s literally sad to hear someone so incredibly rich and powerful using that argument. It’s insulting. Facebook says it’s about putting power in people’s hands. But that’s not the history that we know of advertising or the abuses of its attention data architecture. 

In fact, Google and Facebook have done more to start a surveillance state arms race between China and the U.S. that could dominate globalization in the 21st century. That’s not just a failure of Silicon Valley, that’s an AI-arms race that could destroy freedom and choice online. We’ve already seen censorship start to creep in, in 2019. 

Libra is a bit of a gimmick with the kind of deceptive ‘savior to them’ mission statement that is an entirely fake narrative that Silicon Valley believes is key to starting and scaling a product. 

Facebook has historically been a mechanism for foreign intervention in democracy. In recent times Facebook has been under scrutiny for not fact-checking political Ads under the banner of upholding free speech. Facebook had an Ad ban, while behind the scenes it was creating its own “crypto”. 

Mark Zuckerberg lost a bit of his robotic face on Capitol Hill today. There were moments when his remorse appeared real. But does that mean we should trust Libra for social good?

Libra regulatory hurdles doesn’t just put Facebook’s faults in the public eye, it puts the possible dangers of a cryptocurrency and a blockchain payments system on verdict. Here there are serious concerns for money laundering and various abuses of such a system that would become possible. It’s unlikely Calibra would be able to launch anytime before 2021. 

Mark Zuckerberg is just 35 years old, his commitment to “change the world” seems to be a narrative of Silicon Valley’s game of profitability. So in a sense, Libra also puts all of Silicon Valley and its various abuses on mock trial. That BigTech would get into digital currency banking that has the potential to disrupt the banking industry and payments globally should terrify us. 

We are right to be afraid of a tool that doesn’t submit to the legal framework of the existing financial system and that could introduce an architecture that blends aspects of data harvesting, user profiling, and behavior modification via advertising with financial services. It’s a question of trust, so it’s very ironic that Facebook is the founder of Libra, a blockchain-based payment consortium. For many in the crypto space, it really does make a mockery of blockchain’s trust dynamic. 

If you run a monopoly like Facebook has been, there is no real sense of choice or trust. It became like Google, simply a utility that you used because that’s all that really worked. When advertising firms rule the utilities of how the internet actually works, imagine the possible abuses of a financial tool tethered to their data on each user. That Libra is even going after a global FinServe product is itself an antitrust violation. 

How do you educate a public that has no choice? How do you protect them from behavioral modification online? Facebook is partnering with news curation again and is always seeking new avenues of revenue. The problem is Facebook’s data harvesting advertising approach comes from a position of exploitation, rather than service. 

Libra could be the biggest hoax and cover in history if it’s allowed to move forward with a global stablecoin program. When corporations are allowed to implement deep state rivalries with other nations, like China, Libra has to be seen as a further stage of the surveillance data capitalism that Google and Facebook started. 

Facebook’s trust issues for the Libra Association seriously took a hit when PayPal left, followed by 6 of its peers. Regulatory scrutiny towards Libra appears to be heading for a crescendo in 2020, and Facebook as a predatory data firm with the invention of Libra feels like it’s going after the world’s most vulnerable folk, the unbanked. 

While listening to the house committee hearing today, October 23rd, 2019, you get a feeling of how technology companies are encroaching on the future of trust, democracy, capitalism, and the data and surveillance architecture we are creating in the name of advertising profitability. 

Facebook’s history of misinformation, false promises, privacy invasion, and 3rd party developer abuses is so massive that users are leaving all of Facebook’s products in places like Europe and so are younger netizens in North America. Apps like TikTok and Snapchat are where Gen Z and Alpha generations are growing up, outside of Facebook’s advertising architecture stronghold. 

Facebook wants to be the crypto middleman of digital currencies with Libra. How many legal loopholes will it be able to find to bulldoze and power-lobby its way to fruition? Libra could be a kind of crypto-mafia or “zuck-buck” tool where a B2B consortium could legitimize anonymous accounts. With Facebook pivoting into payments, we have to assume the worst possible outcomes, since it will be a global product with over 100 of the best lawyers money can buy. 

Facebook doesn't want to be seen as the creator of the Libra Blockchain or Calibra. Libra could be a tool for tax evasion, money laundering and promoting wealth inequality on the backs of the poor and the citizens of undeveloped countries just now getting access to the internet. It could be a tragedy of data colonialism. 

Facebook has built a global monopoly on chat. Sending “money” to each other or building social commerce in that chat where Ads take place could be very dangerous for how Facebook piggybacks as the middle man in the evolution of stablecoins, digital currencies and a blockchain B2B consortium with incredible access already to user data and their consumer preferences. 

The amount of regulation that Libra would require that doesn’t even exist yet is so striking and high, abuses of such a payment tool network would be inevitable. It would be impossible to regulate, just as Facebook’s own ecosystem of apps is full of abuses, misinformation, bad actors and a total failure of AI and human reviewers. 

That Libra and Calibra is masquerading as a blockchain product with a sense of an “independent” association is truly unfortunate because it makes a mockery of decentralized governance. A B2B consortium pretending to be upholders of blockchain ethics doesn’t make Libra anything more than an exploitative payment tool. 

The Libra Association is dangerous, whether Facebook is able to be the central ecosystem or not. It’s a cloning of crypto technology that immediately makes most other stablecoins obsolete if it’s passed and able to move ahead. I’m not sure anyone will be able to block it considering Facebook's lobbying budget. It’s a hack, and I’m not even sure Congress or Bills or regulators or politicians or bankers will be able to prevent it from becoming a reality in the 2020s. 

It will likely become a series of stablecoins that will mean it’s effectively a bank for digital currencies. Imagine the power that will give the Libra Association, to by-pass existing brick-and-mortar banking transactions. It could also cripple PayPal and Square with peer-to-peer payments in a global chat product that marries WhatsApp, Facebook Messenger and other Facebook ecosystems. 

A private currency could also undermine sovereign currencies. In the long game Libra could own a kind of digital bank that would begin to take marketshare away from less digital and global banks. Here we are talking about a global payment system that could usher in a kind of new world order (NWO). That would be the ultimate power play of Facebook’s 2.4 billion global users. 

A digital currency at the scale Libra is talking about would be a cross-border payments mechanism that would put out of business a lot of other valid innovations. It would be very bad for FinTech innovation, and not just a threat for cryptos, stablecoins, payment apps, and China’s own ubiquitous payment solutions. Facebook is not good for innovation. Just like BigTech, it’s actually a barrier for real innovation to occur. 

Libra has 21 potential founding members, from a list of an original published 28. Zuckerberg had a lot of prepared remarks for the committee hearing today. How the Calibra payment tool intersects with the Libra Association isn’t very clear. 

Scrutiny on Libra is entertaining to watch, but I’m not convinced lawmakers or regulators can even stop the advent of the Libra Association at this point. The lack of diversity in the CEOs of the founding members is truly astounding as well. The majority are of course executives and white males. Yet this payment tool that seeks to become a global payment system is “for the world”, which implies undeveloped countries that are foreign in that the majority are not ethnically or otherwise represented in the management of the tool and the various companies involved. 

China can build a digital RMP that fast tracks its Belt & Road Initiative that will be faster than the Libra and Calibra systems. Is that a national security issue? China doesn’t respect human rights, rule of law or regulatory assessments as most of the rest of the world understands these things. Some analysts call China a totalitarian state. Is Libra, therefore, a global payment system that could be protectors of democratic values? Is that a valid argument for its existence?

Facebook doesn’t even fact-check its advertisements. It is unable to moderate its own platforms. How can we imagine Libra could be a fair place for global digital currency products to evolve?

Calibra will be backed by real assets, in a 1:1 system so it’s a hybrid digital currency borrowing aspects from crypto, without being a real cryptocurrency. 

The Libra payment system might take a long time to obtain regulation, the product was originally slated to debut in 2020.

How does the Libra Association obtain regulatory approval? Calibra could divorce itself from the Libra Association, even as Facebook continues to pivot to private encrypted global chat. It’s hard to tell what’s real and what’s fake, what’s PR and what might actually happen with this global payments system. Even its whitepaper is full of technical details that doesn’t address its core issues and obstacles towards getting regulatory approval. 

Facebook realizes its plateau on global influence at 2.4 billion is facing a trust epidemic. Is the Libra Association supposed to be the messiah to remedy that situation? As Facebook struggles to pivot to global chat it needs to have a payments product and a blockchain product, but they don’t necessarily have to act together. That Calibra might divorce itself from the Libra Association is one of the more revelatory issues that we learned today. 

When you have the power to ban crypto Ads in your new media company and then clone your own version of a crypto mafia product, it’s the height of hypocrisy in Silicon Valley. Facebook’s moves into payments, blockchain, dating, and non-moderated political Ads without fact-checking changes how we trust BigTech as a whole, not just how we see Mark Zuckerberg. 

Facebook has a trust problem and it’s bled into the Libra Association’s real motives for developing a global payments system. Surveillance capitalism buys into growth at all costs and Facebook as an Advertising monopoly is always scrambling to add more features. That isn’t the same as being an innovator. 

When seven founding members decide this is not the right time to be associated with the Libra Association, you have to wonder about its credibility. Who have left so far? You have mostly payment companies in the form of PayPal, Stripe, Visa, Mastercard and even EBay, Mercado Pago and Booking Holdings. Payment companies don’t seem to like the controversy around the project quiet yet, or perhaps the $10 million node access fee to be a Libra Association member. 

Facebook has become a national security threat, when it was supposed to be a surveillance tool in the guise of “connecting the world”. That advertising rules the American internet, might end up being its downfall, as China innovates in ways that the United States is not capable of doing. Libra as it stands today has a greater chance of standing for money laundering than democratic values abroad. 

Digital transformation has a dark side, that early 90s enthusiasm over the internet were not able to protect against. We must protect the human rights of future generations from bad actor platforms as well.