Tuesday, June 25, 2019

The Trouble Starts If Facebook’s New Currency Succeeds | The Atlantic

Final paragraphs of a Libra perspective by Eric Posner
"But how the Libra Association will use its power is anyone’s guess. The white paper is long on happy talk and short on details. The point is that, along a plausible future path, it will gain immense power, and it’s not beholden to the public, unlike the central banks that manage national currencies. For all the glitzy futurism of cryptocurrencies, Libra is a step backwards in social and political terms, the way bitcoin tried to throw us back into the age of the gold standard. Until central banks were created in the 19th and early-20th centuries, dead-tree versions of the Libra Association were plentiful. They included family dynasties such as the Medicis and the Rothschilds, and massive private banks. Driven by profit and able to operate across national borders, they accumulated massive political power without feeling loyalty to any particular nation—until governments finally reined them in.

Of course, Libra could fail, or become nothing more than a niche product like Venmo. And it could certainly do some good by reducing the cost of transferring money. But government regulators need to approach Libra with a great deal of skepticism, given Facebook’s track record of moving fast and breaking things.

The company has already shown that a successful tech platform can scale up quickly to a once-unimaginable size. An international banklike organization with potentially trillions of dollars in assets and, through its members, ties to billions of users around the world will have a massive influence over people’s economic affairs and far too much political power to be effectively regulated by governments—just like Facebook’s social network."
The Trouble Starts If Facebook’s New Currency Succeeds | The Atlantic

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