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Alarming and unnecessary: Facebook new cryptocurrency must be resisted | Charles Arthur | Opinion | The Guardian (theguardian.com)
The tech giant has big ambitions for its digital currency Libra. Privacy and regulation are just the start of the problems @charlesarthur

 ‘Libra will be operated by Calibra, a new Facebook subsidiary.’ Photograph: Chesnot/Getty Images

Have you heard about Facebook’s new “cryptocurrency”, called Libra? Its basic pitch boils down to “we messed up your privacy and gave your data to all sorts, and let foreign actors screw up your elections – now let’s see what we can do with banking!

That’s the quick way to view its announcement of Libra, which will be operated by Calibra, a new Facebook subsidiary. David Marcus, the brain behind it at Facebook, used the company’s typically humble phrasing to explain it thus:

“The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.

You probably thought that we already had a global currency and financial infrastructure, and you’d be right: a loose alliance of banks and central banks around the world keeps the lights on and the bills paid. So why does Facebook want to tear it all down?


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Libra: Facebook launches cryptocurrency in bid to shake up global finance



Libra isn’t, strictly, a cryptocurrency (for tediously technical reasons). Unlike the yo-yoing bitcoin, its value is set against a basket of what we’ll call “real” currencies such as the peso, pound and dollar; that’s decided by the Libra Association of about 100 organisations including Facebook, Visa, Mastercard, eBay, PayPal, Spotify, Uber and others.

They’ve each paid at least $10m to be involved and thus endowed the project with a $1bn pot.

Essentially, Calibra will “print” lots of digital numbered banknotes, and you’ll buy them (with real money) and transfer them to someone else in exchange for some service or good; they can then either convert them back to real money, or use them to buy something from someone, who can then either convert them to real money, or use them to … you get the idea. It’s like buying credits on Xbox, PlayStation or Nintendo, except you’ll have to prove your identity to Facebook via a passport or national ID card.

The aims are far loftier than buying games: “From the beginning, Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low-to-no cost,” says the Facebook announcement.

At this, tens of millions of people in Africa, India and Afghanistan will roll their eyes. They’ve been sending money – real money, not tokens – to each other on mobile phones (not even smartphones) since 2007 via SMS, using the M-Pesa system, which doesn’t require banks or Facebook.
What else?

“In time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass.” Of course, millions of people across Europe and Asia already do this every day, paying with their phone or even smartwatch.

To know why Facebook thinks this is revelatory you have to understand that the US has only recently shifted from swiping credit cards to chip-and-pin; people in shops there look at you strangely if you wave your phone at the card reader.

And as for “paying bills with the push of a button”, only those ensconced in the primitive US banking system could think that was smart. It’s a place that relies on paper cheques so heavily that if you automate a bank payment to someone, the bank prints out a cheque and physically sends that.

So Libra seems to be solving problems Americans have and most don’t. Facebook insists that 1.7 billion people without bank accounts in developing countries need it; strange they can’t see that M-Pesa fits the bill already.


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Overall, it’s not reassuring that Facebook is doing this. First, it has a track record of screwing up when it comes to looking after or respecting your data – Cambridge Analytica and the Onavo VPN that spied on users being just two obvious examples.

Second, it has problems being consistent in how it applies its rules: see the many, many rows over content. It’s ignorant of its naivete, and so big it repeatedly causes huge problems. 
Third, its size and US-centredness means that the new currency could gain critical mass, and take on a life of its own. And that carries gigantic risks.

 Lana Swartz, an assistant professor of media studies at the University of Virginia, put it succinctly: “Facebook wants to be/is now a government.” But have Marcus and Zuckerberg thought of the inevitable problems that will emerge?

What if other governments don’t like what Libra does to their local currency, perhaps by undermining financial export rules? If they block Facebook, what happens to citizens’ money tied up in Libra?

The problem is, Mark Zuckerberg can’t be deposed by anybody, not even his board. I’m worried that the future involves being forced to use Facebook in order to make everyday transactions, and that the privacy promises will evaporate.

Our banking system isn’t perfect – hello, 2008 – but it’s a lot better regulated than Facebook ever has been. Libra doesn’t sound like freedom.

• Charles Arthur is a former technology editor of the Guardian and author of Cyber Wars: Hacks That Shocked the Business World
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    Francisco Gimeno - BC Analyst Dystopian nightmares in science fiction show global corporations dominating the lives and finances on global scale, even fighting wars not between nation states but between corporate territories to win or lose market influence. Facebook sounds to us so much like the beginning of this that is not surprising the strong reaction against it. Interesting how MPesa has been doing this already without having any problem in emerging countries. Libra can be good if used as Mpesa with a global reach (mostly because of low fees) but you don't need a blockchain for this.
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