Sometimes even bitter billionaire rivals need each other. Mark Zuckerberg and Winklevoss twins fell over the founding of Facebook Inc., but they seem to have buried hatchet over blockchain.
According to FT, Gemini, the crypto shop founded by "Winklevii" held conversations with Facebook over the social network's plans to roll out its own crypto currency, which would probably be used to make payments and purchase over the Zuckerberg empire. The lectures suggest something bigger and more open than previously assumed by the company, according to FT: A floating, negotiable currency that is used far and long.
How far and how wide? Well, when it comes to ambition, it's not far from anything Dr. Evil from the Austin Powers movies can come up with. According to the BBC, Facebook's crypto-based system – humbly labeled "GlobalCoin" – will be rolled out next year across a dozen countries. It's more than the eurozone started with.
Unlike Bitcoin, Facebook's goal is not to bring down the established financial system, but to consent to it. The social network is said to be seeking the blessing of governments, central banks and regulators. It also wants to work with brokers and money transfer companies, and to find deals with online stores.
Zuckerberg will obviously do his best to make his new project sound as reliable and overboard as possible when finally released. GlobalCoin is said to be a so-called "stablecoin", which is usually linked to a large currency like US dollars to minimize volatility. So, in theory, one of Facebook's tokens would never be more valuable than the dollar that supports it – as opposed to the Bitcoin's brake-and-bust prices. Presumably, Facebook will also keep things ordinary vanilla first when it comes to using the digital currency, offering simple retail or money transfers to minimize the risk of loss to its 2 billion users.
Regulators and politicians are not dummies, though. This is the kind of movement that will make Facebook an incredibly powerful, centralized network that tracks the user's behavior for the benefit of advertisers in one who also knows where and how they spend their money. Transaction data is a powerful tool, one that is the key to many fintech companies' bubbling valuations. In the hands of a business with Facebook's reach, the unintended consequences can be huge. US Senators have the right to ask strong questions about the consequences for privacy, potential data breaches, and credit scores. If Facebook starts measuring the user's creditworthiness, it will need tough regulation.
Ironically, there seems to be no Bitcoin's decentralized libertarian principles in this currency for billions that would eventually be controlled by one company – and one man. Facebook's co-founder Chris Hughes this month accused Zuckerberg of having "almost one-sided" power over the social network through his ownership of 60% of the voting rights, suggesting that the company's board is accountable to him, rather than vice versa. Conversations to break up Facebook, or at least take a look at the company's monopoly power, will only increase if GlobalCoin becomes reality.
Judging by early reports, this project looks like a dream for an overpowering company, and a nightmare for crypto-true believers. We've got companies to issue their own currency lately – think of the East India company under the British Empire – but nothing like this. Whether the US government sees it as a competitor or expansion of the dollar's global dominance will be crucial. The relationship between Big Tech and politics is becoming even more complicated.
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Lionel Laurent is a Bloomberg Opinion column covering Brussels. He has previously worked for Reuters and Forbes.
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