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Facebucks is the last thing the world needs

Is Facebook's Money – Libra – fun money, or a threat to all currencies? Or is it just a giant scam to transfer people's money to Facebook?

Facebook's suggested currency, Libra – or as NPR says it, Facebucks – has created a storm. Libertarians see Libra, a variant of a cryptocurrency backed up by Facebook's big dollars and watched by companies it has put together, bringing the day when crypto carts will really challenge all global currencies and fulfill the economist Friedrich Hayek's dream of Denationalizing Money . Or maybe, as a Hacker Noon article by Erasmus Elsner, says: "Facebook has found a place to park their $ 40 billion + cash reserves, and everyone thinks it's [sic] about crypto" ̵

1; a smart way to take in free money without paying interest,

Buried in Libra White Paper are a few sentences that say Libra will also enable a global digital identity for humans (read: a global Aadhaar). All this from Facebook, which is under fire for mass scaling of privacy. From a platform that more easily expands its users to visibility, the "real" currency of the narcissistic digital age: If you want your posts to be viewed, pay us .

It is not my intention to have a close-up on Libra. Instead, I will focus on what money is, not in theory, but in practice. The money is what we spend on transactions; That's what we put into a bank – or under the mattress – if we want to store it. Simply put, it's both a replacement and a store of value. It becomes legitimacy as one of the two. The state bears what the guarantee is on each note from the central bank. All other forms of "money", such as those used by Alibaba – Alipay – or Paytm – derive the value of the central currency, and are held in what can be called "digital wallets" that we hold with these companies. [19659002] Most people see these wallets as temporary real money storage that can be used to make mobile payments. In China, most WeChat or Alipay use payments, even small ones. Both cash transactions and the use of credit card payments are reduced in China, which can also happen in different parts of the world.

Facebook's Libra tries two things at once. It challenges all global currencies, as it will be possible for payments to take place in Facebook's ecosystem without the use of a particular currency. It is a currency backed by a private company, not a government. So is completely beyond all currency control of governments. Of course, Facebook uses cryptocurrency as a replacement for the state guarantee that each state extends its currency. But let's be clear that the credibility of Libra or Facebucks lies in being supported by Facebook, not its crypto algorithm.

Of course, the real world is not that simple. Yes, no country will be able to regulate Facebook's money. Except for the United States. Let's not forget that Facebook is a US company that operates under US law. It is bound by the same laws that apply to US banks. Remember when US sanctions were imposed on Iran, and all the money lying in US banks – and even outside the US – was seized by the US? In fact, the return of these monies is part of the Iran U.S. Joint Joint Action Plan (JCPOA) agreement, some Trump has rejected. So let us not fool ourselves; Facebook's money will not be under the legal control of any government except the United States.

The second part is with 2.27 billion users. Although a small number of them "buy" Facebucks to deposit their digital Libra wallet, Facebook will be on a large amount of cash. It can add a very large amount of money to its $ 40 billion cash reserve through this route. Facebook does not keep its reserve in its vaults at its headquarters in Menlo Park, California. Or in the bank earns some measly interest. Or in research. It uses this huge pile of cash as a giant hedge and investment fund. What Facebookers want to do, by buying Libra, increases this stack of cash to Facebook. We buy some fun money to play with in the Facebook fairground; and Zuckerberg gets real money to play with in the real world.

Facebook has claimed that its Facebucks will allow for exclusion to enter the financial system; They introduce their version of money to help the poor, non-linear Facebook pockets. Most are aware of the true "altruism" of Facebook: it has become one of the richest companies in the world, and Mark Zuckerberg is one of his richest citizens. In India, we are already familiar with the Facebook rhetoric of "helping them excluded" during their Free Basics campaign. It is unlikely to cut the ice here. But it can still have some traction in countries that believe that Facebook is the internet. Or among people who use the Internet largely for Facebooking.

So the key questions: Is Facebook introducing the first money in the world that is not supported by a sovereign or sovereign state? Or is it a gigantic scam to launch a bank unlimited by any rule? Or currency control? Can states that allow Facebook to do so still control the money side of their economy?

For China and the US, the problems are quite simple. In the United States, Facebook is under its jurisdiction and must obey any regulations there. For China it is again quite simple. There is no Facebook in China. They don't need to control Facebook and can regulate WeChat and Alipay, the two mobile wallets there.

With the exception of North Korea, Iran and Russia, which are already under US sanctions, the rest of the world has the problem. In these countries, regulators will ban Facebook's money? Or will Facebook's users, a larger number today than the population of any country, be able to force their governments to surrender to Facebook? This is the great battle that forms in the financial world.

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