With cryptocurrency launch, Facebook sets its path toward becoming an independent nation

(MENAFN- The Conversation) Facebook has announced a plan to launcha new cryptocurrency named the Libra , adding another layer to its efforts to dominate global communications and business.Backed by huge finance and technology companiesincluding Visa, Spotify, eBay, PayPal and Uber – plus a ready-madeuser base of 2 billion peoplearound the world – Facebook is positioned to pressure countries and central banks to cooperate with itsreinvention of the global financial system .

In my view as asocial media researcher and educator , Facebook CEO Mark Zuckerberg is clearly seeking to give his company even morepolitical power on a global scale , despite the potential dangers to society at large. In a sense, he is declaring that he wants Facebook to become a virtual nation, populated by users, powered by a self-contained economy, and headed by a CEO – Zuckerberg himself – who isnot even accountable to his shareholders .

Facebookhasn't behaved responsiblyin the past, and is still wrestling with significant public concerns – and investigations – about itsprivacy practices ,information accuracyandtargeted advertising . Therefore, it's important to see through the hype. People mustconsider who is reshaping the world , and whether they are doing it in the best interests of humankind – or whether they are just seeking to benefit the new class of elite technology executives.

Humanity needs ethical leadership, and time to think through the potential repercussions of rapid technological change. That's why, in my view, Facebook's cryptocurrencyshould be blockedby financial regulators until its design has been proved to be safe for all of global society.

Technology companies are interested in aglobal currency that is native to the internet . That could allow companies like Facebook and Twitter to bring in more users to their platforms, andcollect moneyfrombusinesses who want to jointhe new system. They also want tosiphon off business from the existing financial services industry . That sector is worthtrillions of dollars , is enormously profitable, and yet hasstruggled to implement its own digital currency .

The technical details of Facebook's plans are still emerging, but it seems that the company is not seeking to compete withBitcoinor othercryptocurrencies . Rather, Facebook is looking to replace the existingglobal financial systemwith an all-new setup, with Libra at its center.

The company may be counting on increased public interest incryptocurrencies and financial technologies , and its market strength, to overcome objections. However, I don't believe Facebook should be allowed towreck the global financial systemlike it has, as many see it,wrecked global communications .

There is definitely a need forsmoother, faster and cheaperways tosend money around the world , and to provide access to financial services to the manypeople who do not have formal bank accounts . There is real potential to Libra, but there are likely to be ways to improve even more, developing a payment system that better serves the world as a whole.

At least at the moment, the Libra is being designed as a form ofelectronic money linked to many national currencies . That hasraised fearsthat Libra might someday be recognized as a sovereign currency, with Facebook acting as a ' shadow bank ' that could compete with the central banks of countries around the world.

It doesn't help that Facebook is already positioning itself to evaderegulatory scrutinybycreating a corporate subsidiarythat will join anostensibly independent governing bodyfor the Libra.

To protect consumers, regulators should look carefully at whether the new system supporting the Libra is sound. It may be that an entirely new set of financial rules and regulations is needed to shield the existing financial system from harm if the Libra becomes more popular than national currencies. At the very least, governments need to proceed slowly and carefully when new products may introduce systemic risks into our environment. Even theCEO of Googlehas acknowledged that. In my opinion, Libra's planned launch in 2020 does not allow enough time to fully vet this technology and its risks.

Financial regulations have developed over time to encouragetrust between unknown parties , and to protect regular customers from fraudsters and corporate greed. There are also rules that help governments prevent and detecttransactions that support crime and terrorism .

This is not to say that all payments and purchases should be tied to aknown entity online or in real life .Cash and anonymity is also a civil rightand is key to privacy and personal freedoms.

As new digital financial services, methods of electronic payment and currencies develop and become popular, they should not be allowed to undermine longstandingfinancial safety systems , even in the name of smoother, cheaper transactions.

My concern is not just about large-volume transactions. Facebook has shown how even small amounts of money can buymicrotargeted adswith the power to influence public opinion and election outcomes in the U.S. and around the world.

Facebook has a long history ofquestionable business models and privacy practices . The public, and their representatives in government – including elected officials, financial regulators andcentral bank authorities– should carefully scrutinize all aspects of Facebook's cryptocurrency plans.

This concern is especially urgent because Facebook also has a long history of launching products and services, like political ads andlive-streaming video , without fully considering their potential to damage democracy and the global society at large.

The company has demonstrated its inability to serve society beneficially – and itmay not even be interested in trying . All the signals suggest that customers and regulators alike should carefully examine whether Facebook's Libra istruly innovativeor just a way to avoid restrictions on a potentially hazardous financial product.

Facebook's entrance into the financial industry is a threat to democracies and their citizens around the world, on the same scale as disinformation and information warfare, which also depend on social media for their effectiveness.

It may be hard for world leaders to understand that this is an emergency, as they cannot see the virtual powers aligning against them. But they must huddle quickly toensure they have– and keep – thepower to protect their peoplefrom technology companies' greed.

It will be key to understand if Facebook's future cryptocurrency will ultimately function more like anonymous cash, or more like a traceable credit card transaction. Facebook has the blockchain and encryption technology to create an anonymous digital cash-like system, or a private digital currency,which has not been created yet . Anonymity would heighten the risks of abuse such as money laundering, so it's worth watching out for a cash-like Facebook cryptocurrency that mirrors the central banks' cash system.

In addition, I cannot help but reflect on the name that Facebook chose for this, the Libra, which is areference to the Roman measurement for a pound , once used to mint coins. In many ways the company that Mark Zuckerberg is building is beginning to look more like a Roman Empire, now with its own central bank and currency, than a corporation. The only problem is that this new nation-like platform is a controlled company and is run more like adictatorshipthan a sovereign country with democratically elected leaders. Even now, the company may haveas much poweras some countries – andmore than others .

In the wake of the not too distantglobal financial crisis , and the 'fake news' and disinformation culture that is developing, people must slow down and fully evaluate disruptive technology of this magnitude. Society cannot withstand a launch of a cryptocurrency in Facebook's infamous ' move fast and break things ' style.

Facebook
Financial markets
Roman Empire
Cryptocurrency
Mark Zuckerberg
Information warfare
financial system
Facebook ethics
Facebook livestreaming
Disinformation
Delete Facebook
Facebook scandal

MENAFN1806201901990000ID1098654793

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.