Photography via Libra
Last month, in a move that has left financial regulators and lawmakers scrambling to clamp down on the tech giant, Facebook announced that it would be launching its own digital currency, Libra, in 2020. Cryptocurrencies, internet-based decentralised forms of financial exchange, had their moment in the sun towards the end of 2016, when an upsurge in interest led to a rise in value. They became the talk of the town, with specific kinds such as bitcoin dominating news coverage. However, governments around the globe weren’t on board with this brave new world, and many raised concerns about the anonymity of cryptocurrencies and their previous usage in illicit contexts, such as the Dark Web.
On a very base level, Libra is being defined as a completely new currency, much like the euro or the rupee. In order to give users confidence in the stability of the currency, it will be backed by a reserve of cash from the Libra Association which is comprised of a group of companies and corporations including Silicon Valley heavyweights such as Uber and Paypal. The Libra Association is meant to be a not-for-profit governing body, but regulators around the world have raised concerns about the prospect of a handful of big companies (which have previously faced very little regulation) running amok with a new currency and the influence this would hand them.
“The people who are typically associated with the use of cryptocurrencies are libertarian, white, affluent men”
Of course, the immense power which flows alongside cryptocurrency seems set to fall into the hands of the usual suspects: the people who are typically associated with their use are libertarian, white, affluent men. While accurate data is hard to come by – the whole ecosystem tends towards anonymity – surveys have found that the majority of people interested in cryptocurrencies are men, either as owners or as investors. Furthermore, cryptocurrency gathered steam through being widely discussed on forums around the Internet that are often dominated by men, such as Reddit.
The currency also has a crucial class element too: for communities that have not historically had access to wealth or large amounts of money, investing in volatile currencies such as bitcoin is not immediately appealing. Groups such as Black Blockchain are attempting to shift these inequalities, and Blacks in Bitcoin blogger Edwardo Jackson has commented that he hopes black communities can mobilise around bitcoin, particularly as an alternative source of funding for start-ups.
Despite these aspirations, the reality of cryptocurrency usage has been less progressive: over the last few years far-right groups and neo-Nazi groups have been raking in big cryptocurrency donations. In Orania, a small, all-white town in South Africa, residents sought to create their own cryptocurrency as a way of maintaining an independent Afrikaner state strictly populated by people with an “avowed devotion to Afrikaner culture”.
In Facebook’s white paper laying out its plans for Libra, the company noted that it was hoping to bring it to communities that struggle to get access to traditional financial institutions, like banks. While this sounds good in practice, the roll-out of Libra will, more pertinently, pave the way for Facebook to gain a larger foothold in areas around the world with limited internet access, even if the gains from using cryptocurrency are negligible.
“Libra will pave the way for Facebook to gain a larger foothold in areas around the world with limited internet access, even if the gains from using cryptocurrency are negligible”
The relative anonymity of cryptocurrencies like bitcoin and ethereum is part of their appeal, but a currency controlled by a group of large technology companies might not be able to maintain anonymity – particularly if faced with investigation by law enforcement. Groups that are already criminalised or hyper-surveilled could find themselves being subject to a new form of surveillance through cryptocurrency, with private companies like Facebook holding information about users and their wallets which could be dangerous.
Given Facebook’s run of bad press due to its shady activities (such as the Cambridge Analytica data-harvesting scandal in 2018), lawmakers and privacy advocates have immediately expressed scepticism around Facebook’s intentions with Libra. This week, various US lawmakers in the Senate questioned Marcus David, the person heading up Libra, about Facebook’s plans for the currency. At a hearing, he told congress representative Alexandria Ocasio-Cortez that he would be comfortable taking the majority of his salary in Libra. His nonchalance was met with heavy critique, as Alexandria explained that such an approach to salary payment has been panned across the board due to its historically negative effects on workers. Facebook has since clarified there are no plans for employees to be paid in Libra.
Facebook has asserted that under this new currency, money will be treated like information. While the internet has changed how we convey and absorb information, the world of finance still has some catching up to do. The question remains whether a company like Facebook, and the Silicon Valley white boys club, should be the ones to tackle this frontier.