Facebook's Libra Requires Too Much Trust
“The best way to find out if you can trust somebody is to trust them.” So said Ernest Hemingway.
The question is, how much trust should we invest, for how long, before we decide we’d do better to invest our trust elsewhere?
Facebook has just announced plans to launch a new blockchain-based digital currency networked called Libra.
Facebook will be asking many of its users to invest their trust in its ability to provide a stable alternative to traditional currencies - and one which guarantees privacy and security.
Reactions to Facebook’s announcement have been mixed. Financial regulators in regions like the EU are watchful. As things currently stand, networks like Libra would diminish the power of governments over the regulation of currencies.
Predictably, many banks are also unimpressed. Blockchain currencies promote user-driven online ledgers and P2P exchanges, cutting out some of the banks’ traditional services.
Some technologists and crypto-enthusiasts, on the other hand, have reacted with great enthusiasm. For them, Libra provides another tool for the democratisation of the flow of money.
They see the appearance of a company as large as Facebook in this space as a way of forcing governments to become more engaged with crypto-currencies in general.
One difference between Libra and other systems such as Bitcoin is that its value will be linked to recognised currencies such as the US dollar, the euro and the yen. This may mean that its value doesn’t fluctuate as wildly as that of other cyber-systems.
Heavyweight companies such as Visa, MasterCard, Uber and Vodafone are already backing Libra, as are social enterprises and charities like Kiva and Mercy Corps.
For the average consumer, however, there are good reasons to be wary. Some of these relate to digital cash in general, others to Facebook in particular.
Perhaps the greatest challenge with digital money - whether in the form of crypto-currencies or the cashless payment systems currently favoured by banks and other institutions - is its disconnection from anything physical.
Some of the nations who’ve led the way in the adoption of cashless systems for everything from shopping to public transport now face a growing problem with digital debt. Cash may be messy and often inconvenient, but it has weight. You can feel it leaving your pocket.
Swedish economists have indicated that they would like to see their country go completely cashless by the early 2020s. Yet around 80 per cent of Swedes still say they value having cash and more than 60 per cent say they feel access to cash should continue to be a legal right.
In some quarters, for some people, the ubiquity of cashless payment options is encouraging spending without forethought.
This partly explains the rise in the number of charities and social enterprises devoted to helping people deal with personal debt.
Libra presents a very specific set of perceptual problems, which are associated with its mother company, Facebook.
Here is a company which was co-founded and now led by a man whose mantra for many years was, “Privacy is dead”. Recently, Mark Zuckerberg changed his mind on that. Now he says, “The future is privacy”. Which is it, Mark?
Having built a global mega-corporation on the idea that people no longer care about their privacy, he now appears to have turned 180 degrees.
Apparently, these people are now, suddenly, so concerned about the security of their data - and their right to control it - that this concern will be a dominant factor in shaping the future.
Thus far, Facebook has demonstrated nothing more than a thoroughly cavalier approach to users’ - and non-users’ - privacy.
A string of scandals, capped by the Cambridge Analytica debacle, have shown that left to its own devices and without adequate regulation, Facebook’s default option is to offer as little data protection as possible.
Some will argue that the company is trying to address this problem. Not so, according to a report published by a House of Commons select committee this year.
It said that despite Facebook’s assurances on better practice when it comes to personal data, the company remains more interested in corporate profits than data security.
On another front, Facebook continues to be investigated for its role in the indirect promotion of extremist ideologies.
The company has long claimed that it should not be regulated as a publisher of content or a media company. Why? Because it operates only as a platform for other people’s material.
Yet it recently argued, in response to a lawsuit before a Californian courtroom, that because it makes editorial decisions as a publisher it should be protected by the first amendment.
Clearly, Facebook is confused - or disingenuous - when it comes to its role as a publisher.
Facebook claims that a major motivation for launching Libra is that it wants to bring a more inclusive financial ecosystem to people in developing nations. Many of these people have little or no access to banks and other financial institutions.
This is certainly a laudable goal. However, there are other, smaller companies and social enterprise that already offer similar digital services.
They may not have the reach of a megalith like Facebook but one wonders why the latter couldn’t simply support them in their efforts, individually or collectively.
Facebook’s default appears to be control - first of the flow of data and now the flow of (and the nature of) money.
This raises important questions about how the treatment of personal data that may be generated in the process of using Libra. Will Facebook be upfront about this? The record thus far suggests not.
Taken together, these issues suggest that there are good grounds for a public trust deficit when it comes to Facebook.
Say what you will about the battle for supremacy between hard currencies and their crypto alternatives, trust is still the ultimate currency.
Much has been written and said about the so-called Trust Economy, which has spawned the Ebays and Ubers of this world. Trust, however, is the bedrock of all economies. All economies are based on exchanges and these are founded on trust.
Facebook has consistently treated private data as its corporate property. It has often proven to be irresponsible in its role as a publisher and media producer.
It has often shown itself to be disrespectful of democratically elected organs of state, which have been entrusted with guarding the public welfare.
And it has arguably demonstrated that it is a mainstream corporation seeking profit above all else, though it masquerades as a non-corporate disruptor, working mainly for the people’s best interests.
Mark Zuckerberg and his company have asked us to trust them many times and failed us. Do we seriously want to trust them with the very nature of money itself? I vote no.
WATCH the #2030PlusTV report on this issue.
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