Recently, a big talking point within the cryptosphere has been “Libra“, the blockchain-based digital cash system proposed by Facebook and administered by the “Libra Association” — a consortium of giant global corporations including the likes of PayPal and Vodafone.
Though disguised as a “cryptocurrency”, Libra is actually much more akin to a corporate-backed electronic money circuit, not dissimilar to WeChat Pay or AliPay, which are ubiquitous for day-to-day payments in China.
If you’ve done a good amount of learning on bitcoin and distributed ledger technology (“blockchain”), you should well know that the main advantage of having a “blockchain” is to have a decentralized, transparent, and tamper-resistant ledger that is not easily controlled or manipulated by any one central party.
Libra is not quite this — it is controlled by a consortium of giant corporations. However, we must acknowledge that it is also quite different from WeChat Pay in the sense that with Libra, Facebook and co. are attempting to create an entire new currency.
This is entirely different from WeChat Pay in that, despite Tencent (WeChat’s parent company) controlling the ins and outs of all WeChat transactions, ultimately the currency of record remains the Chinese Yuan (CNY), which ultimately is under the authority of the government.
The Libra currency will be a centrally controlled currency that is issued by corporations. The first ever potentially mainstream currency to not be under the direct control of a government and its central bank. This has huge implications as it could potentially transfer all the powers that come with financial control from the government to the mega conglomerates of the private sector.
And this, is why the U.S. Congress has called a special hearing to address Libra.
The U.S. Government is feeling the pressure and potential threat that Libra could bring. Without monetary control, a government would lose most of its power.
We are still waiting to see how this plays out.
The U.S. government could deem this totally illegal under the grounds of it being a threat to U.S. sovereignty, and nip the Libra idea in the bud.
Or, the U.S. government could do nothing and let Libra test the waters. But where that will lead to is anyone’s guess.
One thing is for sure though — cryptocurrencies and their potential social implications are starting to really grab mainstream attention. POTUS Mr. Donald Trump even recently tweeted about cryptocurrencies.
At this rate, there is no doubt that government organizations will start to put anything related to “crypto” under much regulatory scrutiny. In fact, this has already started with the SEC’s subpoenas on several ICO shitcoins that were in fact unregistered securities.
Cases like Kik/Kin are only the beginning. There are bound to be more and more of such cases coming to a shitcoin near you in the future.
Libra is already facing such regulatory scrutiny before it even exists. But unlike your typical ICO shitcoin, Libra has the tremendous clout of corporate giants behind it. This will ensure that the Libra vs. government battle will be a long and drawn-out one.
On the other hand, we still have bitcoin. The only truly decentralized and censorship resistant cryptocurrency, available to everyone on Earth.
With bitcoin, there is no owner or CEO, and no physical office or legal representative. If the U.S. Congress tries to call bitcoin in for a hearing, nobody is there to pick up the phone.
This is the beauty of a truly decentralized digital currency like bitcoin. It is synonymous with the internet infrastructure (now also satellites) itself, and is unregulatable.
Yes, the government can exert pressure on bitcoin businesses and exchanges from a local level. However, they can never stop bitcoin from existing and from being transacted in a peer-to-peer fashion.
In the future, as the U.S. government and its organizations start coming down hard on more and more so-called “cryptos”, only the regulated and unregulatable will survive. The regulated may include things like stablecoins and security tokens, while the unregulatable is bitcoin.
For many of the other coins you might be holding, I would not only question their actual long term value, but their existential viability.
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