New details emerged yesterday about Facebook’s plans to leverage blockchain technology. According to a Bloomberg report citing insiders, the massive, terrifying, deeply corrupt social media company is planning to build a dollar-pegged stablecoin to enable payments through the WhatsApp messaging application. The effort will focus first on India.
You may be strongly tempted to celebrate this news, perhaps as a legitimation of the promise of crypto that will help spread awareness and adoption more broadly.
Resist that urge. There is nothing to celebrate here.
In case you’ve been asleep for the past three years, a quick reminder of what Facebook is. First, starting during the 2016 U.S. presidential election, it became clear that Facebook was exercising minimal oversight of its news algorithms and advertising platform, leading to the rampant spread of fraudulent news, active foreign election interference, and the mass harvesting of user data by bad actors. WhatsApp itself has been implicated by the U.N. in accelerating the genocide of ethnic minorities, after Facebook ignored repeated warnings. Over the past six months, moreover, it has become increasingly clear that Facebook actively worked to hamper investigations of its mismanagement, including by tarring its critics with anti-semitic conspiracy theories.
No “crypto” Facebook builds has more than the slimmest chance of being even minimally trustworthy.
In other words, Facebook doesn’t care at all about your privacy or financial sovereignty, or for that matter about basic human values. Its leadership is the product of the craven Harvard Business School orthodoxy that has perpetuated vast inequality and crisis-driven business cycles. No “crypto” Facebook builds has more than the slimmest chance of being even minimally trustworthy. But it will almost certainly be sold to the global masses by co-opting the rhetoric of real crypto projects.
Facebook is extremely unlikely to build a real cryptocurrency because it wouldn’t be guaranteed to control it. A true cryptocurrency is based on a public blockchain, which can be both administered (“mined”) and used by anyone on earth with the necessary infrastructure. True cryptocurrencies, such as bitcoin, Monero, and Litecoin, are maintained and developed collaboratively, and their rules either can be changed by something akin to a democratic process, or “forked” by a dissenting minority. They are also, because of their structure, highly resistant to tampering by third parties, including governments.
None of this would be compatible with Facebook’s goals. Even leaving aside the issue of control and governance, a true cryptocurrency would allow seamless access by third-party wallet interfaces, which Facebook would regard as unacceptable free-riding on its global user base. More starkly, truly open cryptocurrencies force the responsibility for financial regulation and enforcement further towards governments, because their global movement is hard or impossible to restrict. Facebook, already facing hostility from governments worldwide, can’t afford to appear a party to money laundering or other forms of regulatory circumvention.
If Facebook does launch a “cryptocurrency” .. you can bet they’ll freely sprinkle their communiques with blather about security, freedom, and privacy.
So a Facebook “crypto” would, at best, be based on a permissioned, fundamentally centralized ledger along the lines of XRP or EOS. That distinction would be entirely lost on most of WhatsApp’s billions of users to begin with. But you can bet Facebook would do its best to further obscure it. Facebook has already duplicitously adopted the circa-1995 rhetoric of an “open and connected world” as a feeble distraction from its abuse of user trust. It would be even more effective to co-opt the growing enthusiasm for the benefits of cryptocurrency. So if Facebook does launch a “cryptocurrency” (the WhatsApp plans are tentative and not officially confirmed), you can bet they’ll freely sprinkle their communiques with blather about security, freedom, and privacy. We’ve already seen the bargain-bin version of this piggybacking with Initiative Q, a centralized (and imaginary) digital currency that had no trouble slyly invoking cryptocurrency.
Just like Initiative Q, but on a massively larger scale, Facebook’s entry would dilute and misdirect global enthusiasm for basic rights like privacy and self-determination. It would create a vast new pool of currency under the effective control of a company that has neither respect for, nor accountability to, the users it has already conned into laboring for free to build its massive profit margins. There might be short-term benefits for users in the developing world, but there’s every reason to think the long-term global cost of Facebook Crypto, just like the costs of its ‘free’ social networks, would be incalculably massive.