1. Libra

I suspect that the only thing to happen this week that we’ll remember a couple years from now is Facebook’s announcement that they are going to make their own cryptocurrency.

It’s called Libra. It could wind up being a very big deal.

Here’s Matt Levine setting the table for the discussion:

[M]ost of us don’t walk around with a lot of gold coins or even all that much paper money, and the main actual technology of modern money is a bit more prosaic. It is the list. For most people who have money, most of their money consists of an entry in a list at a bank. Each bank has a list of its customers, and next to each customer there’s a number, and that number is the number of dollars that that customer has. It doesn’t, like, correspond to the number of dollars that the customer has; it is not a handy reminder that the bank has a box somewhere with a bunch of gold coins that belong to that customer. There’s no box. The dollars consist solely of the ledger entries at the bank.This, too, is immensely powerful, especially combined with modern digital technology that lets the bank (and the customer) access the list from anywhere. But there is something too powerful, too easy, about it. The advantage of using gold as money is that it is hard to get a lot of gold: Once everyone agrees that gold is valuable, everyone will want gold, but not everyone will have much of it, so it will retain its value. Once everyone agrees that having a number on a list is valuable, I mean, it’s pretty easy to write a number on a list; right here on my computer I have Microsoft Excel, which allows me to write down long lists of large numbers and put dollar signs in front of them. So the principal form of modern monetary technology is really legal and regulatory technology. Sure the computer systems that keep the lists of numbers at banks are powerful and complicated, so they don’t mess up the lists, but the thing that keeps the system afloat is mostly a set of rules and norms about who gets to keep lists of numbers of dollars. If your bank says you have some dollars in your checking account, then you do. If I say you have some dollars in my Excel spreadsheet, then you don’t.

This points us to one of the problems with most crypto: It’s only valuable to the point that other users ascribe it value. Ethereum or Bitcoin trade at whatever exchange rate they trade at because of end user beliefs.

Now that’s true of real currencies, too, in a certain way. But in another way, it’s not true of real currencies: The dollar trades at what it trades at because people ascribe value to it. But a big part of why they ascribe that value is that the dollar has a state sponsor. It is backed by the full faith and credit (and military) of the U.S. government.

Which is what makes Libra different from other cryptos: It has a sponsor. Not a “state” sponsor. Not exactly. But a near-state sponsor in Facebook.

Another problem with most crypto is that it doesn’t actually function as a currency. There’s so much volatility in the crypto markets that people may buy and sell bitcoin as an asset, but they’re not going around paying for stuff with it. You don’t buy a pizza with bitcoin anymore.

Libra aims to change that. Facebook is going to make it a “stablecoin.” Sort of. Here’s Levine again:

Libra will be a “stablecoin,” in the sense that its value will be pinned to conventional financial assets. Unlike most stablecoins, though, it will be pinned to a basket “of low-volatility assets, including bank deposits and government securities” in different currencies, so it won’t consistently be worth one dollar or one euro or anything else. “As the value of Libra will be effectively linked to a basket of fiat currencies, from the point of view of any specific currency, there will be fluctuations in the value of Libra.”This strikes me as very annoying, but it has some obvious advantages for Facebook/Libra. For one thing, they’ll only need to manage one general Libra, rather than having different stablecoins corresponding to different national currencies. For another thing, if Libra gains widespread acceptance, its lack of one-to-one correspondence will give it a tendency to displace national currencies.

And that’s the rub. From the start, the goal of crypto was to eventually weaken the very idea of the nation-state by replacing one of its core functions: The minting and maintaining of currency. This was not a side-effect. It was the whole point. Crypto is, at heart, an anarchic project.

But independent crypto never really had much of a chance to accomplish that goal.

Crypto sponsored by a giant tech behemoth, on the other hand . . .

Well now we’re talking about something very different. Maybe.

I wonder: If the crypto project succeeds in weakening the power of the state only to transfer that power to enormous corporations, will the techno-anarchists who dreamt it up believe that they improved the world?

2. Collector’s World

This hits me where I live: