Zucc isn’t the only lizard among these reptiles

In June of 2019, after much speculation in the media, Facebook finally announced its cryptocurrency project Libra. In short, it is a permissioned blockchain managed by the Libra Association made up of the assortment of companies shown above. They range in industries from those in technology, payments, venture capital, and nonprofits and will be the ones who own the nodes on the network.

In Libra’s whitepaper, it states that the goal of Libra is to create “A stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association.” I won’t tell you to read the rest of it, but holy shit is this project problematic. It isn’t the technical aspects of it because in fact, considering that it will be a permissioned blockchain at first then transition to a public blockchain, it is actually technically sound. What’s scary about it is HOW it will be used and actually, the fact that it will likely be a functioning product makes it even worse.

The Libra cryptocurrency is planned to take its valuation based on a reserve of “low volatility” assets so that the price will not fluctuate based on market speculation against other cryptocurrencies and therefore will be considered a “stable coin.” It makes sense that they are creating what is essentially a mixed commodity-money including other countries’ currencies because at least for now, corporations cannot tax us like governments do. Fiat money, or government-issued currency not backed by a physical commodity, was able to exist because after WWII, the US owned most of the world’s gold and so even though the 1944 Bretton Woods Agreement set the exchange value of all currencies in gold, most countries pegged the value of their currency to the US dollar. These material conditions made it easy for President Nixon to make the gold standard useless and create the system we have today so countries like the US could print money to fight stagflation in 1971. They could also do this because most countries had a nationalized system for currency creation and taxation already in place enforced through violence by the State.

In order to facilitate a viable economy for Libra used by Facebook users (2.4 billion), Libra will need to have a reserve worth in the trillions of dollars of different assets to stay stable. A single user will also need to be able to hold at least thousands of dollars worth in Libra coins to make it a viable currency and store of value. When all of these transactions are taking place, in order to comply with the SEC, Libra will need to prove that all of the available Libra currency can be backed by their reserve.

So now imagine, that inside the reserve, Libra is holding the currency of a country which is currently undergoing some political upheaval and the new government has decided to implement some reform so that workers at large corporation like Facebook or any other in the Libra Association receive higher wages which means the corporation makes less profit. The Libra Association can choose to sell the billions of the currency from that country in reserve on foreign exchange markets to plummet its price causing economic panic as a push back. Don’t believe for a second that because the association is “independent” doesn’t mean it won’t protect its members’ bottom line.