On 18 June 2019, a video appeared on Facebook. Over images of people plying their trades and counting banknotes, a soothing voice announced the launch of an organisation whose aspiration was to create a global digital currency called Libra. “Join us as we move towards a world where money works for everyone,” the voice said. What the voice did not say was that Libra’s architect was also the owner of the platform where the video had been uploaded. Facebook had indeed designed Libra, but it made sense to gloss over its role: after the Cambridge Analytica uproar, the social network had become the world’s favourite techno-villain, blamed for everything from data breaches to Russian information warfare. About one year before the Libra announcement, Facebook had been publishing smarmy videos and buying full-page ads in newspapers, begging for forgiveness; its CEO, Mark Zuckerberg, had apologised before the US Senate. After such a hellish year, one would have expected Facebook to keep a low profile, listen to governments, and steer clear of regulatory morass. The creation of a currency did not qualify as staying out of trouble. Yet here we are.

Libra is a digital currency whose declared goal is providing an online payment tool to people who struggle to access banking services in deprived regions – but it will likely catch on among Facebook’s two billion-odds users regardless of location. Here’s how it will work: users will buy units of Libra through an exchange, paying in state-sanctioned currencies such as the dollar, and their Libra balance will appear on a virtual “wallet” embedded on their Messenger, WhatsApp or in a distinct app. Exactly like money in an online banking account, Libra would then be used to pay for goods and services online or offline or transferred to someone else. There are multiple reasons someone would use Libra rather than stick to actual money, the most fundamental being that Libra transfers (including international remittances) would be instantaneous and charge trifling fees.

Libra transactions will be validated by the Libra Association, a Swiss organisation comprising Facebook and, initially, 27 other companies, including Uber, Spotify and Coinbase. The Libra payment network will be structured along the lines of a blockchain, the virtual scaffolding for cryptocurrencies such as Bitcoin, whose technical blueprint – imbued with libertarianism – appeared eleven years ago, kicking off the era of open-source digital money ventures. A blockchain is a digital record of all the transactions that ever happened in a given digital currency. It is decentralised: payments on a blockchain are not processed and verified by a single authority – such as a central bank or a payment company like Visa – but by a swarm of independent computers, called “nodes”. While with cryptocurrencies, anyone with enough resources can theoretically run a node, Libra nodes will only be managed by the 28 members of the Association, even if that could change in the coming years. Another key difference between Bitcoin and Libra is that while the former’s value is determined by demand and supply, the latter’s price is designed to be stable, anchored to a basket of currencies and treasury bonds held in the Libra Association’s coffers. The emphasis on stability contrasts starkly with the high jinks speculation of the cryptocurrency world, but essential if one wants to build a planetary payment system.

Libra is expected to launch in 2020, but some suspect it might never launch at all, as governments all over the globe are essentially queueing up to bash it. France‘s finance minister, Bruno Le Maire, declared Paris would block Libra’s introduction in the EU as the technology could undermine governments’ and central banks’ monetary policy. Donald Trump – you guessed it – tweeted that the Libra “‘virtual currency’ will have little standing or dependability”, and demanded that Facebook apply for a banking licence. The US Congress summoned Facebook’s head of blockchain, David Marcus, to a hearing and pelted him with questions on everything from Libra’s countermeasures against money laundering to terrorism financing to the privacy of Libra users. In October, it was Zuckerberg’s turn to go to Washington and the hearing quickly descended into an evisceration not only of the Libra project, but of Facebook itself. Possibly spooked by regulators circling overhead, in mid-October five key original members of the Libra Association – PayPal, Ebay, Stripe, Mastercard and Visa – pulled out of the project.

If the past years have taught us anything it's that Facebook ads can be insidious in dozens of different ways

One point both Marcus and Zuckerberg desperately tried to drive home during their Congress grillings was that this is not really about Facebook, as the social network is only one member of the wider (and dwindling) Libra Association. That is true, but it is also skating over the fact that Facebook is the one member that built Libra and will build the Calibra “wallet” – the tool with which payments in Libra will be carried out – to be enshrined it in Messenger and WhatsApp. Facebook has promised that a user’s Calibra information will be anonymous (to wit: “pseudonymous”) and never linked to their Facebook profile to improve ad targeting. But the company has a track record for breaking such promises (infamously, with the merger of Facebook and WhatsApp data in 2014) and the devil is in the details. For instance, Marcus said, “Calibra will not share customers’ account information or financial data with Facebook unless people agree to permit such sharing." It is not hard to imagine the introduction of a new feature requiring exactly that consent. Libra’s potential for boosting Facebook’s business model is ginormous.

“[If Facebook broke their promise] they would have the ability to pair your financial information with your social graph,” says Jamie Burke, CEO of blockchain-focused venture capital firm Outlier Ventures. “That means what you're spending your money on, paired with your social contacts, your needs, wants, desires. You combine these things – and that's the holy grail of advertising.” We can only speculate about the consequences of such a move: Facebook would know what you spend your Libra on and show you more ads for those products; it might decide to tweak the prices of those products depending on how much Libra you have in your wallet. Or it might offer advertisers the option to target their ads to people who hold only certain amounts of Libra. If the past years have taught us anything it's that Facebook ads can be insidious in dozens of different ways.

There is a further wrinkle in the Libra plan that should set Facebook-sceptic alarm bells ringing: Libra does not just want to become your internet money – it might also want to become your internet passport. One line in Libra’s documentation gives it away: “An additional goal of the association is to develop and promote an open identity standard. We believe that decentralized and portable digital identity is a prerequisite to financial inclusion and competition.”

Digital identity is another technical unicorn that Facebook, in Libra’s clothing, might manage to ensnare. Think about it as a virtual document that enables its holder to prove their identity or their attributes (age, nationality) when accessing a website, an app or an e-commerce account. A current example is actually Facebook Connect, a feature allowing users to log in to certain apps – such as Tinder or Spotify – by using their Facebook profiles. But Facebook Connect is not ideal from a privacy perspective. “That data is centralised and so it acts as a honeypot for identity theft,” says Harry Halpin, CEO of privacy-focused blockchain startup Nym. The model does not work for Facebook either: fake profiles abound and holding all that personal data on its servers makes the company a target for data breaches – which might trigger multi-billion fines.

We might soon all need a Calibra wallet – even if we did not want one

Libra could change that. The users of the Calibra wallet will have to provide a government ID in order to comply with financial “know your customer” regulations. Together with other forms of authentication – for instance, hypothetically, facial recognition – that could verify someone’s identity. That identification process would happen on the Libra network as a whole, diluting risk for Facebook.

What next? Some researchers working on digital identity solutions are also ardent supporters of the concept of “self-sovereign identity”, or the idea that people should own their data. If Facebook decided to go in that direction, Calibra users would receive some digital representation of their credentials, which they would then be able to use how they like. That would be regardless of their using of Calibra: one might decide to close their Calibra account and still keep their digital credentials.

Of course, there is no guarantee Facebook would go for that arrangement. In fact, the alternative sounds much more like something Facebook would do: one’s digital identity would be inextricably linked to their Calibra wallet, making Facebook’s product the passepartout to the internet’s every service. From Spotify to online banking to YouPorn – if the UK’s “porn block” ever comes into effect – Calibra would become the go-to login device and one able to provide verified information about its users (such as whether they are over the age of 18).

“Libra could identify you, give you a ‘Libra identity’ and they might restrict or limit how you can use that in the future or, potentially, even be able to revoke it,” Burke says.

That would leave us with Facebook as the gatekeeper of global online verification. Whether that should worry you depends on how wary of Facebook you are. Privacy advocates may bridle at the thought of Facebook’s becoming at once the overlord of our social life our money and our identity. “Libra could become a nightmare scenario where decentralised cryptographic identity becomes inexorably tied to Facebook’s troves of personal data,” Halpin says. In that reading, a Calibra "passport" would be a Facebook Connect redux, minimising liability for the tech giant without adding much in terms of user privacy. Another interesting question is what would happen to people who have fallen foul of Facebook’s community standards, (or, one day, who might be involved in Libra-related financial controversies). Would they be excluded from Calibra's identity scheme even if it had become the prime way to navigate the internet? If so, Facebook would essentially transform everyone it doesn't like into pariahs and that can't be right; yet, if it decided that Calibra – at least the identity, if not the currency bit – should be open to all, Facebook would likely be accused of enabling those extremists and hate-pedlars it took so long to boot off its platform. As often with Facebook, we're back into damned if you do, damned if you don't territory. But maybe we're looking at this from the wrong perspective: the point is not that Facebook might exclude anyone, but that we might soon be in a position where we aren't able to exclude ourselves. The most annoying thing about the affair is that Facebook has enough users and clout to make its attempt at setting the terms of online identity very credible. We might soon all need a Calibra wallet – even if we did not want one.

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