Facebook Faces Uphill Battle with its new Cryptocurrency

Facebook Faces Uphill Battle with its new Cryptocurrency

Quick question – do you trust Facebook? Do you trust it with your personal info? With your darkest secrets? How about your money?

That reflexive distrust is bad news for the social network’s new cryptocurrency, Libra. And politicians are launching a full-bore attack.

At a hearing on Tuesday, Senator Sherrod Brown (D-OH), the ranking member of the Senate Banking Committee, claimed that, “Facebook has demonstrated through scandal after scandal that it doesn’t deserve our trust. We’d be crazy to give them a chance to let them experiment with people’s bank accounts.”

“I don’t trust you guys,” said Republican Senator Martha McSally. “Instead of cleaning up your house you are launching into a new business model.”

The Libra is poised to capitalize on a two-headed PR nightmare – the volatility of cryptocurrencies with perhaps the most scandal-ridden company on the planet.

Remove Facebook, and Libra faces the same barriers to entry as Bitcoin – libertarians and anarchists appreciate its decentralized nature, while Keynesians like Paul Krugman see it as an affront to economic history.

For their part, crypto-advocates revel in its uprooting of established fiscal theory. Bitcoin’s unofficial declaration of independence claims that it’s “inherently anti-establishment, anti-system, and anti-state. Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian.”

Meanwhile, Krugman believes that “cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years.”

Critics charge Bitcoin (and all cryptocurrencies) with inherent instability, with its decentralized framework enabling everything from Ponzi and pyramid schemes to drug dealers and terrorists. Proponents argue that cryptocurrencies are designed for systemic stability, not price stability (like fiat currency systems), but the truth is almost completely irrelevant if no one trusts the system, decentralized or not.

And, well, Facebook isn’t exactly synonymous with trust.