Libra to liberate Africa or will Mark Zuckerberg be the modern Slave Master? We are all debt slaves whether we like it or not. Every single one of us who wake up and go to work to earn an income, which is a representation of our labour. That representation, however, is not created by labour but rather by political will and monetary policy decisions. A select few people at the head of organisations such as central banks make those decisions.
We are lured into a false reality where we believe our labour is fairly converted into FIAT currency value and we are free to plan our lives and work towards achieving our goals. This is inherently not true. In South Africa we have very little control over the debasement of the Rand for example. World currencies such as the Euro, Sterling Pound or Japanese Yen do not suffer as blatantly against the will of the Dollar as the ZAR Rand, but ultimately United States Citizens are the world’s biggest debt slaves.
Has slavery really been abolished?
The face of the slavery practice has changed but the practice itself has not. In fact, it has become much more sophisticated. Our consumer culture has driven humanity to a point where we happily make thousands of Rands of debt, to buy stuff we don’t really need, to impress people we don’t know. This results in longer work hours and less time for family and friends. We think we are free, but the only time we get to think about freedom is during a lunch break and our annual leave (if you can afford one … or have another credit card that has not been used yet)
The activity of legally owning other people who are forced to work for or obey you – Oxford English Dictionary
Over the last 6 months, the crypto and fintech space had been abuzz with Facebook announcing project Libra.
What exactly is Libra?
The vision of Libra is to bring fast and efficient banking services to everyone on the planet. Similar to what Facebook did by connecting peoples lives electronically regardless of where on the planet they found themselves.
The Libra Association (more on this later) proposes to create a sort of “blockchainized” version of money. Instead of being backed by a government and central banks, it is “underpinned” by a “basket” of other “assets” … running out of air quotes here …
In plain English, this means they want to take all the debt-based currencies in the world. (or a selection of them). They then repackage them into a brand spanking new currency. A type of “stablecoin“, or so they will claim. They will add a fancy new logo, hip marketing team and a pre-conditioned user base of nearly a third of the population of the world.
Is Libra a cryptocurrency?
This is debatable as we can not even agree on what currency is. Governments have a consensus on what constitutes Money, but in jail, cigarettes are considered currency. During lobola negotiations, livestock is perfectly acceptable as currency. Just because there is no law or decree to assign a generally accepted value to something, doesn’t mean it cannot be used as such.
Technically, we can group Libra with other cryptocurrencies. This is because of the use of a blockchain-based distributed ledger architecture proposed for Libra. The problem is that none of this is actually needed. Facebook can potentially build the same solution on a much less expensive technology stack, but that wouldn’t be as marketable.
The potential of Libra?
Libra has incredible potential and we will see it in the near future in one shape or another. The idea that you can transfer value as easy as sending a photo or message to anyone anywhere in the world has been around for some time and many permutations exist.
All of these have a major barrier to overcome from a supplier and consumer perspective. Trust. Real blockchain-based money does not require ANY trust in a 3rd party.
Facebook has unfortunately fallen foul in this area. Yet they have continued business as usual, unperturbed by the massive impact their business has. Not only on privacy but also our personal responsibility towards it.
Libra has the potential to change the world, we just don’t know if it is for the better or not.
How does Libra affect bitcoin?
Libra has raised the profile of Bitcoin, the only truly decentralised, uncensored form of currency we currently have. The side effects of Libra becoming more popular, is that onboarding new Bitcoin users now become a lot easier. Libra will reduce a lack of education and familiarity cause friction. Less interested individuals become more engaged as the benefits of privacy become more valuable over time. These benefits have always been valuable but only the wealthy have ever had the resources to enjoy the benefits of privacy.
Libra is good for bitcoin.
The Libra Association
Facebook cleverly approached other industry Titans to form the “Libra Association”.
Companies and corporations such as Mastercard, Stripe, eBay, Paypal, Banks and other non-profit organisations make-up the Association.
According to reports, the reason behind companies such as PayPal, eBay, Stripe and Mastercard withdrawing from the Libra Association is pressure from government lobbyists and regulators disapproving view of the project.
Shift the optics and one could argue that these companies join either for fear of missing out or it is simply smoke and mirrors, to make the association seem less Facebook and more decentralised…
The bigger picture?
It is natural to want to compare Libra with just another crypto project or pretender to the throne which Visa and MasterCard have firmly occupied in recent memory.
Considering the ingredients of this concoction one has to look at other possibilities because Libra has sent shockwaves through the financial system. Some politicians literally advise them against something Facebook has yet to build, test or promote.
But what is Zuck really up to?
In 2016 Facebook launched a pilot project to provide free internet in Africa. Essentially this would be a way where Facebook would allow free access to its services (which, let’s face it, is pretty much everything on the internet for many people) via Satellite for all its subscribers.
Imagine what you could do if you had access to an unemployed labour force who, in order to receive a reward for their labour, need to use your service to a) communicate with others, b) transact with others, and c) interact with others in official matters.
When Libra becomes a reality, certainly in the African context, it would be much more than just a currency. Facebook not only can match jobs with skills, but they also have much better insight and predictive ability into user behaviour. Therefore they will be much more successful at job market services and pretty much any other service they choose to provide for that matter.
They can scale!
Facebook has a concise idea of your credit rating and whether you will repay debt, more than you probably have. Facebook knows how to scale. Who better to provide your credit than Facebook?
Now if Facebook is going to find your Job, they will be processing your salary payment, lending you money and connecting you to friends and family … you trust them with quite a lot … you are effectively giving them the power to ostracise you from society at the click of a button.
The natural progression for this line of thinking is that if they can do all these things, why not delegate the tax collection duties of nations to them too?
Facebook doesn’t need banks, payment processors, technology …. They already have all the leverage they need … information.
There is one thing which has not yet seen reality. This is dirt-cheap hardware devices for mass adoption and access to these services… How long will it be?
Giving up your freedom?
Does Libra mean you are giving up your financial freedom? No, Libra can be seen by some as another way of hiding the fact that we are all debt slaves. Only, in a less transparent cloud of technological wizardry and mystery.
We ultimately gave that freedom up when we subscribed to the idea of debt-based money
Why do governments fear sound money?
If the people are saving, governments will take up the slack, but if they don’t, overall spending falls and as a result, so does income. We look at debt in terms of income, because of this, we increase the debt ratio, without actually incurring new debt. Out on the street, retailers experience a dramatic fall in demand. Consequently, they reduce prices to entice people back. However, because our incomes are falling, we don’t see the new lower prices as bargains, but as a sign of more price falls. So instead of encouraging people to come out and spend, the fall in prices prolongs the spending delay. Now, people expect prices to keep falling, and they don’t spend. The economy contracts.
Debt-based money systems are simply invisible shackles, which very few people realise, impedes true freedom. Libra effectively in this context is more analogous to outsourcing the management of prisons to a private company.
Are you a debt-slave? What are your thoughts on Libra?
