Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)
Libra, Facebook’s attempt at cryptocurrency, has been confusing at best, disingenuous at worst. Coming from this cryptocurrency enthusiast and bitcoin owner since early 2013, it is time to dispel some common misconceptions. Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)
Libra Is Not A Game-Changer
Will Facebook bring a lot of interest to cryptocurrency due to exposing its 2 billion person worldwide user base to Libra? Absolutely. Will the crypto investor make “200%, 1000%” returns from it? Absolutely not.
Libra is a stablecoin. That means its price will be pegged to a basket of currencies including USD, EUR, and others. Like many other stablecoins, Libra will most likely fluctuate within a narrow range around $1.00 per coin: it is designed not to increase (or decrease) much in price.
Even with easy access to Libra through Facebook, Instagram, and WhatsApp, there is little evidence users will spend it to explore the wide, wild world of crypto. In its marketing materials, Libra claims to want to reach the global “unbanked” to reduce payment remittance costs. If true, it is doubtful there will be as much financial adventurism into crypto as coin enthusiast’s hope.
If anything, because of anticipated KYC (Know Your Customer) rules at signup, it will be even easier for companies and governments to monitor and censor your own money. Don’t be surprised if a future Facebook or Instagram ban gets you locked out from your Libra wallet.
Libra Is Not Even Crypto
Show of hands: When was the last time you sent someone GPay (Google) money via email or IM? How about when Facebook had its own peer-to-peer (P2P) service in Messenger? But you have probably used Venmo or PayPal, right? Essentially, Libra will be an overhyped version of PayPal with a shiny fake crypto sticker on it.
Having a blockchain isn’t enough. According to crypto godfather, Andreas Antonopoulos, there are five pillars to being truly crypto. A cryptocurrency must be:
- Open: Without Restriction To Who Can Own It Or Mine It
- Public: Independently Verifiable Through A Blockchain Or Distributed Ledger Without Gatekeepers
- Neutral: Agnostic To Place, Race, Or Face
- Borderless: No One Country Can Claim It Or Stop It
- Censorship Resistant: Transactions Cannot Be Restricted By Anyone
By Default, Libra Fails At Least Four Of These Five Principles.
For starters, there will only be 100 validators for the system, as part of the Swiss incorporated nonprofit Libra foundation – setting a company back $10M to join and an estimated $280,000 a year to run. Only these members will be able to check the transaction ledger (the Libra whitepaper itself is hesitant to even call it a blockchain!), which kills the public part. Facebook has been quietly talking to regulators over the past year, definitely killing the borderless part. Can we believe censorship is too far behind?
If you want *real* cryptocurrency that can help the unbanked send payment remittances, then there needs to be exposure to the speed and privacy of coins like Monero, DASH, or even Litecoin (bitcoin is best for savings at this point). All of these are big cap coins with a lot of daily volume and active developer communities maintaining the code.
Black People Will Get Left Behind – Again
With rampant misinformation about what cryptocurrency is and a lack of exposure to it, the black community risks being left out of the picture for the future of money. Of the 28 initial Libra partner companies, none feature any African American-facing companies or interests. While Libra says it wants to partner with some universities as well, would you hold your breath for one of them to be an HBCU?
By using Libra, you’re willingly engaging in taxation without representation. By exchanging American dollars for digital Libra, you give Facebook and its partners the ability to earn interest off your money in traditional banking schemes (taxation) without passing along any of the earned income along to you (lack of representation). They don’t even try to hide it: It’s in their whitepaper. Instead of your dollars hard at work in the community through investment, supporting black-owned businesses, or supporting your “black-owned” self, it will be spread out among Facebook and its corporate partners.
With a 9,500 member Facebook group, Black People & Cryptocurrency (BPC) fights off MLMs (multi-level marketing), badly conceived ICOs, and ill-informed media to self-educate the community and spread the crypto gospel. In an effort to rectify the 2% funding rate of black startup founders, BPC has established an accelerator to develop—and fund—up to 20 crypto and blockchain-focused companies to work with HBCUs.
In BPC, as well as in life, you are encouraged to DYOR: Do Your Own Research. When it comes to the 2020 rollout of Libra and its wannabe-crypto coin, take advantage of its whitepaper to do the same.
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