Almost two years ago in Southbank Investment Daily, I speculated that Mark Zuckerberg was slyly setting the foundations for a US presidential run.
After hiring Barack Obama’s 2008 presidential campaign manager (“change you can believe in” still brings a cynical smile to my face), the Facebook CEO had embarked on a grand tour of the US, aiming to engage with the citizens of all 50 states, and be photographed doing so.
Like all good presidential campaigns, “The Zuck” was heading out to win hearts and minds. He was shaking hands with the everyman before getting his own dirty in the field, and sharing the whole thing on Facebook.
As one post read, accompanied with a collage of images from his tour of Wisconsin, “First time feeding a calf, first time trying unpasteurized milk straight from a cow, first time driving a 70-year old tractor.”
There was sadly no accompanying image of him drinking milk “straight from a cow”, however, he did declare it was “delicious”.
An image from the tour featuring Zuck with farmers in Wisconsin. Almost like a Norman Rockwell painting – would be good for a 2020 campaign
Source: Facebook
And to make himself even more electable, he’d embraced religion after years of declaring he was an atheist. Truly a man of the people.
Having watched a billionaire outsider take the White House against all odds, it seemed Zuck fancied his chances in the arena for the Oval Office – and I believed he had a decent shot at it. A visiting relative who ran a think tank in DC was similarly open to the idea, and when he was over we even made a mock toast to “Zuck 2020”.
At this point, Facebook’s data harvesting operations and cavalier approach to securing its users’ privacy were no secret, and yet nobody seemed to care… just as they hadn’t for over a decade.
That all changed later in the year of course, when Facebook became a target for an establishment shocked by the ascension of Donald Trump. Political actors looked to take Facebook’s scalp as a trophy and further their careers (they still might, and probably will in my view).
By the end of 2017, a Zuck presidency seemed out of the question – certainly for 2020.
But that no longer mattered. For Zuck had figured out where the real power lies, and had set his sights on becoming a central banker instead.
Enter Libra, the long rumoured cryptocurrency that Zuck first hinted he was working on at the beginning of 2018.
Libra aims to become a globally adopted digital currency native to no one country, that everybody turns to conduct online payment. It differs from most cryptos as this will actually be backed by a chest of assets known as the “Libra Reserve”. This is a basket of fiat currencies and short-term government bonds (though no gold), intended to ensure its value is not volatile, no matter where in the world its users may be.Â
Although it’s being touted as a “stablecoin”, the value of Libra will not have a fixed exchange rate in any currency, but will float in accordance with market forces. It’ll be a bit like an exchange-traded fund (ETF), which can trade at a premium or discount to its underlying holdings (known as net asset value, or NAV) depending on market sentiment. But this ETF you’ll be able to spend, possibly as soon as 2020.
It has partnered with some big names, many of them Silicon Valley giants, like ridesharing app Uber, music streaming service Spotify, and payment provider PayPal. Importantly, it also has the support of Coinbase, a big crypto exchange that accepts fiat.
Personally, I reckon the project will be great for the crypto world as a whole, increasing awareness and use of digitally native currencies – a “gateway drug” that will increase broader crypto use and ownership by orders of magnitude if it is successful.
Though Libra takes aim at bitcoin, it will miss – Libra will be run and managed by a board of central planners, the absence of which is bitcoin’s strength. (In fact, if Libra is successful as a means of exchange, I expect it will increase bitcoin’s value markedly.) Â
What it might hit instead is the traditional banking system, by establishing dominance over cross-border transactions, and international payments. It could also pave the way for microtransactions in everyday society, where – for example – instead of purchasing a subscription to a magazine or newspaper, you could simply pay a few pennies for an individual articles on a subject you want to learn more about.
As crypto maven Andreas Antonopoulos said of it:
While Facebook’s Libra doesn’t compete against any open, public, permissionless, borderless, neutral, censorship-resistant blockchains, it *will* compete against both retail banks and central banks. This is going to be fun to watch.
But does Governor Zuck have a future as Governor of the Bank of Libra? Potential users will likely be sceptical as to how private their purchases will be. Readers may recall an instant message thread made by a 19-year-old Zuck in his early days as a social media pioneer which gained notoriety during the Cambridge Analytica scandal:
Zuck: Yeah so if you ever need info about anyone at Harvard
Zuck: Just ask.
Zuck: I have over 4,000 emails, pictures, addresses, SNS
[Redacted Friend’s Name]: What? How’d you manage that one?
Zuck: People just submitted it.
Zuck: I don’t know why.
Zuck: They “trust me”
Zuck: Dumb f*cks.
More to come tomorrow,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates