Facebook says it will be launching its cryptocurrency – GlobalCoin – “in about a dozen countries” by the first quarter of 2020. We can expect more solid details by summer, BBC reports. Over the last few months, Zuckerberg has met with Bank of England governor Mark Carney to discuss the company’s cryptocurrency plans. Zuck also met with representatives from Gemini – a firm founded by institutional crypto-bigwigs and his nemeses, the Winklevoss twins – the Financial Times reports.
How will “GlobalCoin” work?
According to BBC, Facebook wants to make a digital currency that people without a conventional bank account can still use. The Big F wants to work with banks and brokers to let users convert fiat currencies into its GlobalCoins. The social media firm is allegedly also in talks with money transfer services like Western Union to look for cheap ways to send money abroad. BBC also says Facebook is in talks with online merchants to accept GlobalCoins as payment, with lower transaction fees as an incentive to use the digital coin. It all sounds simple enough but there are some big questions that need to be answered. For one, how decentralized will this system be? (after all, decentralization and censorship-resistance are two of cryptocurrencies’ unique selling points). For two, how is Facebook going to use cryptography to secure users’ assets? For three, who is going to be able to see a person’s transaction history? For four, who is going to control this system? Need I go on? Earlier this year, JP Morgan took headlines after it announced the first successful use of its digital token, JPM Coin. Naturally, a flurry of reports followed saying that each token is redeemable for fiat, and that the system was powered by blockchain. JPM Coin sounded like a cryptocurrency, with one important distinction: it really isn’t. JPM Coin is only available for certain institutional investors, and runs on an entirely private and permissioned (read: centralized) blockchain. It’s not outside the realm of possibility that Facebook would follow a similar principle. Proof-of-Work blockchains, like Bitcoin, have long suffered scalability problems, an easy fix for this is to institutionalize the blockchain and centralize its consensus mechanism. In other words, to ensure GlobalCoins transfer faster than current payment systems, it won’t be that surprising if Facebook takes control and verifies transactions itself. Ultimately, it means the platform can set the terms of use and decide how people use the virtual asset. If users don’t comply, they could risk having their accounts frozen – and considering the company’s recent deplatforming moves, this is certainly a legitimate threat. We’ll have to wait and see how strict the terms will be, though.
The end is nigh?
I shouldn’t have to paint the picture, it should be obvious enough, but Facebook’s digital currency will likely give the company another avenue through which it can track its users. Imagine a bank that not only knows about every financial transaction you’ve made, but also knows your political leaning, your interests, where and with whom you spend your time, and so on. In some ways, Facebook’s GlobalCoin fits hand in hand with dystopian narratives where the world has come to be dominated by a just few global superpowers. Where each has its own language, its own politic, its own currency, and ultimate control over its citizens – and anyone that doesn’t fit this mold is simply… dealt with. Hopefully that won’t happen, but given the social media giant’s history of data harvesting and how it has been used to infringe on democracy, we should tread cautiously before making Facebook our bank. The most terrifying thing about all this, though, is that my mother heard about the news before I did. If my personal history is anything to go by, when this happens, it means the end is probably near.
