bad-boy bitcoin on the back foot
Many of those, myself included, that have benefited from the recent upsurge in crypto values may feel like raising a glass to ol’ Zucker and his Libra digital currency but I’d ask them to hold on for a second before popping those corks and remind them to be careful for what they wish.
Bitcoin, founded in the aftermath of the 2007/2008 crash, envisaged a radical and somewhat utopian way for ordinary Joe to avoid the perpetrators of said catastrophe and the subsequent devaluing of everything they owned via ‘quantitative easing’: banks, big business and government. Its philosophy was to cut out the middleman, whether state lackey or corporate wage-slave, and allow unfettered, yet secure, access to a currency outside of the control of these institutions. In the crypto world, debatable, questionable trust and dishonest human actions are replaced by tech certainty via the blockchain.
What the blockchain undertakes is that verified, but unconfirmed, transactions are collected together onto a block that is then spread across the networked community of users and added to the stack of other blocks. This ‘blockchain’ is held by every user, in the form of a quasi ‘double-entry distributed ledger’ that removes the need for any third party authority ie bank or government. Subsequent fortunes have been made and have been lost. Satoshi Nakamoto, the mysterious, unknown, pseudonymous creator of bitcoin, was ranked as the 44th richest person in the world in 2017 with a personal fortune in excess of $19bn, but hasn’t been heard from since 2014.
So what happened, and why are we not enjoying this profound future ten years down the line?
One reason is that bitcoin made enemies. Lots of them. First the Indian government and then the Chinese, two societies that bitcoin was envisaged as having great potential within, refused to recognise it as legal tender. On the back of this, the banking world dispatched its outriders with messages of dark-web doom and advertising behemoth, Facebook, even refused cryptocurrency ads. As it transpires, it did so to buy time whilst developing its own, launching Libra last month with backing from Visa, Mastercard and PayPal, which together make up more than 97% of the global market for payment services. In terms of sheer chutzpa, you gotta hand it to the boy, as this vision will enable his billions of users to make payments and monetary transfers relatively easily and inexpensively. The de facto Bank of FB has delivered the ambition of bitcoin.
However, don’t be taken in just yet. Realising several years ago that advertising revenues were being squeezed, that ad-blocking was the way to improve device performance, Libra offers the tremendous revenue opportunity of a tiny slice of every transaction together with previously un-envisaged data-harvesting capability. By looking after the cents, billions, trillions, zillions of dollars are coming their way. They’re going to know not only who you’re talking to and what about but who are undertaking business with, what you’re paying for and when you’re doing it. In our serially disappointed age, when a company known for unprecedented privacy violations is big enough to launch its own currency, it’s just too darned big.