Zuckerberg has persuaded everyone that all is well in cryptocurrency land
It’s rarely business. It nearly always seems to be personal. Mark Zuckerberg ‘improved’ the Winkelvoss twins’ social network at Harvard University, to create Facebook. Now Zuckerberg is planning to launch the Libra coin, his attempt to ‘improve’ on Bitcoin, the cryptocurrency the Winklevoss twins heavily invested in with the millions of dollars they won in compensation from Zuckerberg over the creation of Facebook.
Is Libra merely a billionaire’s prank? Is it just raw chutzpah? Zuckerberg must know that the odds of Libra actually hitting the street are remote. Facebook certainly has been very careful to play down its role in Libra.
It’s already announced a long list of partners to hide behind that include major players like Visa, PayPal and Ebay, and the Libra Association itself, a ‘not-for-profit’ organisation, is headquartered in Geneva (the Swiss have been very far-sighted with cryptocurrencies, aware no doubt that they can no longer profit from Nazi gold, African dictators and the taxphobic wealthy).
The white paper for Libra is so laced with good intentions that you could imagine yourself in church listening to a sermon, waiting for the organ to kick in. All evangelists for all cryptocurrencies wield the argument that the cryptos can somehow help the poorest of the world, although no one has come up with, as far as I’m concerned, an explanation of how it’s easier to turn nothing into a Bitcoin than it is to turn nothing into a dollar.
There’s no question that if Libra were available this week, it would vapourise almost all the other cryptos instantly, and the survivors would stagger on only for a short time. Libra can benefit from the ten years of field-testing of crypto to have the best tech. And more significantly, Bitcoin, the heavyweight of crypto, probably has no more than twenty million active users, Facebook has over two billion, and let’s not forget its formidable allies.
But Libra isn’t online. Zuckerberg has engendered considerable global animosity for his hubris and cavalier attitude to privacy with Facebook. More importantly, Facebook’s power and lack of accountability has created fear. Facebook’s attempt to essentially set up the word’s largest bank, even if it has ‘not-for-profit’ above the door, has already generated a hysterical letter from the House of Representatives begging it to stop.
My guess is that regulators and governments all around the world will be gunning for Libra. I doubt it will appear in 2020 as planned. Or indeed, ever.
What Zuckerberg has achieved, however, intentionally or not, is to assure everyone that the crypto water is just fine, and they should dive right in. All the hesitant Suits (or whatever it is Hedge Fund Managers wear these days) who dismissed crypto as latter-day Dutch tulips, can now see it’s here to stay.
Which crypto will survive is still anyone’s guess. The year or two of breathing space Libra’s delay will give Bitcoin and others should give them the time to grow some serious roots. Because the cryptos really need to escape from the ‘casino’ culture, where their use is chiefly for traders to make money.
The ‘crypto winter’ and ‘hash war’ of 2018 are over, and Bitcoin has recovered most of its losses. If you go to You Tube you can find enterprising zealots who use payment by crypto to have their plumbing fixed or to kayak the Amazon, but the truth is there is still relatively little everyday, practical use of any crypto. Bitcoin seems more likely to flourish as a sort of ‘digital gold’ for high-end investors than a currency. There are more cash ATMs in a five minute walk from my flat than there are Bitcoin ATMs in the whole of London. If one or two cryptos don’t get serious adoption in the next twelve months, they’ll be finished.
However, if nothing else, we might find out more about the origin of Bitcoin in the near future. Craig Wright, who claims to be Satoshi Nakamoto, the pseudonymous figure behind Bitcoin, is being sued in a court in Florida, by the family of a Dave Kleiman who allege Wright stole Kleiman’s stash of Bitcoin.
Wright is a man who has all the interpersonal skills and bullshit of his fellow Australian, Julian Assange. He is widely referred to in crypto circles as “Faketoshi”. Of course, the fact that he’s not well-liked and volatile doesn’t mean he wasn’t involved in the Nakamoto project. Pleasant individuals rarely change things.
The case doesn’t seem to be going well for Wright and he’s going to have to do something dramatic to prove his contentions. Ironically, the Bitcoin spin-off Wright now advocates, Bitcoin SV (Satoshi Vision) is technically one of the most promising but it lags behind on the crypto chart.
For some reason there are very few people involved in Bitcoin and crypto’s early days who haven’t spent a lot of time helping the police with their inquiries or appearing in court, or jail. The historians will be queuing up to cover this story.
