From the onset, Facebook was different. It offered more and gave what others could not: a magnifying glass, the magic mirror on the wall, lost-and-found terminal, teleportation device with the alluring placebo effect, Aladdin’s lamp with afterglow beam, bonfire and fireworks, a badge of honor, the scarlet letter, the two-way ticket to the relationships Treasure Island.
Able to fulfill the most intimate desires, to serve the noblest purposes, to deliver the most sinister intentions concurrently, it was adopted instantly and grew exponentially. Ten years ago, other social networks and King Kong ain’t got a thing on Facebook — it was the magic people wanted, needed, created to benefit themselves.
Until one day…
The pressurized weight of our inner projections, willful submissions, hidden agendas, wishful thinking cracked the pillars and firewalls of the meanwhile publicly-listed colossus.
The unstoppable matter came down hard.
It pierced identities, crashed visions, shattered ambitions, exuded our darker side as fake hollowness eclipsed iridescent fulfillment.
Perceptions irrevocably changed. Users’ make-believe exodus began. Legislators’ stenotypes engaged. Impugned social network mounted new vision canvas on the spreader bar; subsidiary sanctuaries welcomed revolted digital refugees.
There was no decisive or finite outcome, it was neither the end nor the beginning — just one cycle in the recurring, everlasting, and ineluctable urge of humans to see and be seen.
The pattern did not start with Facebook but with an apple, unrelated to William Tell or Steve Jobs. Likewise, it will not conclude in any other, better social network.
On the contrary…
It will keep repeating itself inevitably, in a manner of maelstroms’ waterbody as long as we inhabit this place. The only question is how many hopes and expectations will drown in infinite loops of our potentials and capabilities before we learn to master them responsibly, within our limits.
There is one other human proclivity quite comparable to such blueprint and pathway — gambling.
Not surprisingly, it has been intertwined with Facebook for quite some time.
As the new cycle of human inveterate need for peroration begins — verified by our digital obsession just as the transaction is confirmed to create a new block of data and become part of the blockchain named Libra — we plunge into this brand new stablecoin, one of the spearheaders emerging from indeed huge spreader bar.
When Facebook Met Checkbook…
To understand the context and origins of Libra, Facebook’s likely foray into centralized banking payment systems and potential industry-altering event for iGaming, we have to go back to 2012, when London-based operator Gamesys developed and deployed Bingo Frenzy app for the social network users in the United Kingdom.
Zynga, a San Francisco company with social gaming in its DNA, joined the party a year later with poker, slots, and online hub featured on blue-and-white pages.
None of this was too visible on radars: the giant had much more to offer back then.
Besides, the geographical impact was limited only to a well-regulated UK market; American interactive patrons were still restrained by the UIGEA.
Thus, seasoned iGamers preferred to find the fairest online gambling mirror somewhere else as the U.S. regulators remained preoccupied with reverberations of Black Friday.
Then seminal 2018 came.
It heralded post-PASPA era but, more importantly for this story, delivered a series of blows to Facebook with ferocity, speed, and mobility on par with Cassius Clay’s performance against Sonny Liston.
The bout was inevitable since the platform’s involvement in interference of the 2016 U.S. presidential elections.
However, Mark Zuckerberg and Sheryl Sandberg, “bent on growth,” as New York Times unveils, were able to “delay, deny, and deflect,” all warnings of hate speech, bullying, and deception.
The heavyweight was somehow kept under the dense wraps, though on very thin ice.
Cambridge Analytica happened — a bombshell revelation about Facebook’s cooperation with the British firm which used a Russian-built application to harvest private information of 87 million consumers without their consent and to influence the behavior of American voters.
They did it by offering personality quizzes which tested OCEAN characteristics — openness, conscientiousness, extroversion, agreeableness, neuroticism.
Facebook knew this for two years “but did nothing to protect its users,” as CBSN reports, nor the company felt the obligation to disclose this to the public, let alone the U.S. Government.
In the aftermath, Facebook lost $120 million in stock market value in one day.
Zuckerberg was forced to testify on Capitol Hill for two days, grilled by the U.S. Senate and the House. He paid a similar visit to the European Parliament but declined to show up before the United Kingdom’s lawmakers — over there, Cambridge Analytica is a matter of breaking the law, and according to the UK’s Information Commissioner’s Office investigation, that’s exactly what happened here.
#deletefacebook was born.
Three days later, the hashtag was endorsed by Brian Action, co-founder of WhatsApp — bought by Facebook four years earlier for $21.8 billion in what became one of the most significant acquisitions for the company — who quit the business afterward.
Kevin Systrom and Mike Krieger, founders of Instagram — purchased by Zuckerberg for $1 billion — followed suit a year later.
…And Leaks, Hacks, Violence, Apologies
Cambridge Analytica affair was followed by a data-sharing scandal allowing phone and device makers’ access to users’ personal information.
It showed that Facebook formed partnerships with almost 60 manufacturers — Apple, Samsung, BlackBerry, Microsoft, Amazon, among others — over the last ten years, going back to the time when apps were not broadly available on smartphones.
The disclosure equals to the situation in which the builder of residence have a copy of security code to unlock the doors and to sift through personal stuff of residents with invisible impunity, and then do the same in apartments of their friends.
The sequence of toxic content affairs was next.
WhatsApp was involved in fake news and viral rumors which led to at least 20 people killed in mob lynchings in India.
Facebook’s subsidiary was used to circulate accusations of child trafficking — “irresponsible and explosive messages,” according to India’s ministry of electronics and information technology — which prompted the brutal attacks, often captured on video and distributed on social media.
India’s government requested WhatsApp to take “immediate action to end this menace,” also stating that platform “cannot evade accountability and responsibility.”
In response, WhatsApp instituted a $50,000 award for research teams to gather and analyze data that “will help us build upon recent changes we have made within [app] and support broad education to help people spot false news and hoaxes.”
A thousand miles to the west, Facebook’s reputation was marred by alleged Rohingya Muslims humans rights abuse in Myanmar deemed as genocide by an independent United Nations investigation.
Carried out by the Myanmar military, the atrocity resulted in hundreds of thousands of refugees fleeing across the border into Bangladesh, towards what became the biggest refugee camp in the world.
The company “acknowledged that it was ‘too slow’ to prevent the spread of ‘hate and misinformation’ in the country,” as CNN reports.
In the wake of these discoveries…
Other scandals such as email addresses’ breach, Instagram password leaks, and cyber-attack through the View As feature in September — affecting close to 50 million people in all — almost went unnoticed.
The same can be said of the affair which unveiled that Facebook rewarded favored partners with users’ data access while it denied them to those looked upon as competition.
Then, bigger guys got upset.
Apple banned Onavo Protect from Apple App Store since it went against its guidelines. In an email to CNBC, the spokesperson noted that Apple “made it explicitly clear that apps should not collect information about which other apps are installed on a user’s device for the purposes of analytics or advertising/marketing.”
Facebook acquired Onavo, Israel-based VPN app which gathers data about what people do on their phones for $200 million in 2013. Three months after Apple’s episode, Facebook pulled Onavo from the Google Play store as well.
Holliday’s season of this never-ending year was highlighted with another apology from Mark Zuckerberg.
This time, it was about the bug which allowed 1,500 apps built by 876 developers to gather photos of 6.8 million Facebook users — by logging in, people unknowingly gave permissions. The bug included photos users may have uploaded but opted not to post.
Investigations, Regulators, Settlements
Next year was no different. It started with another statement from Apple which revealed that they blocked Facebook Research app from Apple App Store.
In a way, the episode is a sequel of Onavo.
Since 2016, Facebook has been paying up to $20 per month, plus referral fees, to users aged 13 to 35, to install iOS or Android versions of Research app and sell their privacy by allowing the software to suck in all activities on the phone and online.
The activity was referred to as Project Atlas. Under the full use of access level granted by the user, the application could constantly collect private messages in social media, chats, photos, videos, emails, web searches, browsing activity, and ongoing location information.
Pressed by mounting industry complains, Facebook shut down both Onavo and Research programs and launched Study program with identical goals and fees.
(Just to be clear: digital ethnography is nothing new. Today, other companies pay $100 to $200 per week to users, including a follow-up interview and screenshots, to participate in. The only difference between them and Facebook is in massive reach the latter possesses.)
Like all of the predicaments — which also included the content of Holocaust deniers, illegal drug sales, prostitution, sex-trafficking, trade of human remains, and endangered animals’ trafficking — were to serve as a preface, the biggest possible guys got upset.
In April 2019, New York Attorney General Letitia James announced the investigation into Facebook to hold the company “accountable for how it handles consumers’ personal information,” as the New York Times reports.
Five months later, in September, the effort became joint investigation when Attorneys General from Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia joined the probe into possible antitrust violations.
The joint investigation comes on the heels of the $5 billion penalty Facebook received from FTC in July. As such, the fine is the largest ever imposed on any company, anywhere, for violating the privacy of users.
It is 20 times greater than the second-largest one — $275 million paid by Equifax — per official FTC statement.
According to documents of the U.S. District Court for the District of Columbia, Facebook consented to enter such Stipulated Order in order to resolve all claims about violation of prior 2012 FTC decision — to not deceive users about their ability to control privacy — and to resolve all consumer-protection claims while being allowed to neither admit nor deny the allegations.
In other words, this is a settlement.
The court order also imposed a 20-year agreement which forces Facebook to reorganize the way it handles privacy decisions. The deal holds the company accountable and enforces an independent privacy committee of the board of directors.
The latter, in effect, removes Zuckerberg’s unfettered and gripping control of decisions about users’ privacy. Committee members have to be appointed by an independent nominating committee, and cannot be fired without two-thirds of owners' votes, which is way beyond his control.
1-in-3: Cryptic Answer to… Everything?
The FTC penalty is only the extension of the Annual Shareholders Meeting held month earlier, where 68% of stockholders voted to institute an independent chair, as reported in Facebook’s SEC filings.
This vote represents an 18% increase in displeasure with the CEO since 2017 when 50% voted to remove him.
The shareholders’ statement, however telling, doesn’t matter much for two reasons.
First, Facebook has a dual-class share structure: class B shares have 10 times the voting power of class A shares, and Zuckerberg owns more than 75% of the former.
Second, when Facebook released the Q2 earnings report — it showed better-than-expected results.
2019 earnings are $1.99 per share (vs. forecast $1.88), revenue is $16.9 billion (vs. forecast $16.5 billion) — including $2 billion accruals for the FTC penalty; the company “set aside $3 billion earlier” — with 1.59 billion of daily active users (8% YoY increase) and 2.41 billion of monthly active users (8% YoY growth).
It makes you wonder…
As of October 24, the world population is 7.74 billion people, which means that 31.13% of all humans on Earth — one out of three — regularly use Facebook, Instagram, WhatsApp, or Messenger every single month.
No. Matter. What.
Ocean tankers come to mind on the spot.
They’re huge. To keep them stable in rough sea conditions and to prevent oil sloshing from capsizing the ship builders request many watertight bulkheads. The design of a vessel has to take this into consideration and calculation. The feature allows tankers to weather the strongest hurricanes, even survive collisions, unscathed.
(The principal constructional approach might also explain how anyone can set aside $3 billion in the previous quarter for the expense that is to happen in the future.)
In the midst of self-inflicted conflagrations, public outcry, regulators’ disdain, users’ migration, the largest settlement penalty in history, internal rulership turbulences, thriving finances, and Zuckerberg’s need to laconically stamp this period as nothing more than natural hiccup in the corporate lifecycle — which already began to shift vision and principles towards private interactions, encryption, reduction of shared content permanence, safety, interoperability, and secured data storage — Facebook unveiled Libra.
“A new decentralized blockchain, a low-volatility cryptocurrency, and a smart contract platform […] to create a new opportunity for responsible financial services innovation.”
So, now that we understand, at least to a certain extent, where Libra comes from, let’s take a closer look at it.
(Note: in case one wonders why Facebook’s executives haven’t been held personally responsible so far, or how come that all investigations are only limited to financial penalties, or simply asks ‘are you for real, how can anyone survive this legally’ — the answer is Section 230 of the Communications Decency Act of 1996. It grants individuals and companies immunity, since courts have interpreted it to mean that tech corporations shouldn’t be held liable for content posted by third parties; therefore, other than moral, ethical, public, intrinsic or industry norms and standards, plus the FTC’s 20-year deal, there’s not much else at disposal for the time being.)
Libra’s Construction Method
Of course, the word cryptocurrency — although not an entirely precise term, as we’re about to see — is probably the only thing Libra, developed in secrecy for more than a year, has in common with Bitcoin, Ethereum, Ripple, Litecoin, and others.
Everything else about Facebook’s coin is different.
Speaking in monetary properties terms, each decentralized cryptocurrency is not backed by any centralized banking system which holds asset values measured in to guarantee stability.
Instead, cryptos’ worth is defined by limited supply through a code-written expiry schedule. As such, they’re not susceptible to inflation, stock markets’ shifts, the stability of the issuing government, and other monetary shakedowns.
This also means that virtual currencies are not pegged to any stable asset, which in turn creates volatility that hinders worldwide adoption.
To counter the nuance, stablecoins emerged as price-stable cryptocurrencies.
Major corporations that adopt blockchain stand behind their cryptocurrencies, create security cushion for users through their assets values, and form alias stablecoins’ effect.
Others like Paxos, for instance, offers three asset-backed tokens pegged to either the U.S. dollar or gold.
The idea of gold-backing to create stablecoins is not new. Back in 1995, E-Gold was the first digital currency to do so. At the peak, before it was shut down, millions of people used its service.
To validate the value of stablecoins in the cryptocurrency global market with a total cap of $220.3 billion, Paxos’ crypto assets have been approved by the New York State Department of Financial Services in September 2019.
Libra, on the other hand, is backed by a reserve of real assets created through “a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks,” according to their White Paper.
Regardless of the perhaps unnecessarily opaque language used — open for any conceivable option in the future — fact remains that Libra is backed mostly by the U.S. dollars.
Thus, technically speaking, Libra is stablecoin, not cryptocurrency by definition.
In formal terms, Libra is governed by an independent Libra Association, backed by 21 members that signed onto funding chapter on October 15, in Geneva, Switzerland.
Most prominent founders, each with single voting power, include Facebook, PayU, Lyft, Spotify, Uber, Vodafone, Iliad (French telecommunication provider), Farfetch (online luxury fashion retailer), plus several venture capital companies, blockchain operators, and nonprofits.
The most dedicated readers would have spotted Mastercard, VISA, PayPal, eBay, Stripe, Booking Holdings, and Mercado Pago — leading internet payment platform in Latin America headquartered in Brazil — in this group a month ago.
By October 11, all of them pulled out and, at least on paper, deflated reputable payment institutions’ contributions to Libra.
In a customary composed manner, Facebook classified withdrawals as a lack of commitment which is better to know now, rather than later.
Be it as it is, the monetary standpoint is only half of the stablecoin or cryptocurrency construct.
Opening the Software Hood
The remaining segment consists of programming code. In fact, an argument could be made that the code is both the heart and the spine of any blockchain.
It is the code that enables efficiency to propagate each transaction almost instantly, security through almost unbreakable cryptography system, irreversibility which guarantees that transactions cannot be forged, and availability to use funds unconditionally without a need for permission.
Absent of these attributes enabled by the code, there is no cryptocurrency.
Bitcoin, Ethereum and Co. have been running for quite some time, and yet every now and then still face glaring code issues.
Surely, they cannot be compared with any technology giant on any term and the whole crypto concept is based on decentralized approach with no one in the fundamental charge of anything — except for the miners — but nonetheless, even after years of operations and with imminent scalability in the sights, Bitcoin’s code is prone to occasional bugs.
After all, there are tens of thousands of bodies of code emerging all the time.
With aspirations to deploy Libra in such an operational environment, Facebook’s approach to programming code matters.
In many ways…
The social network is still a LAMP website that uses Linux, Apache, MySQL, and PHP, deeply devoted to open source.
Facing unprecedented scaling through time, the key challenge was and still is to keep the platform operating smoothly and to service billions of users’ interactions at the same time, not to mention integration with languages of other applications coming through acquisitions.
To keep up, Facebook’s engineers use plethora of bridge-solutions and custom-written systems: built-in compiler to boost native code, Haystack, Scribe, HipHop Virtual Machine, Cassandra (for Instagram), Hadoop and Hive (also used by Twitter and Yahoo), Varnish, React, and on top of them all, Thrift — in-house developed cross-language framework that enables different programming codes involved (PHP, Erlang, C++, Java) to understand each other.
Furthermore, the company deploys different code for a diverse set of users. This enables special features for, say, employees or certain countries, and allows for gradual releases, activation of certain functionalities behind the scenes (dark launches), and real-world stress testing.
Needless to say, every once in a while this software mishmash freezes in one capacity or the other.
Additionally, there are more than a few online critiques written by engineers who worked at Facebook about code-hygiene standards, test-driven-development, extensive code review procedures, and other idiosyncratic business processes required for sustained and highly-complicated software operations. (To be fair, Google is no exception when it comes to such articles.)
Finally, Facebook today faces recruitment difficulties in the wake of privacy scandals.
Two years ago, close to 85% of top university graduates who got job offers at Facebook ended up there; now, the rate dropped down to 35% to 55%.
(Trivia: back in 2015, Goldman Sachs had more engineers than Facebook; for what it’s worth, at the time, investment banking company surpassed Twitter and LinkedIn as well.)
Byzantine Generals Problem
With such a backdrop of software history, Facebook decided to run and govern Libra on nothing less than a brand new, purposefully invented programming language — Move, launched a few months ago after a year-long development.
It may be difficult to believe that Move will be devoid of serious bugs and issues — usual and expected in this phase of the product lifecycle — no matter how well-tested.
With deep and due respect to all engineers involved, it is way too young to be deployed in such a potentially enormous project.
On the other hand, Move is just a tip of the highly complex software iceberg of Libra.
By default, blockchain technology is based on decentralized programming systems made of different subjects who act based on incentives and available information: every time a new transaction is broadcast to the network, they can either include the operation to their ledger or ignore it. Only when the majority of subjects in network reach consensus on a decision, the transaction is final.
So, what happens when some subjects choose to go against the rules, maybe even temper their ledger? What is the procedure when the body of those subjects becomes large enough but not yet the majority? How can one make the positively right decision in such circumstances?
To counter these challenges of distributed network communication and computing systems, existing protocols have to be tolerant to faults.
In other words, there must be software procedure in place, an algorithm, which enables subjects to achieve secure consensus.
The challenge is not new, it exists since 1975, and the story of Two Generals Problem is often used to illustrate its severity.
Two Generals are in charge of two physically detached armies, tasked to attack the enemy positioned between them. General A is in charge while General B acts upon his orders. Neither army can take down the enemy on its own.
To order the attack, General A has to send the messenger with details of operation (time and axes of advance) through the enemy’s camp. Once the messenger reaches the HQ of General B, he has to return to General A carrying message of acknowledgment. Only then can the assault commence in a coordinated fashion, which is the only way to secure victory.
The messenger could be captured on his way to General B’s camp; there is no way that General A can be assured his subordinate received the message without returning confirmation. Likewise, the messenger could be captured on his way back to General A’s camp; there is no way that General B can be assured his superior received the confirmation.
Of course, after some time, each General can decide to send another messenger but there can be no certainty since each courier is liable to be captured as well.
Thus, an infinite series of messaging is potentially required to reach the consensus.
The Invention of Failures Tolerance
In reality, this deceptively simple problem is unsolvable — without adding extra variables.
In 1982, the academic paper by Lamport, Shostak, and Pease upgraded the conundrum to several Generals in the equation, with one or more of them being traitors.
The seminal effort of these three computer scientists led to the solution: provided that Generals use written communication and 2/3 of them agree, the traitor’s efforts can be annulled.
This work became known as Byzantine Failure Tolerance (BFT) — scientists used Byzantine armies as an example, hence the name — and paved the way for the construction of an algorithm that enables subjects in any operation to achieve secure consensus.
BFT is the single most demanding class of failure modes in computer programming: they are the most severe and complicated to deal with.
As such, BFTs are used in airplane engine systems, nuclear power plants, space technology (SpaceX considered using them as well), and any other systems wherein actions and correct consequences depend on consensus between a large number of sensors.
Blockchain is one such system, a decentralized ledger that depends on consensus between its subjects.
As of now, no BFT protocol exists for cryptocurrencies.
Without BFT, any peer can transmit bogus transactions and nullify blockchain reliability. Without a central authority to govern such cases, the potential for abuse by fraudsters is enormous, particularly when the cryptocurrencies market cap is taken into consideration.
To compensate for this critical functionality, when Satoshi Nakamoto invented Bitcoin, he created a modified Proof of Work (PoW) consensus algorithm as the closest probabilistic solution to Byzantine Generals Problem and substitution for BFT.
In 2011, PoW was updated with Proof of Stake (PoS) to improve functionalities.
Neither of the two algorithms is 100% tolerant of the Byzantine failures, but they work.
Nowadays, PoW is considered as one of the most secure and reliable implementations for blockchain with proven track of record; it is deemed as the most brilliant solution to BFT.
As you may have already anticipated…
Libra uses a completely different Byzantine Failure Tolerance approach based on HotStuff, a novel protocol invented in 2018.
Facebook’s BFT derivate aims to leverage decades of scientific research and achieve “the strong scalability and security properties required by internet settings.”
Why is this in-a-nutshell overview of the second half of stablecoin construct — other than monetary — so hugely important? (If you think this is long, you should see the resources!)
Because with Libra, Facebook plans to use a massive body of unused code, written in a spanking new programming language which employs radically different central concepts and methods to build and chain blocks, effectively putting aside all proven-in-production methods envisioned meanwhile by other cryptocurrencies.
For the record: we don’t imply that anything underhanded might be going on here.
Instead, we only underline notions that manager gives the most demanding task to a well-proven worker, divers go below the surface using the equipment of well-established manufacturers, Generals go to war with battle-tested troops — and what’s past is prologue, as William Shakespeare wisely put it.
National Regulators, Version 2.0
Be it as it may, Facebook plans to deploy Libra at large in the first half of 2020, encompassed with Calibra, digital wallet app.
In the vision statement that might be interpreted as infinitely bigger ambition than to simply deploy new cryptocurrency or stablecoin, Libra Association’s White Paper states:
- That they believe more people should have access to finances and cheap capital, and that people have the right to control fruits of their labor;
- Global, open, instant, and low-cost initiative such as Libra could create immense economic opportunity and generate more commerce around the world;
- People shall trust decentralized forms of governance in the future, and global currencies and financial infrastructures should be designed and governed as a public good;
- The sole raison d’être of Libra is to help advance financial inclusion, support ethical actors, and perpetually upholds the integrity of the ecosystem.
If all of this is up to regulators, it is going to be a very steep climb.
In the USA, David Marcus, Facebook’s executive in charge of Libra, testified before the Senate Committee on Banking, Housing and Urban Affairs on July 16, but did little to assuage members’ concerns.
As a consequence, Zuckerberg was called to testify before the House Financial Services Committee on October 23.
Now the experienced trooper, in his testimony Zuckerberg reiterated Libra’s backing by the U.S. dollars and underlined its significance in extending America’s financial leadership, democratic values, and worldwide oversight. He warned that without innovation, global leadership may not be guaranteed.
In an interesting strategic statement, Zuckerberg also said: “I want to be clear: Facebook will not be part of launching the Libra payments system anywhere in the world until U.S. regulators approve.”
Without approval, this pledge may either offer him additional time to gather extra backers or consolidate the project or, more importantly, provide for the dignified about-face in case the future requires him to ditch Libra. With the approval, regardless of its nature, he gets the endorsement.
When asked would he consider the digital dollar instead of Libra, Zuckerberg commented that such an option might cause users in other countries to refrain from deployment.
Additionally, Zuckerberg stated that Facebook won’t be leading Libra’s efforts going forward; instead, it’s up to the Libra Association to do that. One thing, though, should not be forgotten: Facebook will always be in charge of the code, which effectively puts them behind the wheel.
Finally, Zuckerberg warned that the rest of the world does not wait as the United States debate these issues, pointing out China’s aggressive moves in this area.
All in all, after six hours, lawmakers noted that they haven’t learned anything new in Zuckerberg’s testimony: the majority of topics addressed regulations, privacy issues, and concerns about the U.S. dollar backing of Geneva-based company.
Afterward, Chairwoman Maxine Waters (D-CA) told reporters that Committee needs “to basically review what happened here today and make some decisions about how we go forward with the strategy.”
Wall Street’s opinion was different — Facebook’s shares raised 2.1% during the hearing.
In potentially flanking maneuver, on a par with best Generals…
Zuckerberg also met with President Trump a month ago. The surprise meeting, previously unannounced, was part of his visit to Republican policymakers. Duration, attendance, and topics discussed between two men remain unknown.
What is known, though, is that POTUS lashed out on Facebook last June — "Look, we should be suing Google and Facebook and all that, which perhaps we will, OK?" — and that he also spent $3.6 million on advertising on the website in 2019 Q1.
Indeed, many roads lead towards the soft underbelly of the Beltway.
One Simple Question: Why?
Across the Atlantic, France announced plans to block Libra in the country. Germany argued stablecoin should be banned in the whole EU. The European Commission already raised a myriad of questions as part of a larger EU initiative to determine levels of Libra’s regulation.
The UK regulators — ignored in Cambridge Analytica disaster — have been particularly interested about “robust measures to protect personal data, including transparency, adequate privacy protection tools and a minimal collection of info,” since the social network hasn’t “met expectations,” on these accounts in the past.
Short of the whole of Facebook’s history and crypto-regulations, underlying legislators’ worries also include money laundering and financing of terrorism.
As we wait for the white-collar outcome…
A simple question with probably complicated answer emerges — why?
Why would Facebook launch Libra in such a delicate, even brittle moment?
Why would Zuckerberg put his company again into the spotlight which may catalyze overwhelming regulations of social networks around the world, even though he states he’d welcome them with open arms?
Why would he expose Facebook to the initiative that already forced them to postpone the initial timeline, even tune down the tone of their crypto expertise?
However stark all the answers might seem, it’s difficult to believe that behemoth’s head shed did not anticipate ensuing public reactions and legislators’ eruptions. It’s hard to envision they would poke the bear without some agenda that would warrant such undertaking.
Of all possible options, the idea of having WhatsApp and Messenger users able to utilize Calibra and send Libra across the world to other users and businesses in a low-cost manner is the most logical and in line with White Paper statement.
On one hand, it could lessen the social network’s dependability on advertising revenues that necessitate data collection which, in turn, led Facebook earlier into the minefield of privacy policies.
On the other hand, as an exponent of Facebook’s shift toward private interactions and encryption, Libra could offer payments feature to messaging apps — currently non-profit revenue buckets — and create new commerce hubs that would make small yet profitable cuts of trillions of users’ transactions, with the prospect of astonishing increases in revenues.
As such, Libra could transform Facebook’s business in the coming years and, furthermore, overhaul its revenue streams, while steadily steering it away from maelstroms of privacy issues which are, like it or not, necessary to be competitive in the massive online advertising business (others do it as well, we just don’t hear so often about it).
If that is the case…
It would probably be the single greatest Queen’s Gambit Facebook ever pulled out.
Tencent Holdings Ltd. from China may be used to illustrate the notion.
Their chat platforms, WeChat and QQ, facilitate payments between users, merchants, mobile games, and digital goods (skins, avatars, stickers). By shrewdly mixing chat apps with expenditures’ services, Tencent has become one of the most valuable public companies in China.
On November 11, China’s central bank plans to launch a state-backed cryptocurrency and issue it to five banks, Alibaba, and Tencent. (By the way, that’s what Zuckerberg was referring to. The launch also shed some light on the government’s crack on crypto miners in China.)
But, where is the benefit of sacrificing the queen?
In open space at the centerboard which involves the biggest user base of Facebook — the social network has four times as many monthly active users in Asia than in North America.
Libra and iGaming Potentials
With Libra, Facebook could entice Asians — already accustomed to interactive transactions — with the possibility to utilize payments, shopping, gaming, apps purchase, you name it.
Once they adopt Libra/Calibra and prove the concept, it would only be a question of time before Facebook’s stablecoin spreads around the world and a fast-paced consumer society we live in.
Finally, the real monetization of digital payments is not so much in peer-to-peer transactions as in creating the market place: once users get comfortable and accustomed to platform, the next step is to add a plethora of options and services to choose from.
This is where David Marcus’ background comes into perspective.
Head of Libra is a 20-year veteran of transaction-based mobile services, mobile gaming, and social network payments with extensive experience in the Asian market, including a two-year stint as president of PayPal Holdings.
He also owns a shared patent for payment transactions on a mobile device using a mobile carrier, currently assigned to PayPal.
Of course, Queen’s Gambit theory is nothing more than a mere possibility.
Other options may as well include Facebook’s desire to monetize on cryptocurrencies’ mainstream frenzy, hidden brawl with other IT giants, or, more likely, a known unknown.
One way or the other, it seems that Facebook’s Generals assembled not two but several armies under Libra’s standard.
It might be an understatement to say that following their journey will be exciting.
With all of these facts and one theory on our table, the time has come for the ultimate question and elaboration.
What could Libra mean for online gambling?
Well, Facebook’s stablecoin might not even see the light of the day. It still has to get off the ground, to survive almost guaranteed regulations, and to somehow gain traction. If any entity forces Zuckerberg to choose between the social network and Libra in any capacity, there can be only one winner there, and it’s not the latter.
Then again, it’s impossible to envision him going even to his garage without a plan.
As always, the answer is in the future.
That being said…
There is one thing Facebook’s coin will most certainly do for iGaming — Libra will become the harbinger of stablecoins adoption in online casinos and sports betting.
As we speak, we witness the rise of cryptocurrencies’ adoption across the spectrum of industries, payment services, and consumers' channels.
We have legalization renaissance of online gambling unfolding right in front of our eyes.
We have Google, lowering advertising bar for sports betting in the latest October 2019 update.
We have a $54.1 billion iGaming industry with 43.5 percent of gross wins generated by mobile devices, according to H2 Gambling Capital projections for 2019.
Unfathomable Booster for All
Indeed, to have the option to use stablecoins, backed by fiat currencies — effectively nullifying crypto’s volatility that hinders full-bore adoption — would be for online gambling the equivalent of Weiand 6-71 supercharger protruding through the hood of Max Rockatansky’s V8 Interceptor.
The stablecoins’ supercharger would be functional, contrary to fictional one, used not in post-apocalyptic scenery but legalized settings of the flourishing outlook of online gambling, and the switch on gearbox handle would be equally used by patrons and operators.
Think about it.
Deposits and withdrawals are instant through chat apps or any other viable software integrated into e-wallets. Efficiency, security, irreversibility are guaranteed by unbreakable cryptic blockchain technology.
All KYC requirements are fulfilled momentarily.
Patrons registered with real identities provide for unprecedented opportunities in players’ protection, self-exclusion, and suppression of gambling addiction.
National regulators possess matchless data transparency enabling them to completely control the whole ecosystem.
The monetary muscles of players’ income, operators’ revenue, and national taxation are based on stablecoins skeleton backed by stable fiat currencies.
Best part? All the necessary elements for such development are already in place, no need to drill holes in the water.
It is only a matter of time before banking institutions connect these dots and improve them accordingly.
It will be a revolutionary, mind-bending miracle in online and social gambling — super-exponentially supercharged way beyond anything we can imagine today.
It will be the legacy of Libra: that's what Facebook’s initiative will bring to iGaming and sports betting.
In such potential development, perceptions in online gambling would irrevocably change.
Patrons’ make-believe exodus towards products and services of new business ventures would begin.
Driven by unparalleled transparency, legislators’ stenotypes would remain still, sanctuaries empty.
Innovation would mount a new canvas on the spreader bar of human potentials.
It wouldn’t be the decisive or finite outcome, nor the end and the beginning.
Instead, just one cycle in the recurring, everlasting, and ineluctable urge of people to develop and be developed in a pattern which started with an apple, unrelated to William Tell or Steve Jobs.
As such, it might not culminate in any other, better stablecoin.
On the contrary…
It might keep reflecting itself inevitably, clearly, in a manner of the brilliant bonanza that only our infinite yet mastered hopes and responsible expectations can deliver.
If that is what Facebook and Libra could convey in their catharsis’ end, one simple 'thank you' on behalf of all iGamers around the world will have to suffice.