Posted 1 year ago | by Ben Armstrong

Possible Facebook Anti-Trust Case Demonstrates Private Digital Currency Paradox

Facebook is looking at a potential anti-trust investigation by the US Federal Trade Commission – and its stock isn't loving the attention. This is a long time coming – and it is long overdue.

With the success that Facebook has seen over the last decade, the company has been able to expand into many areas that may not spring to mind when the social media platform is mentioned. The Cambridge Analytica debacle is one example of Facebook's broad business model – and Libra is another.

Facebook's digital currency project has been flamed hard hard in the crypto community, but its real opponents are actually in central banks – and governments that would suffer if the fiat currency hustle came under attack.

In this situation is a perfect illustration of why non-government/central bank digital currencies are likely to fail. If a company is big enough to spearhead a digital currency with a global reach (like Libra) – it isn't going to get very far with regulators – let alone governments who have loads to lose.

Facebook's Digital Currency Problems Run Deep

While a decentralized project like Ethereum really only faces opposition from the established financial system, a company-backed digital currency like Libra has to overcome two (or more) potential challenges.

The first group that will avoid and antagonize the project is the crypto community – which isn't going to trust a currency that is being developed by one of the most abusive companies that is still in business today.

Facebook isn't a great place to be if you are into data privacy – or value honest social discourse.

Governments and central banks are also going to be hard of a company-backed digital currency – and they both have good reasons why. For a government, the use of any currency they can't print and spend is a big negative.

If a private digital currency became popular – and the government couldn't control it – numerous problems arise. One of the biggest is funding deficit spending, which is normal in every major global economy.

It is highly unlikely that a major government would allow the creation of a competing currency by a company without the ability to create that currency as the government or central bank sees fit. This may or may not be a problem for the currency – although it would no longer be an alternative asset.

The Question of Trust

Aside from the business model issues – Facebook itself has a massive problem with abusing user data – both in terms of securing it, and also using it for potentially nefarious purposes.

A digital monetary system that would require even more user information seems like a massive risk to personal security – and the risk of huge hacks that compromise loads of sensitive data are very real.

To say that the personal data horde that Libra creates would be a target for hackers is a massive understatement – as both the funds and information would both be extremely valuable.

Facebook had a great run – but it looks like it is coming to an end. While it may be able to maintain its core business model, its adventures into areas like digital banking are likely to be very limited.

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About Ben Armstrong

ef4f73e9ddeb61becab57469962fa946?s=90&d=blank&r=g Possible Facebook Anti-Trust Case Demonstrates Private Digital Currency ParadoxBen Armstrong is a YouTuber, podcaster, crypto enthusiast, & creator of BitBoyCrypto.com. Better known as BitBoy Crypto, he works hard to educate and inform the crypto community.

Ben has been involved with the world of cryptocurrency since 2012 when he first invested in Bitcoin. He used Charlie Shrem's BitInstant & lost Bitcoin in the Mt. Gox hack.

In 2018, Ben decided to go "full-time crypto" and focus all of his time and energy into expanding the reach of crypto.

If you have any questions or comments please feel free to email him at BitBoy@BitBoyCrypto.com or contact him on Twitter @BitBoy_Crypto.