USD, Libra, BTC. There can be only one.
Cryptocurrencies are a ‘national security issue’, says Steven Mnuchin, Secretary of the U.S. Department of the Treasury. He was talking about Facebook’s Libra, but the whole debate sparked by the tech giant has brought bitcoin back to centre stage as well – especially in the light of its 300% gains this year. Facebook execs are in the process of testifying before the Senate Banking Committee and House Financial Services Committee, to answer various concerns around Libra, and bitcoin keeps coming up alongside it.
On the surface of it, Mnuchin and other lawmakers are worried that Libra could be misused for money laundering and terrorist financing. He also affirmed Trump’s view of bitcoin being ‘highly volatile’ and ‘based on thin air’.
Ultimately, though, this is about something much, much bigger. There’s a saying in the Talmud to the effect that he whose coin is current in the land is king: the one who creates the money is in charge.
So this is looking like a three-way battle between the Fed and the might of the US government; Facebook, a multinational corporation with 2 billion monthly active users and half-trillion-dollar market cap; and Bitcoin, with its decentralised network and rapidly-growing global adoption.
What this whole episode is doing, in a way that we have not experienced since the US came off the gold standard in the early 1970s, is starting a debate about the nature of money. What is it? Where does it come from? Who makes it? What effect does that have? What backs it? What is it ultimately worth?
Back to that question raised by the Talmud: who is king? Is it the Fed and the US President? Is it Zuckerberg and a tech corporation with a shaky reputation for privacy and complicit in subverting democracy? Or is it everyone and no one, the model of Bitcoin?
All three will be very hard to stop, though for different reasons. None is designed to stay small – they must all keep growing or be consigned to the dustbin of monetary history. So make no mistake. This isn’t about terrorist financing, it’s about sovereignty: national, corporate or personal. And it could be one of the most important questions of our time.
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