The Dangers of Lybra

The announcement of Libra, Facebook’s crypto-currency, has provoked violent reactions and harsh criticism. Some well-founded, others less so.
by Andrea Monti – originally published in Italian

Lybra, Facebook’s cryptocurrency is not the first and will certainly not be the last to be put on the market, but unlike Bitcoin, Ethereum and the like, it has sparked controversy at the white heat that did not characterize its predecessors.

Lybra is under attack from practically all fronts. Although a “proprietary” and US crypto-currency was developed using the results of DECODE, an EU-funded open source project, it would threaten the privacy of users, destabilize economic and financial public order and encourage money laundering and criminal activities of various kinds.

There is something for everyone, but if we look at the specific objections (apart from the more “political” one related to DECODE), we can see that the criticisms are not very different from those levelled at Bitcoin and its derivatives. And as for Bitcoin & C, these criticisms are fundamentally wrong starting from the use of the word “cryptocurrency”.
In legal terms, the legal tender currency is only that issued by a sovereign entity, i.e. by a state or, in our case, by a superordinate entity such as the European Union.

Moreover, “currency” in the proper sense has a series of characteristics – management by central banks, inclusion in the International Monetary Fund – that “cryptocurrencies” do not have. Indeed, in the USA there is the so-called “private currency”, i.e. coins beaten by private subjects, whose existence is legal on condition that taxes are paid (in dollars). But this does not change the fact that cryptocurrencies do not have – and this is what counts – the legal status of “legal tender currency”.

But then what are cryptocurrencies?

The answer is as simple as it is disconcerting: they are only digital “objects” to which we all agree to give an “exchange value”, no more or less than what happens with the exchange of figurines or collectibles. There is no “intrinsic value” of a rare figurine: for a collector, it is worth a lot, for the rest of the world, nothing.

Similarly, if we are willing to accept Bitcoin, Ethereum or Lybra in return for a product or service, the “problem” is ours alone, in the sense that we take the risk that someone else refuses to accept a cryptocurrency that we have taken for good.

Concerns about the misuse of cryptocurrency are also unfounded. History shows that even without cryptocurrencies, it has been possible to carry out colossal frauds (above all, the financial crisis that has lasted for twelve years and whose end cannot be seen). And there is no lack of systems to launder dirty money through the virtuous channels that are now scandalized by cryptocurrencies.

The real problem of cryptocurrencies is, instead, the loss of the monetary sovereignty of the State and therefore, the impossibility of exercising power over the property of individual citizens. Not many people know this, but since 1972 even “legal currency” has no intrinsic value because there is no longer the obligation to maintain a proportion between the national gold reserve and circulating currency. Therefore, a crypto-currency – even if different for juridical nature – has no less exchange value than a traditional currency because both of them base their existence on people’s willingness to use them as an instrument to carry out transactions.

And so we have come to the reason why Lybra scares the institutional world more than the other cryptocurrencies: because, unlike the others, Lybra already has a massive number of potential users, who will find it available without having to use dedicated software or access unidentified marketplaces.

Lybra, therefore, represents a double danger for the establishment: it destabilizes the financial order and increases the power of a single subject.

Lybra, unlike other cryptocurrencies, can replicate the situation created by the Robber Barons of America in the last century, who paid the workers’ work with their private coins, which could only be spent in their shops, thus earning twice as much.

But unlike in the past, there is a simple and effective solution to prevent Lybra from causing these consequences.

Avoid using it.

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