This story was originally posted on Tuesday.
Tomorrow, David Marcus is going to testify in front of congress on Libra. He’s an incredibly smart guy, working for another incredibly smart guy, Mark Zuckerberg. And they’re both great capitalists. They’ve both earned themselves and their shareholders wealth beyond their wildest dreams.
But life is about “more”. For capitalists, it’s more shareholder value. And Facebook’s boldest move in its history (and I know Facebook and their history better than most), is Libra. It’s bold in its vision on the potential impact on the value of Facebook’s shares.
When Facebook announced Libra on June, it sparked immediate pushback from regulators and policymakers around the world. In response to the backlash, David Marcus has agreed to talk to both the Senate Banking Committees (and their 25 members) on the 16th, and the House Financial Services Committee (and their 60 members) on the 17th.
While I’ve stated my belief that Libra is positive for the crypto ecosystem, as it’s raising awareness, it’s seemed to me from Day 1 that it was DOA.
Even though Facebook has stated that it had “…. an initial consultative phase with regulators, central banks, and other organizations from all around the world,” the blowback has been intense.
Just now, Treasury Secretary Mnuchin Stated that Facebook has a lot of work to do to convince the regulators. And tomorrow (the 16th), we’ll see the next step in the process when Marcus testifies:
Faceboook/Marcus Does Not Have The Answers To The Most Important Question
Now, luckily for Marcus, congress is likely too ill-informed to know what the most important question is. Which is, how are you going to decentralize? Congress needs to know because they have to understand how they regulate it. They are going to want to know who they call or arrest when they have a problem with it. Because, to the degree they’ve tried to answer that question for Bitcoin, they’re left scratching their heads. When they want to know the answer to that for Libra, what will Marcus tell them?
Marcus will say he doesn’t know because there is no solution today to decentralized governance that is robust enough to provide the functions that Libra needs. So if you’re a lawmaker, and Libra can’t answer that question, it’s DOA
Congress Has No Idea What Money Is
To be clear, when Zuckerberg last testified before congress, it was obvious that most congressmen had little understanding of how Facebook or the internet actually works:
While some may quarrel with that, we all have to agree that the President has no idea what Bitcoin, cryptocurrency, or Libra are:
But how many in Congress really understand what money is? Please let me know the most cogent things said by a congressman about money.
But Congress Does Appreciate That The U.S. $$ Is The Reserve Currency of the World
Since the end of the 20th century, the U.S. dollar has been the world’s dominant reserve currency. The world’s need for dollars has allowed the U.S. government to borrow at lower costs, saving us in excess of $100 billion per year.
But what they will learn when they listen to Marcus’ prepared statement, is that the goal of Libra is to have people around the world “… rely on Libra for their daily financial needs”. If that’s true, why can’t governments?
Congress Has No Idea What A Store of Value is?
Please let me know the most cogent things said by congressmen on this topic.
Congress Has No Idea What Cryptocurrency Is
Please let me know the most cogent things said by congressmen on this topic. Listen to Senator Shelby share his ill informed views. He describes Bitcoin as “ …. a virtual currency which means it’s not real”.
Senator Shelby on Cryptocurrency: “It’s a dangerous thing”
Congress Has No Idea What Decentralization Is
Please let me know the most cogent things said by congressmen on this topic
So, the testimony coming over the next two days is coming from a person who doesn’t have the necessary answers. And it’s being told to people who have no idea what he’s talking about. I don’t mean to be disrespectful to congress, it’s just that these are complicated things, and there is no indication that a single person in Congress has any idea what’s going on.
But what they will know is that it puts the U.S. dollar at risk as the reserve currency.
So for all the reasons stated above, it not surprising that Libra is the one thing that unites Maxine Waters & Donald Trump:
That’s why Libra is DOA in the U.S.
Lou Kerner is Partner @ CryptoOracle.io a community-first Crypto VC. Believer that Crypto is the biggest thing to happen in the history of mankind. Founder of CryptoMondays