When Satoshi Nakamoto launched Bitcoin (BTC) near the beginning of 2009, he went to great lengths to ensure that his identity was untraceable. To this day, no one knows who Satoshi Nakamoto is.
Satoshi likely chose to be anonymous for a few reasons. If Bitcoin (BTC) began spreading across the globe, Satoshi could be arrested for breaking money laundering laws. If Bitcoin (BTC) became valuable, then all sorts of thieves would try to steal Satoshi’s Bitcoins (BTC). Also, if Satoshi’s identity was known earlier on, perhaps it’s feasible that Bitcoin (BTC) would never have had the chance to grow. For example, if the government knew who Satoshi was in the early days, they could have stifled Bitcoin’s (BTC) growth by deleting Bitcointalk and Bitcoin.org, both of which are critically important sites created by Satoshi.
Perhaps even more important than Satoshi being anonymous is that the Bitcoin (BTC) network is immutable, cryptographically secure, and decentralized. This means that Bitcoin (BTC) balances or transactions can never be frozen or reversed, making it so that neither the government nor any other entity can interfere with the Bitcoin (BTC) network. Also, Bitcoin (BTC) has no central point of failure since it is decentralized, meaning the government can never shut down Bitcoin (BTC). The government can impose laws on Bitcoin (BTC) users, but the government cannot change Bitcoin’s (BTC) protocols due to the decentralized and democratic nature of the Bitcoin (BTC) improvement proposal (BIP) process.
Basically, Bitcoin (BTC) has everything it takes to function as a global currency while simultaneously being untouchable by the government. There is no place, person, nor computer that the government can attack to stop Bitcoin (BTC).
This is critically important since the United States and other countries derive most of their power from controlling their national fiat currency via a central bank. Bitcoin (BTC) poses an existential threat to government fiat currencies and the power of governments in general. Their fiat currencies lose value long term due to inflation and can easily be frozen or reversed, taking away the user’s control of their money. Bitcoin (BTC), on the other hand, has been gaining value long term, and users have full control of their money. This is causing an increasing number of people to abandon fiat currency and use Bitcoin (BTC) instead. The government probably speculates, just like we Bitcoiners, that maybe Bitcoin (BTC) has a chance at becoming the primary global cryptocurrency sometime in the future.
Essentially, Satoshi Nakamoto did everything right by programming Bitcoin (BTC) in a cryptographically secure and decentralized way, so that Bitcoin (BTC) would survive even if there was intense government pressure against Bitcoin (BTC).
It seems that the polar opposite of Satoshi Nakamoto is Mark Zuckerberg, who has done everything wrong with Facebook’s proposed Libra cryptocurrency.
The most fatal flaw of Libra is that it is centralized. Facebook is offering the opportunity to join the Libra Association, which will govern the Libra network, for $10 million. Major corporations like Visa, Mastercard, PayPal, Lyft, Uber, eBay, and Andreessen Horowitz have already signed up. These corporate nodes will participate in validating transactions and presumably earn a transaction fee while simultaneously having the power to change the Libra protocol via a vote, the power to print or burn Libra at will, and the power to manage Libra’s reserve.
There are multiple things wrong with the way the Libra association is setup. First off, the corporate nodes have the power to print Libra at will, which would result in the same long-term inflation problem that plagues fiat currencies. Second, the Libra association protocols may be written in the white paper now, but the Libra association can change these protocols at any time. Therefore, users have no guarantee that Libra will function the same from week to week. For example, if government regulators come after Libra for money laundering, perhaps Libra would start freezing, reviewing, and reversing transactions, which would make it no better than existing fiat payment systems.
The Libra reserve definitely raises eyebrows. Instead of simply pegging Libra to the US Dollar (USD), like with USD Coin (USDC) and Tether (USDT), Libra will have a diversified portfolio consisting of bank deposits in different major fiat currencies as well as government bonds denominated in various major fiat currencies. At least that’s what Libra says at this time. Remember, the Libra association can change their rules and protocols via voting, and it is not out of the realm of possibility that Libra would start investing in riskier assets.
Assuming Libra will never invest in anything but deposits and bonds denominated in major fiat currencies, the reality is that practically all fiat currencies globally have been losing value long term, so Libra would lose value long term too.
Additionally, the Libra association expects to make profits on the investments in the Libra reserve, but will not give any of those profits to users, which seems unfair and about the same as a bank.
Aside from Libra’s flaws listed so far in this article, what scares the government the most is that it’s an attempt by a consortium of major corporations to launch their own sovereign global fiat currency and central bank. This has never happened before, and the government appears threatened by Libra, fearing that corporations behind the Libra Association will divert away significant power from the United States Federal Reserve and US dollar (USD), diminishing the United States’ ability to control global markets and print vast sums of money on demand.
The backlash against Libra has been vicious so far and started almost immediately after Libra was announced. Maxine Waters (D-CA), chair of the House Committee on Financial Services, said in the middle of June that “Facebook is continuing its unchecked expansion and extending its reach into the lives of its users. Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony.”
The attacks on Libra from top-ranking U.S, government officials have only intensified since the first shot across the bow from Waters. Federal Reserve Chairman Jerome Powell, who is one of the most powerful government officials on Earth, said “I think we agree that Libra raises a lot of serious concerns, and those would include around privacy, money laundering, consumer protection, financial stability. Those are going to need to be thoroughly and publicly assessed and evaluated before this proceeds”.
Chairman Powell’s comments are not surprising considering that Libra would be a competitor with the Federal Reserve and US dollar (USD).
Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks, both national and international. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States dollar!
Treasury Secretary Steven Mnuchin also commented, saying, “This is indeed a national security issue. We will not allow digital asset service providers to operate in the shadows.”
He added, “They and others have a lot of work to do before they get us comfortable.”
“We’d be crazy to give them a chance to let them experiment with people’s bank accounts,” Sen. Sherrod Brown (D-OH) said.”
Others joined the attack, among them Sen. Martha McSally (R-AZ), Rep. Brad Sherman (D-CA) and Rep. Alexandria Ocasio-Cortez (D-NY).
Out of all the United States government officials that have lambasted Libra, the most truthful about Libra’s threat to government power is Waters, who acknowledges that reality.
“Facebook’s plans raise serious privacy, trading and monetary policy concerns,” she said. “The system will yield immense economic power that could destabilize government”
Libra’s centralization flaw is what’s leading to the numerous attacks from government officials. The corporations and people behind Libra have names and addresses, and they can easily be subpoenaed, interrogated, or even imprisoned. This means that the corporations and people behind Libra are completely at the mercy of government regulators, not just in the United States but regulators from every country in the whole world.
To make matters worse, Libra has a centralized blockchain, meaning that Libra’s protocol can be changed at any time at the behest of government regulators.
Both Bitcoin (BTC) and Libra have the potential to compete with fiat currencies and possibly diminish the power of the Central Banks and governments of the world. However, the government cannot take Satoshi Nakamoto to court since there’s no firm proof of who he is, and the government can’t change the Bitcoin (BTC) network. This explains why, to some degree, the government does not focus much effort on attacking Bitcoin (BTC). In comparison, Libra is like low hanging fruit, and it will be easy enough for the government to inhibit the Libra network with bureaucratic red tape until it is no longer a threat. At the rate things are going, it’s possible Libra will function poorly when it launches, stifling its chances to grow, with the possibility that Libra may not launch at all.
So Satoshi Nakamoto did everything right to give Bitcoin (BTC) a chance at becoming a global currency, and Mark Zuckerberg did everything wrong with Libra, giving it little chance of success. It is quite remarkable that a single man, Satoshi Nakamoto, was able to do a far better job at creating a cryptocurrency than a consortium of the most powerful corporations in the world.