Mark Zuckerberg recently was called to testify before the US Financial Services Committee about the proposed Libra project. Numerous members of the Committee spent much of their allotted five minutes criticizing Facebook and its founder over data breaches and ethics issues. But Zuckerberg’s testimony statement began with a nod to the 1 billion unbanked people in our world today (14 million in the US).
Two things came to light during the hearing. One was that the majority of Committee members were as yet uninformed about blockchain technology, the basis for the Libra project. The second matter was the display of America’s deteriorating standing in the global technology (and data) landscape.
There were a few congressmen and congresswomen that came to learn what Facebook’s famous CEO had to say. They seemed prepared to find out more about where our world is heading technology-wise. And who better than a tech giant to answer questions about the shift to digital money?
But most of the Committee members chose not to ask about the workings of the Libra project. Instead, they opted for grandstanding on pet issues and mentioning the bills they were currently working to pass. Not only that, but they also acted as though they were trying to connect Zuckerberg to almost every crime against humanity. From anti-vaxing and red-lining, to human trafficking and money laundering, it appeared that Zuckerberg was responsible for all of it.
The important question
Only a few of the Committee members questioned the risks of not innovating. Is the US dollar so strong that it can withstand sitting out this technological revolution?
Yes, Zuckerberg is a billionaire and yes privacy and the data situation are huge problems facing citizens the world over. But Facebook’s creators certainly did not predict the enormous success the platform would have. Nor did they anticipate the sheer amounts of data they would be lording over. Regulators may do well to work with tech giants to help them move forward. But from the Zuckerberg testimony, we see more interest in restraining the development of disruptive technologies.
This desire to control stems mainly from being the world’s economic leader. For example, the USD has been the standard currency worldwide for a long time. For most American people, it’s always been this way. They don’t know anything different.
The American dollar has been a global reserve currency and a powerful economic and political weapon since the 1940s. In fact, the weaponization of the American dollar is one of the biggest reasons bitcoin has taken off in emerging, volatile regions. As a decentralized cryptocurrency, bitcoin involved features that the Libra project has tried to integrate into future development. One of these features takes the power out of centralized authorities like governments and central banks. It puts that power into the hands of a vast network of users. Not to mention bitcoin’s algorithmic protocol, which has been unhackable for a decade.
But the fact remains that since the publication of the Libra whitepaper, Zuckerberg has repeatedly stated that Facebook would work with regulators until they were completely satisfied. Congress’s main concern has been that the Libra coin will undermine America’s economic powers.
During the testimony, Zuckerberg reiterated Facebook’s willingness to work with regulators. Yet, it appears that in today’s political and economic climate, full satisfaction will never come.
Reasons for the Libra Hearing
The general reaction of lawmakers to Libra’s initial announcement has ranged from contempt to attempts to close down the project completely. From day one, some politicians felt it should go nowhere and that it was their duty to stop the project in its tracks.
As it was pointed out by various Committee members, it’s easy to suspect and or blame Facebook and its young leader for many reasons, such as:
- Facebook banned all cryptocurrency advertising on its platform while they developed the Libra project. Then, they released the ban just prior to the Libra announcement.
- Zuckerberg answered “Yes” when asked if politicians could take out political ads using false or misleading information. His view was that we are a country of free speech and it’s not Facebook’s job to tell truth from fiction unless it could pose imminent harm.
- Facebook enabled Russia to interfere with US elections by allowing ads that pitted Americans against each other, suppressed voting, and favored the Republican candidate.
- The Facebook platform has experienced numerous data breaches including one that exposed the data of 50 million users.
The problem with stifling US innovation: China
This clamping down alarmed many in the industry, who are watching as other countries like China and France roll out new initiatives for cryptocurrency infrastructure. China, in particular, has made massive moves to create a state cryptocurrency based on the RMB. Conversely, the US has focused on restraining, shutting down and fining cryptocurrency companies without providing clear guidelines as to how to move forward.
As a result, American companies are either towing the line and positioning their platforms to mimic a bank or payment processor, or moving operations to countries that are more business- and innovation-friendly, such as Singapore, Switzerland, and Malta.
But molding cryptocurrency innovation to decades-old rules and regulations (which were put into place before the internet) is limiting American innovation in the blockchain sector.
Meanwhile, China is now wooing Chinese cryptocurrency companies to come back and do business in China. They’ve also banned all anti-blockchain sentiment and ‘suggested’ that all its citizens become part of the ‘heart’ of the Chinese economy by registering their identities on a blockchain application.
During the Zuckerberg testimony, Congressman McHenry talked about the hearing as a ‘deep cultural moment” for the US as the country balances innovation with control. He in no uncertain terms alluded to US officials using fear to justify a power grab. Something all too familiar to most Americans in the current political climate.
When you compare the US with China, it’s easy to see that US innovation is being held back. All this while the Chinese blockchain industry faces zero regulatory pushback.
Who can live without Facebook?
Facebook has billions of users. It has also created an outlet for small businesses worldwide to advertise their offerings to a global market. Some people claim that Facebook is for the older generation and that the platform is waning. However, new emerging markets and Facebook’s massive revenue in 2019 tell a different story.
Incidentally, Facebook users include 95% of all members of the US Congress. In fact, collectively they posted more than 210,000 Facebook posts for political purposes in 2018 alone. So they, too, use the Facebook platform as a tool for spreading their message. Do they warn their followers about the dangers of using the platform? Or is it solely up to Zuckerberg as they seemed to imply?
Most intriguing quotes from Zuckerberg’s testimony
You now have the summarized story about Zuckerberg’s testimony and how it laid bare America’s inability to let the markets dictate a new currency. Next, it’s time to watch the six-hour hearing. Just kidding. We nutshelled it down into 25 impactful quotes to help you get the overall picture.
- Maxine Waters: “…it should be clear why we have serious concerns about your plans to establish a global digital currency that would challenge the US dollar.”
- Patrick McHenry: “Sadly, throughout the history of innovation, a major theme is the exploitation of fear.”
- Mark Zuckerberg: “…if history has taught us anything, it’s better to be on the side of American innovation, competition and most importantly the freedom to build a better future for all of us. The financial industry is stagnant, and there is no digital, financial architecture to support the innovation that we need.”
- Nydia Velasquez: “Facebook’s internal model was for a long time ‘move fast and break things’. Mister Zuckerberg, we do not want to break the international monetary system.”
- Gregory Meeks: “You’re concerned about the underbanked and unbanked. How much of Facebook’s money is in MDIs that would provide services and help the unbanked and the underbanked?”
- Bill Posey: “For many of us, Facebook is a reality in our business and our personal lives.”
- Bradley Sherman: “I was anti-cryptocurrency back when you were anti cryptocurrency.”
- Mark Zuckerberg: “…because the reserve will be primarily US dollars, I actually think that a project like this could be important for extending America’s financial leadership and to the contrary of the risks that are being pointed out.”
- Lacy Clay: “…there is no one in Facebook senior leadership with substantial civil rights experience. Why is this?”
- Bill Huizenga: “You have taken the puzzle pieces of politics, shaken up the box, thrown them out on the table, and everybody’s trying to figure out where they fit when it comes to Facebook and when it comes to this technology use.
- Bill Huizenga: “As you can see here today, politicians in Washington are pretty good at lodging criticism, but creating something of value is significantly more difficult.”
- Andy Barr: “I think the American competitiveness angle and the competition with China is a national security issue.”
- Mark Zuckerberg: “…we clearly have not locked down exactly how this is going to work yet.”
- Roger Williams: “No matter what policies we enact up here in Congress, the private sector will be the engine that brings game-changing technologies into existence.”
- Barry Loudermilk: “…even some of your harshest critics here today, I will venture to say if they haven’t already, will post their comments and maybe even the videos of their questioning on Facebook, which is a testimony to the impact that your vision, your innovation has had, not only on American culture but on business, on technology.”
- Warren Davidson: “I think centralization is the key.”
- Ted Budd: “…if we’re to remain a world leader in financial technology, it’s vital that this committee not embrace reactionary laws against cryptocurrencies”
- Michael San Nicolas: “My community on Guam is small. We have a limited amount of local media, and so I was able to reach a vast majority of my residents just by going through Facebook.”
- Katie Porter: “You’ve got about 15,000 contractors watching murders, stabbings, suicides, other gruesome, disgusting videos for content moderation. Correct?”
- Denver Riggleman: “I think we’re getting to the beginning of Social Network Two and I just want to be in charge of my own casting.”
- Sean Casten: “We can allow that concentration of power to take over the government, which is to embrace fascism. We can allow the government to take over that concentration of power, which is to embrace communism. Or we can embrace competition.” (paraphrased quote by Justice Brandeis)
- Tom Emmer: “Congress is nowhere close to catching up with some of the most basic changes happening in our society.”
- Mark Zuckerberg: “You can text someone around the world. It’s end-to-end encrypted. It gets there in less than a second, a lot less than a second. It’s easy to use. I just don’t see why you shouldn’t be able to send money in the same way.”
- Alexandria Ocasio-Cortez: “Could I run ads targeting Republicans in primaries saying that they voted for the Green New Deal?”
- Tom Emmer: “Looks like members have invested absolutely no time learning about this new technology in order to responsibly question the company.”