Ken ITO and Max YATSUZUKA
Facebook released a new “Cryptocurrency” project “Libra” on 18th June and this has stimulated public discussions all over the world.
Following this announcement, G20 summit was held in Japan, along with V20 meeting for the regulation of cryptocurrencies, from 28th to 29th June. Leaders from each government and central bank had gathered in Osaka, and the “framework of free cross-border data flow (with Trust: “OSAKA TRACK”)” was supposedly discussed. However, there is no reference in “Osaka leaders’ declaration” about the “framework of free cross-border financial flow” by Facebook, the Libra project, and only a brief discussion is reported from the V20 forum.
Facebook claims “large swaths of the world's population are still left behind — 1.7 billion adults globally remain outside of the financial system” and Libra would assist them. However, US insists that Facebook’s Libra will “be an alternative to the dollars” and Facebook should “stop the project right now”. Unfortunately, much of early speculations just scratch the surface of this subject and an academic analysis is absent.
Our laboratory has continued fundamental theoretical research on cryptocurrency with Harvard University Kennedy School from 2014. We have pursued, with Prof. Calestous Juma, eradication of poverty by applying “Encrypted Asset” system, i.e. post-block chain technology in African continent, and also extracted major problems on such systems. This article aims to provide our academic insight into Libra.
1 Can Libra be money? : The difference from Bitcoin
Possible global information coverage of Facebook and Libra
There are 2.4 billion Facebook subscribers, equivalent to 41% of the entire population on this planet. That means Facebook could already “enclose” 40% of the global population with vast amount of personal information network. GAFA— Google, Apple, Facebook and Amazon, are no doubt the champions of the global knowledge-intensive society.
1.7 billion unbanked people, mentioned in the white paper, are equivalent to 31% of the global population. Then, Facebook’s Libra proposal could be regarded as an attempt to enlarge existing “enclosure”, including financial activities of 2.4 +1.7 – overlap (ca. 0.5?) ~ 3.6 billion, i.e. 65% of the global population. Considering the ethics of artificial intelligence and bigdata issues, our first question is “Should a private sector be allowed to possess exclusively a majority of global personal financial information?”