CEO Fintech Worldwide, DeFi Alliance Scholar
Some of us knew this was coming. It had to. But the announcement of the Libracoin has thrust the world into a new reality rather sooner than many expected. It has pushed the thinking forward dramatically - as Facebook plans to go live with Libra next year and on a huge scale.
We know that the big tech companies wield more power than many countries. Big techs have massive existing customer networks and the enormous quantities of data. Data give big tech firms the edge over competitors. They already have the users, so they are likely to succeed.
The inevitable conflict that will emerge from this is the tussle for global governance. Who, a state or a digital corporation or and international body, will be in charge of an initiative that will challenge the international system as we know it. Regulators are already struggling to assert authority and they want to regulate monopolies such as Google, Facebook, Apple and Amazon that are setting new rules for the global economy. Not to mention the role of China who plan by 2030, to become “the world’s primary artificial intelligence innovation centre, transforming the country into a leading innovation-style nation and the greatest economic power.” No one quite knows what to do about that.
Facebook with 3.2 billion users and Libracoin seems set to compete with the world’s largest economies. It will certainly fast track the general public into the cryptocurrency world and create massive disruption to banks, and insurers but it has much wider policy implications. Behind Libra are some of the biggest and richest corporations including Visa, Mastercard, PayPal, Uber and eBay. Will this just concentrate power, rather than the promise of decentralisation that comes with blockchain?
What will become of the nation state? The nation state is a relatively new concept in history, emerging only in the 1600s. There is no reason to believe that nation states will lead us inexorably into the future. With the internet blurring borders and national systems transitioning to global systems the traditional ways of defining a nation state are being eroded. Anyone can become an e-Citizen of Estonia in a few minutes and begin transacting in a digital economy. People can join digital communities and platforms and indeed economies outside of the geography they are located in.
At London Fintech Week last week, we had a chance to debate and discuss just what this means for the world. Barry James from the British Blockchain and Frontier Technology Association chaired the debate and opened with the comment, “It is only a matter of time before we get global money.” The future of money was widely questioned, not only fiat, but Simon Gleeson of the law firm Clifford Chance posed the view that “there’s no need for money: all we need is a central register that keeps track of obligations.” Gleeson’s view is that the value of any form of exchange is in the end what people are prepared to accept that it is.
Freddy Kelly from Credit Kudos showed us just how far big tech companies have already gone in undertaking functions of banks. He presented a slide, where he listed four tech giants, Apple, Amazon, Google and Facebook against four traditional banking or finance functions: payments, lending, current accounts and insurance. You might be surprised to see how many boxes were already ticked! Traditional finance institutions have good reason to be afraid.
The Facebook move has certainly galvanised the world into taking their heads out of the digital sand and start debating the new economic order that is upon us. Everyone is worried about the tech giant genie who is now well and truly out of the bottle.
Jane Thomason, CEO, Fintech Worldwide. Frontier Technology and social impact thought leader, recognised in Forbes Magazine (2018) as Blockchain’s Leading Social Development Evangelist, and The Introducer (2019) as a Blockchain woman leader. DeFi Alliance Scholar