Professor Lara Swartz has a lot of interesting things to say in her new book, “New Money” [2]. I will review this book in some length in the near future.
For today, I wanted to highlight some not-at-all-worshipful remarks about Facebook’s Libra project, now rebranded as ‘Diem’.
Discussing different kinds of money, new and old, she remarks:
“If national currency represents liberal democracy, and Bitcoin represents some combination of techno-libertarianism and anarcho-capitalism, the Libra represents Silicon Valley feudalism…. This is not a “peer-to-peer” technology, rather, it bestows a peerage.” ([2], p. 169)
Me-ow!
Swartz has her head screwed on right, and has a deep understanding of payment systems, conventional and “innovative”. In general, she isn’t impressed by blockchain projects sponsored by existing conventional firms.
Discussing the success of Starbucks’ (non-blockchain) loyalty cards, which are edging toward a general purpose currency, she remarks:
“There is little evidence, however, that a firm like Starbucks, with its extensive infrastructure for digital payments, or social media platforms like Facebook actually need a blockchain or cryptocurrency to provide digital payments.” ([2], p. 168)
What is actually going on is marketing, and deceptive marketing at that:
“… Blockchain offers these firms a mystique of innovation, a feeling of excitement, a whiff of the radical. In this sense, blockchain acts as a Trojan horse, enabling entrenched firms to create closed-loop loyalty systems while appearing to support an open, transparent, peer-to-peer technology.” ([2], p. 160)
Ouch!
By the way, I would say the same about central banks, governments, and all parts of conventional financial system. What does a central bank—which already has its own money and infrastructure—need with a new, less developed technology? And how would using a blockchain make a central bank, well, “decentralized”? This chatter is just for show.
Wow!
I will discuss more on this book Real Soon Now.
With this book, Swartz surely must be a leading candidate for the Emperor Nakamoto’s New Clothes Award! Stay tuned.
- Brady Dale (2020) Every Credit Card a Tribe, Every Crypto Coin a Scaling Debate. Coindesk, https://www.coindesk.com/lana-swartz-new-money-book-crypto-communities
- Lana Swartz, New Money: How Payment Became Social Media, New Haven, Yale Univesity Press, 2020.
Cryptocurrency Thursday
Robert McGrath's Blog 
One thought on “Lara Swartz on Libra”