In a plot development for our ongoing “Second Gilded Age” documentary/farce that I feel would get a lot of notes for being over-determined in any script-writing (get it?) class, Facebook has decided to:
…announce its cryptocurrency later this month, and will allow employees working on the project to take their salary in the form of the new currency, according to a report in The Information.
About a year ago, the company appointed former PayPal executive David Marcus to begin exploring opportunities with blockchain, the technological underpinning for cryptocurrency. Since then, several outlets have reported that the company has been building its own digital currency, which users will be able to store, trade, and exchange for regular currency, in part through Facebook apps including Messenger and WhatsApp. The report adds that Facebook is also planning physical ATM-like machines where users can buy the currency.
This is a terrible idea for several reasons. First, it still has all of the disadvantages of company scrip, namely that your bosses also have way too much authority over what they pay you is worth, and where and how you can spend it. Whose servers will “store” and “trade” Facebucks and does anyone not born yesterday expect them to be anyone other than Facebook’s servers? How does Facebook intend for people to “exchange” their Facebucks “for regular currency” and have they checked with anyone at the U.S Treasury about what the exchange rate will be, how they’re getting the cash for the ATMs (straight from the Bureau of Engraving or Printing, or will it be the Fed window, or the money markets?), or whether and how the IRS will treat Facebucks as taxable assets or legal tender for tax liabilities? Why would anyone trust Facebook’s security with any of their financial data?
Second, it also has all the disadvantage of cryptocurrencies, where the thing you’re being paid in is both a highly-speculative asset bubble and a medium of exchange despite those things being inherently contradictory, a virtually unregulated online marketplace which has proven incredibly vulnerable to hacking, fraud, viruses, and other shenanigans despite that being the one thing that blockchain was supposed to be good at preventing (raising the question once again as to why it’s useful), as well as an electricity-sucking, market-distorting contributor to global warming that needs to be banned as part of the next climate change accord.
Needless to say, I expect a lot of well-educated, well-compensated suckers to lose their shirts on this, because something something disruption something something.