For the past few years, future-focused communicators have seen cryptocurrency as a potential tool for promoting brand transparency and accountability. That's because blockchain, the digital technology that logs cryptocurrency transactions, acts as an unalterable ledger.
Blockchain can promote accountability for brands whose financial dealings have been questioned. One recent example is Ticketmaster. After a much-publicized class-action lawsuit alleging inflated service fees battered its reputation, and another class-action lawsuit alleged that its verified reseller network worked with scalpers, Ticketmaster acquired the live event-focused blockchain company Upgraded.
Libra already is raising eyebrows
When Facebook announced last month that it was launching a cryptocurrency, Libra, the ubiquitous social network similarly positioned its product as a tool for promoting transparency. Libra, Facebook said, will let users make purchases and send funds with nearly zero fees. It can be bought or cashed out online or at local exchange points like grocery stores. In addition, it can be stored within third-party wallet apps like Facebook’s Calibra wallet. Calibra will be built into WhatsApp, Messenger and its own app. Facebook claims it's working out the kinks before Libra launches to the public in the first half of 2020.
"Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting," TechCrunch reported. "Your real identity won’t be tied to your publicly visible transactions. But Facebook/Calibra and other founding members of the Libra Association will earn interest on the money users cash in that is held in reserve to keep the value of Libra stable."
Facebook thinks that Libra will incentivize small businesses to transact more on the platform. In turn, this will create economic growth and allow Facebook to garner more ad revenue. Today, however, the federal government officially said "not so fast." The U.S. House Committee on Financial Services published a letter addressed to Facebook that calls on the social network to halt its cryptocurrency plans.
"We write to request that Facebook and its partners immediately agree to a moratorium on any movement forward on Libra -- its proposed cryptocurrency and Calibra -- its proposed digital wallet," the committee wrote. "It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intends to rival US monetary currency and the dollar. This raises serious privacy, trading, national security and monetary policy concerns for not only Facebook's over 2 billion users, but also for investors, consumers and the global economy."
Aside from the House Committee's points, communicators should note that, though Libra has been positioned as a salve to heal Facebook's battered privacy reputation, launching a cryptocurrency alone does not simply smooth over a brand's privacy woes. It's all a question of how the tech is implemented.
Libra still fails to address Facebook's core privacy concerns
Every major privacy issue that has dogged Facebook over the past few years ties back to its micro-targeting ad platform—from fake news and fabricated groups paid for in rubles, to paid job posts flagged for gender discrimination that were showing up only on the timelines of male 30-somethings.
Not once has the social network acknowledged that it ought to focus its human content moderators on ad spends in areas that would be regulated in the real world. Instead we've seen a ton of ornery, gestural solutions like the "Why am I seeing this ad?" button and complicated opt-out data privacy processes that require a labyrinthine navigation through several screens in order to implement.
As it's now proposed, Libra promises to offer more of the same. It sure seems like a solution that Facebook's Colibra will protect users' privacy.
But whether or not your data is being co-mingled with the vast well of business customers on the platform, it would still be vulnerable to Libra Association's partners, including Visa, Mastercard, Spotify and Uber. Moreover, it's unclear what incentives businesses that join the association will get in return.
Libra allows data sharing in 'certain circumstances'
The initial draft of Libra's terms of service reads that, "[a]side from limited cases, Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent. For example, Calibra customers' account information and financial data will not be used to improve ad targeting on the Facebook, Inc. family of products."
Not being used for ad targeting is one thing, but what are those limited cases? "The limited cases where this data may be shared reflect our need to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra," the terms of service continue.
The problem with this is, as we've seen with Google, leaving big tech to decide what keeps people safe or complies with the law has caused trouble. People who were simply in the same cell phone grid where a crime was committed had their phones tracked, and were subsequently detained on the grounds of probable cause.
We know that the company has long held private surveillance contracts with the federal government. The prospect of Facebook entering into a similar sort of partnership with financial institutions doesn't exactly inspire confidence.
How Facebook could use Libra for good
If Facebook really wanted to position Libra as a tool for promoting transparency, it easily could. It would involve requiring certain industries and transactions exclusively use Libra—political, employment-related, and any other sector that would be regulated in real life—thus providing an added layer of security and oversight via its new subsidiary company.
We'd be surprised if Facebook takes this route, though, as it wouldn't necessarily guarantee additional revenue streams. Just like its ill-timed launch of Facebook Portal right after the election-hacking crisis, Facebook remains more focused on profit, not on legitimate security solutions.