As a fiat currency pegged stablecoin, Libra offers little threat to the U.S. dollar’s monopoly. To Libra users, it would be little different from PayPal, Alipay, Apple Pay, Google Pay, WeChat, Zelle, or the dozens of other peer-to-peer payment platforms around the world.
Yet, Libra threw the powers-that-be in such a panic that President Trump was pressured into tweeting a condemnation of Libra and a Congressional hearing was swiftly organized. Rep. Brad Sherman compared Libra to the 9/11 attacks, which in case you forgot, killed several thousand Americans.
I certainly have my reservations about both Facebook and Libra, but a “blockchain-enhanced” payment network that competes with Paypal is hardly the terrorist event of the century. It is highly unlikely that President Trump wrote his rant against Libra himself—his tweets were likely scripted for him as the party line against potential dollar competitors.
What’s crystal clear from this episode is that anything which is remotely a threat to the U.S. dollar’s dominance as the world’s reserve currency will be swiftly neutralized.
This is precisely why a peer-to-peer, decentralized network like Bitcoin is needed: any centralized challenge to the dollar’s dominance, by a company or nation-state, is likely to face swift retribution from the United States government. The U.S. economy relies on the dollar’s status as the world’s reserve currency to keep issuing new debt to sustain our unsustainable budget deficits.
Libra is currently little more than a vague white paper and a few lines of open-source code, yet legislators like Reps. Carolyn Maloney and Maxine Waters are demanding that the project be shut down before the concept has even been fully fleshed out.
It is clear that when U.S. dollar regime inevitably collapses—be it next year or decades from now, the U.S. government will not permit any organization within its reach to develop an alternative that can safeguard American assets. The government relies on its ability to collect (dollar-denominated) taxes to pay interest on its enormous debt and fund its unsustainable fiscal commitments.
This makes it all the more essential for those of us who wish to safeguard our life savings and ensure an economic recovery based on sound money to support decentralized, borderless, and censorship-resistant alternatives like Bitcoin. While Bitcoin is certainly not immune from legislation, it is substantially more difficult to control as can be seen in countries such as Venezuela, China, and India, where it is still widely used despite being banned.