Facebook is launching it’s own Cryptocurrency named GlobalCoin in a month and YOU can run your own node on their network for the low fee of $10,000,000. Facebook plans for this coin to be a “stable coin” pegged to USD.
Let’s break this down a bit. At $10M per node who is going to run this software? From Bitcoinist:
Currently, there’s no further information about any of the requirements needed to become a validator node or how these third-parties will be rewarded.
Use of the word validator indicates these are dumb nodes. The nodes aren’t doing any work in the network and the network isn’t competitive. This immediately throws red flags about this as a currency. Bitcoin works because Satoshi solved the problem of issuing honest money. Declaring a centralized corporate coin a cryptocurrency takes liberty with the definition of a crypto and will, sadly, fool 99% of the population. GlobalCoin will be centralized. Your transactions may not be immutable or censor free.
If it’s $10,000,000 to run a node and the nodes are only validating then I assume that the incentive to run a node is in transaction fees. I don’t think there are altruistic billionaires looking to run $10M FB nodes as a hobby. So far, we may be looking at a network that is mutable, censorable, centralized and under control of Mark Zuckerberg who will be charging you for the privelege of moving his personally issued magic internet money. What could go wrong?
GlobalCoin will be a “stable coin”. Let’s see how stable coins have worked out. Romans began shaving and clipping coins when they wanted to make up for shortfalls in their central planning by restocking their vaults with their citizens wealth. The US mint used to issue coins that contained silver. As years have worn on the precious metal content of our coins have been watered down, yet we still pretend US coins are stable coins. At one point US dollars were redeemable for precious metals to guarantee their value. That link was broken by Nixon in the 70’s.
Now, US dollars are pure fiat. There is no value behind them other than the fact the US Government has said it is so. No one has called our bluff because if the US falls so does most of the world. We will see if that game ends in our lifetimes.
But I digress. More recently Tether and USDC, primarily issued and used by Bitfinex and Coinbase respectively, have entered the crypto space as stable coins. Their entire premise is that you can redeem one unit of Tether or USDC for one USD.
Bitfinex and Coinbase issue Tether and USDC and have stated it’s backed by USD. Do you believe them? Guess what, Tether has never been audited. You know who else has never been audited? The Federal Reserve.
Tether and USDC supposedly exist to facilitate trading. In reality, stable coins exist for these companies to print money and pass the risk to their clients. The solvency of Tether has been hanging over Crypto for several years. It’s crypto’s dirty secret. Tether is a black swan waiting to emerge at any moment.
So Facebook plans to release a stablecoin, charge $10M for nodes to validate transactions and has no guarantee of your money being safe from censorship. Globalcoin will meet the fate of all stable coins. Eventually, the system grows, chaos enters and causes unforeseen circumstances and the stablecoin link is broken. You’re left with a fiat with possibly nothing backing it.
Bitcoin is a ledger. Your coins exist as entries on a ledger. Inflation is already known and in a sublime harmony of mathematical precision with a genius design of incentives. Bitcoin is immutable, uncensorable, honest, programmable money.
Anyone who buys GlobalCoin deserves their fate.
This could all be avoided if these genius level corporate CEOs understood the power of Bitcoin. Bitcoin is honest money. Bitcoin is a system that punishes cheaters. Bitcoin exposes corruption. If FB built Bitcoin into their applications they would be doing much more good than staking their own claim to the cryptoverse. Globalcoin will cause FUD and end terribly for them and possibly many others.
Bitcoin is an IQ test. Zuckerberg failed.
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