CNBC anchor Andrew Ross Sorkin says cryptocurrencies are challenging the last monopoly America and other governments around the world possess: their control over fiat currency.
In a new interview with author Ben Mezrich, Sorkin says,
“You saw the reaction to Libra almost instantaneously in Washington – people saying okay, we’ve got to press the pause button on this. Governments have a monopoly on fiat currency. It’s one of the last things they have a monopoly and an ability to control things with.
The idea that they’re going to let these other cryptocurrencies flourish, where people can send money completely unencumbered, completely untraceable, completely untaxable, seems to me at some point there’s going to be a fork in the road or a conversation where there is going to be a major pause being pressed.”
Facebook announced its new stable currency, dubbed ‘Libra’, earlier this month, triggering an onslaught of criticism from regulators who are trying to push back against the tech giant. While members of the US Congress are taking shots at Facebook for its poor record on handling private data, Libra has sparked a debate about how tech companies and computer scientists could effectively take power away from bankers and governments.
By building blockchain-based systems, tech companies can move capital around the globe quickly and cheaply. They can do it without traditional banks while eliminating high transaction fees and days-long settlement times.
Basically, they can reinvent money, making it easier and faster to move.
Despite critics who say that Libra is more like a private digital asset than a cryptocurrency since it will be available on a permissioned platform and controlled by a bunch of big corporations under the guise of decentralization, unlike Bitcoin which is permissionless and public, the backlash against Facebook’s invention exposes just how much governments behave like a corporation facing a fierce competitor that can threaten their bottom line.
“This is terrifying for governments more than for banks. This is a form of money they have no control over. They suddenly get into this battle with these tech giants over something that is supposed to be something government has a total stranglehold on, right – money, fiat currency. So how do they regulate this? How can they possibly regulate something that is without borders, that is instant, that is controlled by these massive tech companies? I think they’ve got a real problem ahead of them.”
— Squawk Box (@SquawkCNBC) June 25, 2019