A quick thought on stablecoin, Facebook nation, and government pushback

Just had a thought on creating a digital nation and admittedly I am still just fleshing out the idea so bear with me.

Crypto currencies still have a chance at succeeding, but the issue commenters and the public continue to overlook is that as currencies, Bitcoin, Ethereum, Ripple, and whatever the hell else is out there have no underlying political economies to support them. Currency valuations transmit to the world the value and/or level of economic output a nation has. Bitcoin, for example, is not a nation’s currency. If it were, it would give Zaire’s currency volatility a run for the money. With the advent of stablecoin, particularly Facebook’s expected issue of the digital coin in 2019, we could see the beginning of a truly digital political economy.

Stablecoin is defined as a cryptocurrency pegged to some reserve currency like the U.S. dollar or another crypto currency such as Ethereum. No matter the model, the goal is to provide users with some stability in the coin’s exchange price. Consumers and investors may like the convenience of not having to check Bitcoin’s price every time they want to buy a cup of coffee or make a currency exchange. Stablecoins, at least in theory, helps to avoid all that.

Facebook will reportedly first play in India’s remittance market. As we descendants of the Commonwealth are all to familiar with, the remittance process can be emotionally taxing when the lack of necessary middlemen are not in place to get money to our relatives in Europe, Asia, and the Caribbean.

The blockchain technology platform that Facebook’s stablecoin will use is expected to provide the transparency and peer-to-peer capabilities that ensure that monies are sent and received under a system of trust, verification, and lack of intermediaries.

But I can see Facebook and even Amazon going beyond playing a relatively minor role in a country’s payment system. Not only could Facebook or Amazon issue digital currencies in the next ten years, they could and should go all out in developing their own digital nations.

Facebook could finally add some meat to his currently weak mission of “connecting the world” by leveraging every business and consumer in his network to engage with each other commercially by using his stablecoin. Consumers subscribing to Facebook or Amazon could be assessed annual membership fees or be charged a “tax” substantially less than the average state or local sales tax in exchange for exclusive access to every merchant listed on either platform with the medium of exchange being a stablecoin.

As one of the largest companies in the world with a 2.5 billion people user base, Facebook, via commercial exchange on its platform, can generate the value necessary for traders in currency to express enough faith in the currency to trade in it drive up its value. Unlike current crypto currencies, a “Facecoin” could exhibit more organic and trustworthy movement because it would be backed by a company large enough to be a national economy.

As for local, state, and federal governments, they could be left a few decades from now with nothing left to regulate and tax but physical infrastructure. Would government be understanding and wish more and more taxpayers a fare thee well, or would government act like the pharaoh in the Old Testament, chasing the people with its tax chariots.

The ensuing issue may be the legal relationship between the old State and the new Digital State that online platforms like Facebook and Amazon will hopefully morph into and how best to treat citizens who have to spend time in both worlds.

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Does Facebook’s business model disrupt the political information markets?

Facebook is engaging in a war against misinformation and divisiveness in the United States as perpetrated via social media, according to published reports by Bloomberg and The Atlanta Journal Constitution. Having done a 180 degree turn from its position last year that its platform was not used to cause a disruption of public opinion leading up to the 2016 presidential election, Facebook is using artificial intelligence tools to identify inauthentic posts and user behavior.  With teams comprised of data scientists, policy experts, and engineers, Facebook is blocking fake accounts and vetting news stories posted on its site.

Critics doubt that Facebook’s attempts to thwart future social media influence will outweigh its incentives to distribute fictional political stories that keep people glued to Facebook while providing advertisers with millions of pairs of eyeballs.  Facebook, according its 10-K annual report, garners almost of its revenues from advertising.  In 2017, advertising made up 98% of Facebook’s revenues.  According to Facebook’s 10-K, at the top of the list of factors that could adversely impact advertising revenues: decreases in user engagement, including a decline in the time spent using the company’s products.

Having used Facebook for eleven years, I witnessed the increase in the use of the platform as a tool for political engagement.  Facebook has expanded opportunities for voters to vet politicians and their policies.  I have seen a significant number of posts, including memes and video, that got the facts wrong; that showed no knowledge of process, politics, or economics.  Cynicism, fear, passion, inaccuracies, sincerity, patriotism, anarchy, and indifference all run rampant on Facebook.  But do I buy the argument that messages placed on Facebook by Russian agents spread so much misinformation that America became suddenly divided overnight? That “Russian interference led to a Trump victory?

No.  The divisiveness was already there.  Giving a couple hundred million Americans the ability to quickly share their thoughts, accurate or not, on the political news of day simply tore away the scab.

Further evidence of divisiveness in American politics: print, broadcast, and cable media.  American media is meeting the demand of a divided public, with Fox News occupying the Right and MSNBC and CNN serving the frenzied Left.

What Washington may truly be afraid of is that politicians have less control over the channels through which they are vetted.  On the one hand, Jeffrey Rosen, president of the Constitution Center, shared the following with The Atlantic’s Jeffrey Goldberg:

“Twitter, Facebook, and other platforms have accelerated public discourse to warp speed, creating virtual versions of the mob.  Inflammatory posts based on passion travel farther and than arguments based on reason.  We are living, in short, in a Madisonian nightmare.”

On the other hand, Americans may be taking to Facebook, YouTube and Twitter in search of alternative opportunities to criticize the political packages and action plans that politicians offer in exchange for votes and increases in taxes.  The divisiveness may be stemming from an increased lack of enchantment with democracy itself.  After all, according to Professor Yuval Harari, democracies are “blips in history” depending on “unique technological conditions” and losing credibility as democracy faces more questions about its inability to provide for and maintain a middle class.

Democracy is hard up to explain why almost all the nine million jobs created post recovery from the 2007-2009 recession have been “gig work” paying little to no benefits.  Democracy has yet to come up with a solution to a wealth gap that the Left invests time in describing, laying blame at the feet of the rich yet coming up with no solutions for a society that prides itself on equal access to the ballot but still comes up short on adequate access to capital.

To the question whether Facebook’s business model has disrupted the political information markets, I would, for now, answer yes.  Facebook has contributed to bringing unreasonable, uninformed voices into the arena. I for one do not want to be lead or have policy fed by impassioned, unreasonable voices, no matter what part of the spectrum they fall on.  What the political class may have to look at for in the near term is that democracy may be less of a facilitator of a peaceful transfer of power between its factions as the mob continues to peel away the scab.