I have this debate often:
- Why governments will fail to block the emergence of cryptocurrencies such as Bitcoin
- Can you have decentralised exchange without centralised control?
- Is the world being democratised through technology?
- How do governments regulate a networked world?
- A world without money
- A world without government?
… and find the answer always the same: who governs the internet? The government.
People hate this answer, as they want it to be The Internet but, when The Internet fails, they want answers. For example, when you order things on eBay or Amazon and they don’t turn up, you want eBay and Amazon to be the government and sort it out. Sometimes they do and sometimes they don’t, but the most frustrating part is not knowing who to call
Similarly, with Uber, Airbnb and more, you see the star rating and think the democracy of The Internet sorts out the winners from the losers. Well, truth be told, it does not. Accounts can be faked and star ratings rigged, so listen in y’all.
Equally, when your bitcoins disappear up a MtGox backside, who ya gonna call? Cryptobusters?
No, the government of the internet is the government. This is demonstrated by, after two decades of allowing development of the network without oversight, the G20 has finally woken up to the challenge: "Group of 20 finance ministers agree to compile common rules to close loopholes used by global tech giants to reduce their corporate taxes".
I've always said the G20 will create the rules for the network and finally they are. Now, I’m not saying I like this anymore than any of you do, but when things go wrong you need to have a supervisory authority to sort it out. This is why, for all the power that the internet places in our hands, there will still be an authority over it all.
Why am I talking about this today? For a number of reasons but number one is Libra, the new digital currency of Facebook. Libra, by its name, implies it is freeing people. We are libertarian. We are freed. We are released from government. We can do our thing on the internet, without government.
And there’s the rub. It is the libertarian dream of the bitcoin movement. Money without government. But it will just never exist as money was invented by government for government. It is our control mechanism for taxes and for monitoring economic and social activity. Without it, there is no government.
Now, I am accused of being a statist because I don’t believe in a world without government. I believe we have to be governed. Or rather, I believe we have to have an authority who can sort out a mess, in an equitable and fair way, when things go wrong. Am I wrong? Is that bad?
In a libertarian world, we have no oversight, no overlords, no supreme justice or, to be truthful, no justice at all. In a libertarian world, when things go wrong, we have the rule of the people. The people vote and give the thumbs up or thumbs down in a virtual world that reflects the old gladiatorial rings of old. But this is where I take exception. In a gladiatorial world, where the majority public rule gives the thumbs up or down, what happens when you’re the one losing? And what happens if there are only a small number online at that time? And what happens if they don’t listen to the whole story but just the part they want to hear?
Can we see a future with no courts, no rules, no laws, no justice? Just the rule of the common people based upon a star rating or a thumb up or down? What about the nuances and complexities of relationships, history, agreements and contracts? Can we just dump a millennium of legal precedents for the rule of the people online?
I don’t think so. I think we will always have governments, courts, rules and structures. The challenge in today’s connected world however is that the internet does not recognise borders. The internet does not recognise countries, governments or structures. The internet is a global network without borders.
This is a friction that regulatory occurs in debates about the future world: who governs the internet? How do you regulate a world without borders? What is the law when the transacting counterparties are without law?
I think this will be the most interesting part of the development of Libra, the Facebook currency. Having had this debate for a decade about bitcoin, and my answer is that the law wins and governments rule, Libra will face the same criteria and challenge. In fact, it already is.
Nevertheless., the counterargument is that Mark Zuckerberg and his brethren are the governors of the internet. It reminds me of the quote from Jack Ma when I attended the Alibaba Netrepeneurs meeting two years ago:
“Management. The word is there for regular companies. At Alibaba we treat it more like governing an economy, as we have to manage so many companies dependent upon us as partners.”
Are the Big Tech giants the new governments of the world through the network, or are the governments of the world going to manage the Big Tech giants through the network?
Watch this space.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...