Facebook will not have a cryptocurrency, but a digital currency disguised to evade even more taxes
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Although it is said that Facebook has developed a cryptocurrency, it is false, it has nothing to do with reality: an attempt to pay even less taxes.
Information about the creation by Facebook of a digital currency based on cryptography flood the network. This social network intends to launch a kind of cryptocurrency, although it really is not such. It cannot be considered a cryptocurrency, because it will not be decentralized and it will not be immutable, among other parameters. Before delving into Facebook's motivation to launch a crypto-based digital currency, I will explain the reasons why we should not consider it a cryptocurrency, such as Bitcoin.
Basic characteristics of a cryptocurrency
To be able to be called a cryptocurrency, such as Bitcoin, must meet the following requirements:
- Be decentralized: Not be controlled by any government, financial institution or private company.
- Be open source: Bitcoin and most cryptocurrencies are open source, or what is the same, the code can be audited, verified and used as a basis for other cryptocurrencies.
- Be auditable and traceable: We must have the ability to see the origin and destination of all cryptocurrencies or at least see how much of them is transacted.
- Not objectionable: This means that no one can have the power to alter the cryptocurrency blockchain, therefore, you cannot delete transactions, block accounts, etc.
- Promote privacy: Public keys and public addresses do not store personal data of users and can create as many as we want.
- Controlled emission: Although there is no maximum amount, the amount of coins that are put into circulation must be clear. Bitcoin sets a limit of 21 million coins and the amount that is released is set by the halving. Ethereum has no currency limit, but every two blocks 3 Ether is released.
It is necessary that these parameters are met so that we can consider it to be a cryptocurrency. Corrupting any of these parameters means that we must stop calling it this way. Although there is a particular case quite controversial that brings a long tail to this day and I will explain briefly below.
The DAO and Ethereum
We must go back to the year 2015 when it develops the first Decentralized Autonomous Organization or DAO for its acronym in English. These types of organizations are based on Smart Contracts within the Ethereum blockchain. Lets create autonomous organizations that function as a 'company' where all members of the network have the same voting rights. The DAO was the first of these and managed to raise a large amount of Ether for its development.
The problem comes when a hacker finds a vulnerability in the smart contract, hacks it and seizes all the stored Ether. That is a problem for the network, as a person has a large number of coins and could bring down the price of Ether whenever he wanted.
To solve this problem a soft fork was devised to modify the chain and correct the theft. The community accepted, but doing this meant creating a bigger vulnerability. Before this a hard fork ran which involved retaking the chain before the robbery, suppressing the stolen coins.
It was applied in block 1.920.000 and in that moment 85% of the nodes accepted the new blockchain, while 15% did not. At that time a fork in the blockchain that goes by the name of Ethereum Classic.
This very simplified and reduced explanation shows how the blockchain was modified in Ethereum to correct an error external to the developers. It is the only time that has occurred and the controversy was so great that it may never happen again. It is not only the controversy, but the discrediting of the Ethereum blockchain and the dangerous precedent that was created.
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The parameters that make Facebook not have a cryptocurrency
Taking into account those explained in 'basic characteristics' we realize that the first factor is that Facebook is a private company. Being created by a centralized organization it no longer has the ability to consider itself as a cryptocurrency. To be so, there should be decentralization, But is not the case.
Facebook will also have the code control and will own it, so it cannot be scanned for vulnerabilities and improvements cannot be developed for it. For example, Bitcoin being open source has allowed the development of the Lightning Network.
Perhaps the most important aspect so that it cannot be called a cryptocurrency is that its blockchain or distributed ledger (DLT) will be mutable. This means that Facebook reserves the right to modify and / or delete transactions, wallets, blocks, etc. Therefore there will be censorship.
Privacy in this cryptocurrency disappears completely. Facebook will possibly allow the creation of a single wallet ID per user of the social network, therefore it will be associated with a name and privacy is lost. We must remember that Bitcoin, Ethereum, Litecoin and so many other cryptocurrencies they do not store personal data associated with addresses.
Neither regulation nor taxes
Facebook like many technology companies are based in countries where taxation is very low. It is not the same to have the company in Spain, where you have to pay a large amount of taxes, as having it in countries where you pay less than 5%. Despite this, companies are not very taxable and have seen cryptocurrencies as the bargain of the century.
Although Facebook is an 'American' company, the company's interest is in pay the less taxes, the better. Likewise there is no regulation clear about of how to tax cryptocurrencies. Given this, they have seen the sky open to tax evasions, but at exorbitant levels.
Many times there is talk of the problems of regulating cryptocurrencies or of a regulation without taking into account the idiosyncrasies of cryptocurrencies. An unrealistic regulation is often sought for them, as in Spain, which You want taxes to be paid for each transaction. This is an absurd aberration resulting from ignorance or disinterest. But it is no less true that regulation according to the technical and technological aspects of cryptocurrencies could be beneficial.
Under great pressure
Currently Facebook is immersed in a large number of scandals for selling user data to the highest bidder. There is no privacy and any data, image, video or other that we upload to this social network is likely to be sold. It is evident that Facebook is a company, also a billionaire, that has workers who at the end of the month want to receive their remuneration.
Our data in the social network are very valuable source of information for third companies. Many users post opinions about products, experiences and others data that can be used by companies to develop more specialized and aggressive marketing campaigns.
To get around all these restrictions, Facebook has devised this digital currency. Possibly for publishing information, images, videos and others we receive a consideration with this blockchain-based digital currency. Come on what They will be 'paying' us to publish information and they will continue to earn money, yes, without the control of governments.
Stablecoin format
It is impressive how these types of coins have become so popular and they are only good for manipulating the market. Tether was the first of them, but there is a great deal more, which he went on to name.
All these pseudo-cryptocurrencies are based on centralization and having a fixed value. This means that 1 Tether equals 1 dollar, more or less and according to the developers say. It should be noted that in the case of Tether it is also said that all the available ones are backed by dollars, something that seems quite implausible.
Any Stablecoin can have a fixed value associated with another unit of account or fiat money. For example, We could create Stablecoin that are 1: 1 with the euro, ruble, Mexican peso, the yen or any currency of any state.
Facebook could tie its digital currency to a fixed price, which is 1: 1 par with the dollar or with a fixed price. You could consider 1 Facebookcoin worth $ 10 forever, no matter what. If they let it free and it was the users based on trust, who established a price, they could find a sabotage and that their invention would be worthless.
Conclusion
The idea of Facebook could not be simpler and clearer: skip regulatory restrictions, not pay more than is necessary and total opacity. This will allow the company to continue operating, even increasing its profit margins. Here who will be harmed will be the user, who will believe that he is receiving a consideration for using the social network, when in fact he receives a handout.
Although the most important thing and that I wanted to make clearer is that calling what Facebook will implement as 'cryptocurrency' is a fallacy, a lie and a scam.
