Thread by @jchervinsky

0/ The Libra hearings were a huge milestone in the development of US political thought re: the financial system & digital assets.

Both chambers of Congress brutalized Facebook, but true cryptocurrencies came out looking pretty good. My takeaways from this week below.

Thread 👇

1/ If you need to catch up on Libra, check out:

- Libra's whitepaper (libra.org/en-US/white-pa…)
- @TechCrunch's summary (techcrunch.com/2019/06/18/fac…)
- @CaitlinLong_'s testimony (forbes.com/sites/caitlinl…)
- @CoinCenter's article distinguishing Libra & Bitcoin (coincenter.org/entry/the-diff…)

2/ Congress held two hearings on Libra this week, one by the Senate Banking Committee & one by the House Financial Services Committee.

@DavidMarcus was in the hot seat answering questions. He did a good job considering Facebook doesn't have a great reputation in DC these days.

3/ It's actually hard to overstate how much these Members of Congress seem to dislike Facebook.

Many spent their time recounting the company's failings instead of asking about Libra. Most were openly suspicious of its motivations. Some could even be accused of grandstanding.

4/ It can be frustrating when Members ask questions just to make a point or give speeches without letting the witness respond.

For better or worse, that's just the political theater of DC. Some Members are there to be heard, not to listen. It's a chance to generate sound bites.

5/ To that end, we got to enjoy a rant from our friend @BradSherman, who said Libra is more dangerous than 9/11. Uh, okay.

But we also got to hear from some of our pro-crypto favorites, like @RepTomEmmer, @RepBillFoster, @WarrenDavidson & @PatrickMcHenry.

https://twitter.com/APompliano/status/1151514004524810241

6/ Crypto remains a largely non-partisan issue -- one of a handful where you can't tell if someone is a Democrat or a Republican by their questions alone.

That's great. It means we have time to be thoughtful & develop consensus across the aisle. I hope we make the most of it.

7/ It seems like Members are starting to understand the tech better, too. Many questions were a lot more sophisticated than we've heard in the past.

Most importantly, they appreciated the distinction between Libra & true cryptocurrencies like Bitcoin. That's a big victory.

8/ The main critique of Libra was directed at Facebook, which the Members repeatedly described as "untrustworthy."

Would Facebook infringe on users' privacy? Lose all their money? Exclude the competition? After all, why hide in Switzerland unless something sketchy is going on?

9/ Marcus gave the best answers he could, often falling back on the promise that Libra won't launch until every regulator is satisfied.

No one could say *which* regulators, though. Marcus was asked who should regulate Libra, but he didn't have an answer. Neither did the Members.

10/ That's partly because nobody's quite sure what Libra even is, exactly.

Could it be a bank? If so, what kind & where? Are its reserves a commodity pool? Are its tokens securities? Does that make it an investment company? Or maybe an ETF issuer?

And on, and on.

11/ These are hard questions for Libra, but they're really not for crypto.

In Bitcoin, we don't have to trust a central entity to safeguard private transaction data, manage a fiat currency reserve, or promote healthy competition. These things largely take care of themselves.

12/ In a way, we couldn't have asked for a better company to get Congress thinking about these issues. We now have a perfect opening to say:

"Interested in improving payments infrastructure, but don't trust Facebook? Let us show you the far superior, trust-minimized edition."

13/ That said, the hearings did foreshadow some issues we'll have to tackle.

For one, the tired refrain that "crypto is for criminals" came up early & often. In particular, the Members wanted to know how Libra would prevent illegal activity & comply with AML/KYC requirements.

14/ Marcus had a quick answer: the Libra Association would register with FinCEN as a regulated money services business & Calibra would require identity authentication for all users. Problem solved.

(Well, not really, since other wallets might not comply, but never mind that....)

15/ The AML/KYC question is tougher for crypto, since it's permissionless by definition & thus pseudonymous.

I'd say our answer starts with @JerryBrito's "The Case for Electronic Cash: Why Private Peer-to-Peer Payments are Essential to an Open Society."
coincenter.org/entry/the-case…

16/ From there, we'll need to grapple with the amorality of technology, law enforcement's reliance on financial surveillance, & the optimal degree of social tolerance for criminal activity in the name of the greater good.

It's a nuanced & practical argument, but not an easy one.

17/ Another tough question: would Libra compete with the dollar? Marcus could say no, since Libra's just a fiat-backed payment system.

What do we say for crypto? Different people have different hopes & dreams for Bitcoin, but no doubt "global reserve status" is high on the list.

18/ By now some of you are thinking, "who cares about the government, crypto is unstoppable." Okay, but it's not that simple.

Like it or not, the government commands a lot of power & resources. It would be quite bad if crypto ownership was criminalized or networks were attacked.

19/ So, what's next? As the meme goes, good luck to Congress getting the CEO of Bitcoin to come testify.

In my view, Satoshi's absence is a feature, not a bug. But it also means *we* have to stand up and speak for ourselves. Luckily, we have some people who are awesome at that.

20/ People like @Melt_Dem, the real champion of Libra week.

Notice how she focused on (1) the *economic* value of an open protocol & (2) the inevitability of *some* country realizing that value, just maybe not America. That's how you make the non-ideological case to politicians.

21/ Finally, is Libra dead on arrival?

Maybe, maybe not. Facebook must've expected a couple tough hearings. It's part of the process in DC: first you pay your pound of flesh, then you get to work whipping up support.

But is it coming in 2020 as planned? I doubt that too.

[end]