U.S. Congressman Warren Davidson of Ohio’s 8th congressional district was recently interviewed by Noded Bitcoin Podcast co-hosts Pierre Rochard and Michael Goldstein. During the interview, the conversation turned to Facebook’s Libra project and the differences between the social media giant’s offering and Bitcoin.
Earlier this year, it was Congressman Davidson who used the term “shitcoin” during a congressional hearing related to Facebook’s digital currency plans.
According to Davidson, he first became interested in digital cash systems before Bitcoin existed, back in the days of DigiCash. This interest in digital cash was sparked by the issues related to moving between the United States and China.
“What really goes on in the back end there sometimes is governments are taking their time to validate everything, make sure they know it’s you, [and asking]: Why is this money moving?” Davidson told Goldstein and Rochard. “Who’s moving it? Are we okay with this? Should we process this request or should we follow it? Should we report it? All kinds of things.”
According to Davidson, Bitcoin first came onto his radar back in 2013 or 2014.
The Problems with Facebook’s Libra Currency
Once the conversation turned more directly onto Facebook’s Libra currency, Davidson let it be known that his main issues with the project revolve around the degree of centralization involved with it. The congressman claimed it’s clear Libra would be regulated as a security if it were ever to launch due to the fact that the entity or group in control of the network could make changes to the currency that would affect its exchange rate. For example, Libra holders could be harmed financially if it was decided that a much weaker currency, such as the Venezuelan bolivar, should be added to Libra’s fiat currency reserves.
“If that central authority is able to manipulate the value of [Libra], how do you not treat it as a security?” Davidson rhetorically asked Goldstein and Rochard during the podcast interview.
Rochard pointed out that Cash App was able to fly under the radar by simply integrating Bitcoin into their platform rather than trying to create something completely new. The Noded Bitcoin Podcast co-host asked Davidson if he thought Facebook also would have been better off taking this approach.
“I hope they try it because it’d be a way better idea than Libra,” Davidson responded.
That said, Davidson also added that Libra has been valuable in terms of illustrating Bitcoin’s key value proposition as a decentralized, uncontrollable digital money. Davidson pointed out that Facebook already filters content on their social media platform, and questioned whether people would want that same sort of filtration in terms of the transactions in a digital currency system.
“Do we want filtered speech or free speech?” asked Davidson. “Do we want filtered transactions or freedom?”
According to Castle Island Ventures Partner Nic Carter, this trend of missing the point of why Bitcoin has value in the first place is extremely prevalent throughout the altcoin market. Notably, a recent report from privacy-focused search engine DuckDuckGo revealed that social media users are taking more steps to protect their online privacy, which could be a bullish trend for Bitcoin over the long term.
Goldstein pointed out that CNBC Squawk Box’s Joe Kernen appeared to learn a lot about Bitcoin thanks to the discussions around Libra this year.
“Throughout this Libra thing, we got to watch in real time as Joe came to understand Bitcoin by virtue of seeing the problems with Libra,” said Goldstein.
These issues of centralization found in Libra were known from the start, but the potential for the faux cryptocurrency to help the general public better understand Bitcoin was discussed heavily at a Bitcoin conference over the summer.
According to Davidson, Libra has also helped Bitcoin’s critics better understand the cryptocurrency, which has led to some of his colleagues, such as California 30th congressional district’s Brad Sherman, becoming more determined to ban it. Of course, others in Congress have pointed out that attempting to ban Bitcoin would be a fool’s errand.