"I can do more damage on my laptop sitting in my pyjamas before my first cup of Earl Grey than you can do in a year in the field." 
Q, Skyfall 2012

Friday saw us leave behind the summer solstice and it’s hard to believe that the days will already start getting shorter – symbolic perhaps given the escalating tensions between the US and Iran. Following the downing of a US drone last week, Trump warned of the potential for “obliteration like you’ve never seen it before”. Whilst a knee-jerk military response was narrowly avoided, over the weekend, news broke that the US had conducted a cyber attack - aimed at disabling the computer systems that control Iran’s rocket and missile launchers.

The significance of this should not be overlooked. Whilst lines of code might appear harmless when compared to missiles and mushroom clouds, they can be deployed quickly (from thousands of miles away), have wide-reaching consequences and leave the victim susceptible to further attack. The situation highlights humanity’s dependence on technology (even at the highest level) and emphasises how increased reliance and unintended vulnerabilities often go hand-in-hand. This is a dynamic that leads us nicely onto another of last week’s major stories – the official announcement of Libra - the cryptocurrency currently spearheaded by Facebook and a collective of other technology/payment based heavy weights that make up the Libra Association. https://libra.org/en-US/white-paper/#introduction

This link directs you to a white paper from the association. It is an interesting read for anyone who wants to learn more about Libra and the problems they are seeking to solve. The basic premise is that of the 1.7 billion people that remain disconnected from the current financial system (“the unbanked”), over one billion have access to a phone and nearly half of these have internet access. This is a fact that puts Facebook at a distinct advantage to the conventional payment system (where access can only be granted by an issuing bank and often involves a lengthy and costly trip to the nearest branch and due diligence that the very people who would benefit from banking the most simply don’t have). It is certainly an interesting development during a time where big-tech is coming under increased scrutiny from anti-competition authorities, and the calls for the incumbents to be broken up grow louder. Many are, understandably, questioning the appropriateness of providing sensitive payment information to a company with Facebook’s track record for data security. Others worry about the increased dependence this will place on a company that, arguably, already has too much power and the subsequent consequences of granting them further control over our lives.

One of the most vocal (and perhaps qualified) critics is tech entrepreneur Chris Hughes who shared his concerns in an article for the FT. The article, which can be found here https://on.ft.com/2FmBDbg , is worth a read in its entirety if you are an FT subscriber. For those that aren’t, Hughes’ primary concern is the threat that the promise of a stable (asset backed) currency presents to the ability of governments to control their monetary supply and the impact this will have on a country’s ability to effectively navigate periods of both boom and recession. Although given the recent rhetoric coming from the Fed (suggesting upcoming rate cuts and a return to easy money supply), one has to question how successful governments really are in managing this – perhaps letting the corporates have a go would prove no more contentious!

Whilst, in theory, Hughes’ concern is plausible (particularly for emerging economies where often the purchasing power of the local currency can vary wildly) in practice, this only really becomes a problem if Libra becomes widely adopted and diminishes the importance of traditional currencies. So far, crypto currencies have remained at the fringe of society - despite a number of periods of heightened public interest. Perhaps a consortium of some of the world most innovative and respected companies is what is required to propel crypto currencies into the mainstream. 

Have a good week!