Abstract
Replacing the first materials used in metals in ancient times as a currency is a novelty of money. The second novelty of money is the exchange of precious metals, such as gold and silver, used for hundreds of years. During this period gold was used as the world currency. After these developments, there has been no news for a long time before the advent of Bitcoin and blockchain technology.
Innovation in money has taken a new dimension with blockchain technology. The Libra Association’s project to create a global currency blockchain technology has caused controversy. Sovereign states do not support the exercise of world control without their control. This paper explores the ideas of world currency, the reaction of sovereigns, and the effects of the new world currency (Beck, 2018).
Introduction
With the advent of money, the barter system, which has had to meet the needs and has limited economic activity, has been phased out. Technology creates everything in life that is used as a currency. With the first wave of technological development; Ancient societies replaced coins, wheat, corn, shellfish, and silk, as currency. Copper and bronze were easily used as gold, and then silver and gold, which required advanced techniques (Benigno, 2019).
The earliest forms of currency that have evolved with technological advances have no relationship between money and government. There is no trace of the money used by the Hittite Hittites or the money used by the Chinese call them Shell, as a sign of state sovereignty. These coins had the stamp of the sellers or the guilds of merchants instead of the stamp (Berentsen, 2018). With technological advances, the monetary forms have changed, and for the first time in China, paper money was called “jiaozi” in 1120. Unlike current money, they had a limited circulation period and were issued for three years (Cameron Dark, 2019).
But in 1247, restrictions were lifted that were imposed forthree-years. The paper money was not only limited to China’s geography but also reached Iran. There, Chinese and Arabic letters were distributed in Tabriz. It is known that paper money, which means innovation in money, fails and the metal system returns. Then gold and silver were used as the most complete currency for hundreds of years (Chohan, 2017).
The gold coin stand art was started by Britain in 1821 as the first in the world. The establishment of the Latin Monetary Union in 1865, the International Currency Conference of 1867, convened in Paris and adopted the gold standard. But due to the inability to steadily increase the supply of gold, the coin’s stand was abolished, and the gold bullion was adopted as standard. In this system, the monetary authorities will issue banknotes instead of gold and store the gold in bullion molds (Desbois, n.d.).
The first paper money on the European continent was issued in 1661 by Stockholm Bank. However, the central banks’ monopoly on banknotes production took a long time, and it took them longer to become state-owned (Table 1). In some developed countries, central banks have never been state-owned (Ehrenberg, 2019).
Hundreds of banks issued various banknotes before the Bank of England monopolized the banknotes in England. In the United States, it has been a common occurrence. There was no central bank until the FED was formed in 1913 after the Second Bank of the United States closed in 1836. During this period called “Free Banking”, any bank that has obtained state approval may issue banknotes (Garonna).
The bullion standard of gold was used successfully before the First World War, but with heavy financial losses from the war, it was impossible to increase the gold supply, which eliminated the connection between banknotes and gold. This has facilitated the production of banknotes in wartime. Although the developed countries returned to the gold bullion stand after the war, the Great Depression of 1929 completely dropped the system (Garonna).
Creators of Libra Association
The Libra Association, which has 28 constituent members in 2019, is expected to reach 100 members by 2020. World leaders in payment systems support MasterCard (USA), Visa (USA), PayPal (USA), Stripe (USA), PayU (Netherlands) and Mercado Pago (Brazil) as founders. This means that these corporations are ready to adapt to the coming wave of changes in the financial sector (Johan Eriksson, 2006).
Being one of the largest telecommunications company, Vodafone (UK), solved he issues of community. The second company in Communications, Iliad (France) is well known as the pioneer of many new broadband and ultra-fast communications innovations.
Anchorage (US), Bison Roads (US), Coin base (US), Hapo (Switzerland), all he is one of the founders with experience in blockchain technology. Having members who have experience in blockchain technology means that building the technical infrastructure for Libra will not be difficult. It will be easy for these corporations to do what they do for Libra.Andreesen Horowitz (USA), Breakthrough Initiatives (USA), Ribbit Capital (USA), Thrive Capital (USA) and Union Square Ventures (USA) (Maréchal, 2017).
The Manifest
The Association’s website states that Libra will be a regular currency
Built on a “simple, inclusive, and global” and secure network. The White Paper issued by the Association outlines the mission of Libra to establish a global currency and financial structure that can be used by billions of people (Meaning, 2018).
The blockchain technology that brought Bitcoin is used in Libra and is open sourcecodes. Unlike Bitcoin, it is based on a specific asset portfolio. The scales are similar to Mandy’s DEY and Inter-suggestion. That could give Lev some stability. Another aspect of Libra that differs from Bitcoin is that the Libra Association is governed by the fact that Bitcoin is not managed by anyone. Despite being the leader of the association, Facebook is still the same as other members of the community (Moisio, 2018).
Reaction on Libra
Bitcoin and other cryptocurrencies have been closely monitored by central banks and states for 10 years, but they have not been able to get a significant reaction because they were inaccessible to the masses. But unlike Bitcoin, before it went public, it gained a significant reaction after it was released (Sauer, 2016).
FED Governor Jerome Powell has stated in the Finance Committee of the United States House of Representatives that Libra cannot move forward without having to worry about the risks of money laundering, privacy and, if Libra becomes available, to the public. U.S. lawmakers at the press conference say that allowing the tech giants to influence monetary policy by taking advantage of others in the financial system is mistaken (Zetzsche, 2019).
They also said that mega-corporations would not have access to critical public infrastructure. They called on the FED to protect the economy from Facebook’s monopoly. Some have argued that Libra is a threat to democracy, that Facebook and other tech companies should be closed and that an antitrust inquiry should be opened (Østbye, 2017).
Conclusion
Bitcoin, created by renowned economists, and technically sound from its theoretical point of view, the infrastructure created by information technology and cryptology experts has allowed us to look for a new dimension of world currency. Blockchain technology brought by Bitcoin has been the main source of money innovation (Desbois, n.d.).
Bitcoin has been closely monitored by the authorities since early morning, but because of its limited user base, it has been rejected as a threat. However, due to the fact that Libra is accessible to the general public, it is perceived by many countries as a threat. The main source of concern is the subsidization of the Libra national currencies and a violation of the sovereignty of the state. Especially in developed countries, it is expected that the scales will subsidize national currencies as strong and stable foreign currencies.
Sovereign states also do not want to lose their income for the elderly. It should also be noted that the flexibility of monetary policy gained after the fall of Bretton Woods will be wiped out with Libra. The liquidation community is struggling with issuing money to sovereign states, called Libra (Beck, 2018).
One of the biggest drawbacks of the community is the lack of founders from Africa and Asia with 1.2 and 4.5 billion people, respectively. Although non-profit organizations in the U.S. have found their niche in the community, the Red Cross and the Red Crescent are like large holes in its casing for lack of space.
Although the Community of Scales initiative has been blocked today, it still looks forward to other simple organizations tomorrow. With advanced technology, the gin does not seem to be in a bottle for a world currency. Instead, we need to adapt to this change (Taskinsoy, August 8, 2019).
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