Taxi drivers around the world are in a fight with a car-hiring service called Uber that is making their lives difficult. Up until now, courts have been deciding in favor of the old business model — but for how long? Hotels, too, are reporting fewer overnight stays because people prefer to book their accommodation through Airbnb. Here again, courts have ruled against the new online competitor, because the business is misappropriating scarce housing.
Telephone companies are losing sales because calls from one continent to another are free via WhatsApp. TV cable providers are facing lean times as more and more people, especially young people, get everything they are looking for through streaming services like Netflix or DAZN. Retail shops are suffering because shoppers are preferring to buy with a quick click on Amazon.
This all means that digitization will not only change our everyday lives, but also many businesses, whether in manufacturing or services. This process seems unstoppable; turning back the clock is simply unimaginable. Not surprisingly right now the next industry is being turned upside down — the financial industry.
The good Mr. Zuckerberg
Cryptocurrencies have been making headlines for some time, but usually in a more negative light. Bitcoin, the most popular of these digital forms of payment, has attracted attention with its unprecedented highs and lows. Not to mention the fact that many internet criminals will only accept it as ransom money. Cryptocurrencies are also a godsend to organized crime or the drug mafia, since the trail of digital money goes cold in the black hole among zeros and ones.
Financial watchdogs, which are still stuck in the analog world of money, have looked at digital currencies in a skeptical light since their emergence. So far, however, little to nothing has happened. But that is changing now. Earlier this year, internet giant Facebook publically announced plans for its own digital currency called Libra.
As always when Mark Zuckerberg has an idea he only points out its positive aspects. First it was global internet coverage to the last corners of the world for the good of humanity. Now it's a digital currency that makes sending money as fast, safe, easy and cheap as sending a WhatsApp message (WhatsApp, just as a reminder, is a Facebook subsidiary). The goal of the Libra would not be to make a profit, but to reach the 1.7 billion people who do not have access to financial services. So here too it's a story for the good of humanity.
But Zuckerberg's story lacks credibility. Why have eBay, PayPal, Mastercard and Visa recently turned their backs on the project? Why are regulators and finance ministers suddenly getting nervous? Why was Zuckerberg grilled for six hours this week in front of a congressional committee? Nonetheless, even the boss of the largest bank in the world, Jamie Dimon of JPMorgan Chase, does not really seem confident when he says that Libra has "no future" and will "never happen."
The end of the dollar?
The fear is that if a group with such power like Facebook with its 2.4 billion users enters the financial market, the stability of this market could be at risk. What's more, that could stifle the role of the dollar as the world's leading currency. And that would have dramatic consequences for US foreign policy.
Many sanctions against unpopular regimes or dictators work because of America's currency lever. In a digital currency world these sanctions would probably not work anymore. Whether money laundering or terror financing, if money flows are not transparent (which is already hard enough today), things could get out of control.
Even the Europeans have woken up. Germany's Finance Minister Olaf Scholz has become a champion fighting against the Libra. Recently he even received applause from the head of the US Federal Reserve for his risk analysis. Scholz isn't just against the Libra, he is looking ahead and instead wants an alternative for fast and cost-effective money transfers across national borders. He is not alone. "We need the digital euro," according to the Association of German Private Banks, claiming that if they do not do it, then others will.
That almost sounds like Mark Zuckerburg. He had a strikingly similar argument for the US Congress: It would be better if the regulators would approve his Libra project, because if America didn't do it, then others would. In China similar plans have been on the drawing board for a long time and that would be a much greater danger.
So the big question is: Will countries still have the money monopoly in the future, or will it be private companies like Facebook or the operators of the server farms that mine bitcoins around the world?
The battle for the money of the future has only just begun.