Coin Rivet: What are your initial thoughts re. this week’s Libra announcements and whitepaper?
IG: It is a very exciting announcement for the wider awareness of digital currencies. When Libra goes live, suddenly it will be in front of 2.5 billion users, forcing mass awareness of crypto and its uses.
Facebook is educating the market faster than any pureplay crypto company could, so it will be a hugely interesting 2020 for the blockchain world.
Coin Rivet: Libra has divided opinion, with some saying it will take cryptocurrencies into the mainstream and others arguing that a digital currency controlled by tech and payment cartels such as Facebook, Visa and Mastercard, is not the way forward. Do you agree with either of these arguments or does the truth lie somewhere in between?
IG: It is great for wider adoption and legitimacy of digital currencies amongst the general public. It is, however, against the core principles of an open, decentralised cryptocurrency. It will bring great benefits to a wide population of the unbanked, who to date have struggled with cryptocurrencies designed to help them due to a lack of wide availability and popularity.
Facebook will help provide a meaningful solution here. International payments can be very expensive and time consuming and the introduction of Libra will address this head on. It will, though, be an incredibly divisive cryptocurrency among the blockchain community.
“Facebook are establishing themselves as a major threat to the banks. With Open Banking and their own digital currency they can move to a position to own the client relationship for a wide range of financial transactions”
Coin Rivet: Libra, blockchain without the block and the chain. Discuss.
IG: I’m a massive fan of the decentralised nature of open blockchain and believe companies play an important role in helping develop the technology at scale and ensuring wider adoption. The global talent pool of people skilled in blockchain technology is aided by corporations investing heavily. This will lead to many spin off innovations and new startups.
Facebook has invested heavily in solving engineering problems of scale and performance most companies will never face. Their commitment to a digital currency will help accelerate the sector and drive innovation, not least from the hardcore crypto community as well as other corporations wanting to establish competing digital currencies.
Coin Rivet: Based on the theory that Bitcoin doesn’t need to worry (indeed Libra may even help Bitcoin adoption by driving millions of people to seek out what a real cryptocurrency is), whose piece of the pie is Facebook taking? The banks?
IG: They are establishing themselves as a major threat to the banks. With Open Banking and their own digital currency they can move to a position to own the client relationship for a wide range of financial transactions. This is not their desire at the moment, but these trends develop over time.
Libra will have a very positive impact on the price of Bitcoin, raising the profile and wider belief in the future of digital currencies. The media attention has already been significant and will continue over the next year.
Coin Rivet: “Given Facebook’s troubled past, I am requesting that it agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.” So said Rep. Maxine Waters, Chairwoman of the US House of Representatives’ Financial Services Committee, this week. Could Libra be derailed by the regulators?
IG: There is no doubt that governments and regulators have an active role in determining how money is defined, governed and issued. Facebook has the audience reach and financial power to make a strong case to get this project launched. It will not be a smooth ride with lots of competing interests potentially affected.
We will see issues of privacy, control and competition addressed as Facebook forges its way through the FinTech world and there will doubtless be many legal and ethical issues that it will need to confront.