Coin Rivet: Libra has divided opinion. Some say it will take cryptocurrencies into the mainstream. Whilst others argue that a digital currency controlled by tech and payments 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?
MM: Libra will certainly raise a deeper awareness of cryptocurrencies, ultimately assimilating it into the daily lexicon of the average person. People don’t actually need to know what blockchain really does, the same way people that do not need to know what 5G does. All people really care about is that 5G is faster internet and that they will be able to download movies instantly and eventually have driverless cars on the road delivering people or packages. The next decade will be interesting.
That being said, it doesn’t negate the major concerns that enthusiasts have surrounding Facebook’s entry into the crypto community. Facebook – being a large, legacy tech company/corporation – is the antithesis of Bitcoin and crypto in its purest sense.
The fact that Facebook is considering 100 private companies that can commit $10 million to control, verify, and authorise a small number of permissioned nodes only means that the company has taken an early mover advantage to ensure that no matter what happens with true cryptocurrencies over the next few years, they will improve their access to data, becoming ever more entrenched in the world’s digital footprint and increase their advertising revenue.
Coin Rivet: Libra, blockchain without the block and the chain. Discuss.
MM: Facebook’s “blockchain” is pretty unorthodox, so many have been calling it a PR stunt. The whitepaper itself notes that “unlike previous blockchains, which view the blockchain as a collection of blocks of transactions, the Libra blockchain is a single data structure that records the history of transactions and states over time.”
Beyond the blockchain, without the block or chain, Libra doesn’t even come with usual and highly sought after benefits of blockchain’s distributed governance until some undisclosed time in the future. The stablecoin will launch next year centrally controlled by founder coin holders.
“Facebook – being a large, legacy tech company/corporation – is the antithesis of Bitcoin and crypto in its purest sense”
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?
MM: Facebook is trying to counter the easy, in-app payment solutions that have emerged in the last several years. But the banks will never lose, fiat currency in dominant jurisdictions will always be the benchmark. Truthfully, it’s the emerging economies that may be most prone to Libra being adopted as a method to counter local hyper inflation and leapfrog the idea of traditional financial systems that were never able to gain adoption due to lack of infrastructure.
Using a telecom analogy, think of the land lines infrastructure that was usurped by 3G in many developing regions, it was much easier, less expensive and the phone companies catered towards global populations that were highly deprived of telecommunications.
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, last week. Could Libra be derailed by the regulators?
MM: First, regulators (not the general public, to be honest) will need to understand it, how both Facebook and blockchain work, and its potential combined impact. That said, Bitcoin is still under the watchful eye of the government. So while there might not be regulation available right now, it is possible that as the public and government become more knowledgeable, Facebook will have more to worry about.
Ultimately, Libra is about the balance of power and knowledge. As it stands, despite their wealth of knowledge and power, Facebook uses digital fiat currencies. As long as fiat is on the table, it will be under the rule of the government that issues it. Now, by having a basket of currencies, Facebook can kick out currencies/countries if need be. And state regulators and supervisors will lose their power.