My, oh my. It’s extremely exciting to see all the Libra opinions floating around. What to think about Facebook’s little move into global banking? The haters are hating and the regulators started regulating. Below are a few things that struck me so far, from where I’m standing…
- It’s a convenience coin. And convenience is a huge USP. Exchanging digital money that you can keep safely, in a non-volatile currency sounds like it might be useful for quite a few people.
- Banks have been working on a similar convenience coin (utility settlement coin) for years. But instead of being process-centric and finding benefits for the few, Facebook went for user-centric and potential benefit for the masses. Add to that a tech-savvy innovation culture and you got speed + scale. Scary: this time they’re dealing with fundamentals like money, not with ’status updates’.
- Apparently, it’s more a distributed database than a blockchain. Whatever. But still, they chose to use the words “blockchain” ánd “crypto-currency”. Surprising narrative. And narratives will be important.
- It’s surprisingly ambitious about becoming more permissionless and open over time. So either they’ve ’seen the light’ and are taking some first, corporate steps towards that. Or they’re naive and have no idea how difficult that is. Major downside for them: making the click from centralised to decentralised is not easy. I just imagine a board member from PayPal/VISA/… (who blocked payments to WikiLeaks), to click into permissionless mode and talk about things like aligned incentives. When it comes to having your brain re-wired, this is a Mind-F, IMO.
- It uses an awful lot of terminology (and tech concepts) from Ethereum, but obviously have decided to build from scratch.
- The issue of identification seems vague to me. In one part they mention they don’t link accounts to real-world identities. But the Calibra wallet mentions that KYC is required.
- In that respect, how to verify the unbanked (first target audience) with reliable government issued-ids?
- They’re very explicit about not sharing financial data for advertising etc. But their reputation is well against them. And the Calibra terms mention that lovely phrase “not without customer consent”. So it will only take a lending app with the option ‘improve your credit rating by sharing your data’ and off we go.
- What’s in it for the members/big corps, who pay minimum $10m to join? They’ll make money from fees, but you’d expect these to be a whole lot lower than current Paypal fees. They’ll also take a share of the interest generated by the ‘stability fund’ through Investment Tokens. Will that be enough? Or, will it be data after all? Or other ‘incentive schemes’, which are vaguely mentioned?
- Regulators are going to be busy, oh so busy. Will they regulate against the current processes and the existing world? Or will they think/talk/discuss from fundamental principes? That may or may not be a good thing.
- It’s a centralisation exercise, a global coin, to make things easier. In theory, that also makes it more fragile (thank you, late Bernard Lietaer, for making me vaguely understand the importance of fragmentation and multiple currencies). In contrast, one of the promises of web3-blockchains are programmable monies, all with different purposes.
- Interesting to see that a Web3-blockchain-savvy investment fund like USV is on board.
To be continued. No doubt.