So Facebook finally came out with some details on their Crypto project. It’s been led by David Marcus, of Paypal fame, and has been surrounded by lots of speculation for over a year. What they’ve actually released is = not a play to replace Bitcoin, rather an attempt to reach into the unbanked sector. That’s super exciting to me. Marcus highlights the difference here.
Many want to pit Libra vs. Bitcoin. In my mind these two are not in the same category. BTC is a decorrelated (investment) asset. Libra is designed to be a stable medium-of-exchange. I have been, and remain a fan of BTC, but for very different purposes.— David Marcus (@davidmarcus) June 19, 2019
I’ve worked in finance in emerging markets for ten years now, and access to cash is one of, if not the largest, barriers for the unbanked to access financial products. It’s an obvious insight, but it’s hard to comprehend because of just how easy it is for us to get cash. If Facebook’s stablecoin actually works, we’ll hopefully see more people being able to transact, build up a payment history, and get access to financial products.
I’m optimistic this has a good shot of succeeding. Facebook has over two billion users and massive influence with governments across the world. They have some brilliant people working on this, and I think the Libra leadership is strong enough to push back against the Facebook privacy monster. The details of how this will be structured is below. I pulled this from Axios:
- The coin will be managed by the Libra Association, backed by Facebook and 27 other organizations.
- These 28 are known as Founding Members, and Libra hopes to have about 100 of them by launch next year. They include Uber and Lyft, Visa, Mastercard and PayPal, and investors like Andreessen Horowitz and Union Square Ventures. Others are nonprofits and academic institutions, like Kiva and Women’s World Banking.
- In exchange for investing at least $10 million in the foundation’s reserves (which back the Libra token’s value), these members will get to run validator nodes for the Libra blockchain — “a rack of servers that will run transactions,” as the foundation’s currency chief describes it.
- They’ll also receive special Libra “investment tokens,” which are different from the basic form of the cryptocurrency, and get a vote as part of the foundation’s council.
This is a big step forward for crypto in the public’s mind. People will pay attention now, and I expect other crypto projects to benefit from this. It’s an exciting time to be in finance!