{"id":14603,"date":"2019-07-09T11:46:25","date_gmt":"2019-07-09T11:46:25","guid":{"rendered":"http:\/\/mediashower.com\/blog\/?p=14603"},"modified":"2019-07-09T11:46:25","modified_gmt":"2019-07-09T11:46:25","slug":"facebook-stock-vs-libra-coin","status":"publish","type":"post","link":"https:\/\/www.mediashower.com\/blog\/facebook-stock-vs-libra-coin\/","title":{"rendered":"Facebook Stock vs. Libra Coin"},"content":{"rendered":"<p>I don\u2019t usually make predictions. (There\u2019s a reason fortune tellers only charge five bucks.) But in this case, it was fairly obvious: the <em>New York Times <\/em>reported that Facebook was launching its own alternative to bitcoin.<\/p>\n<p>In our <a href=\"https:\/\/www.bitcoinmarketjournal.com\/join\/\"><em>Bitcoin Market Journal <\/em>newsletter<\/a>, I suggested that you might want to look into Facebook stock in advance of the official announcement. Those of you who did\u2014and acted on it\u2014were richly rewarded.<\/p>\n<p>I told you the opportunity presented the best of both worlds: an investment in an altcoin, backed by a publicly-traded tech company. Since the Facebook cryptocurrency isn\u2019t available yet, you could \u201cinvest\u201d in it simply through buying Facebook stock.<\/p>\n<p>Then it happened: Facebook announced Libra, its new bitcoin-like cryptocurrency, and the price of FB stock rocketed upward from $169 to $189 (see chart above). The price of bitcoin also surged; as I write this, it stands just shy of the $10,000 breakout mark.<\/p>\n<p>Libra, the new \u201cFacebook coin,\u201d is a very big deal. Here\u2019s why.<\/p>\n<h2>The Opportunity: The Internet of Money<\/h2>\n<p><em>\u201cWe believe that a global currency and financial infrastructure should be designed and governed as a public good.\u201d <\/em><\/p>\n<p>They got the messaging right: in the <a href=\"https:\/\/libra.org\/en-US\/white-paper\/#introduction\">Libra white paper<\/a>, they describe Libra as a \u201csimple global currency\u201d and \u201cfinancial infrastructure.\u201d (Both parts are important.)<\/p>\n<p>A simple global currency means what I\u2019ve called a \u201c<a href=\"https:\/\/www.bitcoinmarketjournal.com\/facebook-coin\/\">supermoney<\/a>,\u201d higher than the dollar, the Euro, or any government-owned currency. A financial infrastructure means we can send that money around the world, quickly and cheaply.<\/p>\n<ul>\n<li>Immigrants will be able to earn money to send to their families back home.<\/li>\n<li>Doing business with companies overseas will be simple and easy.<\/li>\n<li>Sending aid or scholarships to developing countries will go directly to those in need, without corruption or bribes.<\/li>\n<li>Peer to peer payments (giving your kids an allowance, or splitting a restaurant tab) will be as easy as a few taps on your device.<\/li>\n<\/ul>\n<p>I highly recommend reading at least the <a href=\"https:\/\/libra.org\/en-US\/white-paper\/#introduction\">first two sections of the white paper<\/a> (Problem Statement and Opportunity), which will take only a few minutes. It\u2019s inspiring, and it just makes so much sense.<\/p>\n<p><center><br \/>\n<img loading=\"lazy\" class=\"aligncenter wp-image-114037\" src=\"https:\/\/www.bitcoinmarketjournal.com\/wp-content\/uploads\/2019\/07\/slideshow.png\" alt=\"McKinsey slideshow.\" width=\"600\" height=\"338\" \/><br \/>\n<\/center><\/p>\n<p style=\"text-align: center;\"><em>Courtesy <\/em><a href=\"https:\/\/www.mckinsey.com\/business-functions\/strategy-and-corporate-finance\/our-insights\/global-flows-in-a-digital-age\"><em>McKinsey<\/em><\/a><\/p>\n<p>This is one of my favorite infographics, showing the global flow of money. Thick lines represent where money flows freely; thin lines represent where the flow of money is choked or dammed. A one-world currency will mean that we can widen those trickling creeks into mighty rivers, allowing wealth and prosperity to flow freely to all.<\/p>\n<p>A country can\u2019t do this. Facebook can.<\/p>\n<p>Facebook, with its global adoption, is already being used by <a href=\"https:\/\/zephoria.com\/top-15-valuable-facebook-statistics\/\">2.7 billion people<\/a>, or about a third of the world\u2019s population. That\u2019s a reach that no other nation can match (even China, the world\u2019s most populous nation, has only half that many citizens).<\/p>\n<p>Many pundits are concerned about financial regulation of Libra, but they are missing the point: Facebook is beyond the usual financial regulation, in the same way that Uber is beyond the usual taxicab regulation. To borrow a meme, Facebook is playing 4D chess on a 3D chessboard against regulators playing 2D checkers.<\/p>\n<p><center><br \/>\n<img loading=\"lazy\" class=\"aligncenter size-full wp-image-114038\" src=\"https:\/\/www.bitcoinmarketjournal.com\/wp-content\/uploads\/2019\/07\/bitcoin.png\" alt=\"Bitcoin plus Facebook equals Libra.\" width=\"975\" height=\"151\" \/><br \/>\n<\/center><\/p>\n<h2>The Threat: It\u2019s Still Centralized<\/h2>\n<p><em>\u201cOur ambition is for the Libra network to become permissionless \u2026 this transition will begin within five years of the public launch of the Libra Blockchain and ecosystem.\u201d<\/em><\/p>\n<p>I\u2019m talking about Libra as if it\u2019s entirely controlled by Facebook, but the company has wisely put it in the hands of The Libra Association, an independent, nonprofit organization located in Switzerland. The Libra blockchain itself is open-source, pseudonymous, and encrypted. So far, so good.<\/p>\n<p>However, the blockchain itself is permissioned, meaning that it is run by the \u201cFounding Members,\u201d made up of heavyweights like Mastercard, PayPal, eBay, Coinbase, and Andreessen Horowitz. Unlike bitcoin (where anyone can run a validator node), only Founding Members can run a node at launch.<\/p>\n<p>There is also a \u201cLibra Reserve,\u201d like the Federal Reserve: a store of deposits that back up the Libra coin. (Picture a safe full of gold coins that backs up every Libra coin). When someone adds to the reserve, the blockchain mints new Libra; when someone cashes out a gold coin, the blockchain \u201cburns\u201d (or destroys) Libra.<\/p>\n<p>If this sounds like a central bank, that\u2019s because it is. Just as the Fed can create or destroy money in order to control inflation, The Libra Association will wield a similar power over this new global money. This power should not be left to Mastercard, PayPal, and Silicon Valley VC firms. We should share it.<\/p>\n<p>In other words, Libra must become truly decentralized.<\/p>\n<p>The Libra white paper claims that permissionless systems like bitcoin cannot currently provide the \u201cscale, stability, and security needed to support billions of people and transactions across the globe,\u201d but adds that its long-term goal is to transition to a decentralized, permissionless system \u201cwithin five years.\u201d<\/p>\n<p>Five years is way too long. This transition needs to begin in <strong>one year<\/strong>.<\/p>\n<p>Five years of blockchain time is like thirty-five years of human time. (Think dog years.) In five years, Libra could replace SWIFT as a global financial standard, running trillions of dollars in transactions a day. It could rival the dollar as the global currency benchmark. Do you think Marc Andreesen will want to give up his seat at the table then?<\/p>\n<p>Bringing in the heavy hitters from the financial world is important for building up the Libra Reserve and giving the currency credibility. But we need to get them out of the driver\u2019s seat as soon as possible. Otherwise, it\u2019s just \u201cnew boss, same as the old boss.\u201d<\/p>\n<p>People have already been jokingly calling Libra \u201cZuckBucks,\u201d which is just a simple acknowledgement that if Facebook (or anyone else) remains in control, it\u2019s a project doomed to eventually fail. A Facebook coin will last only as long as Facebook. Why not just buy Facebook stock?<\/p>\n<p>You say a permissionless system isn\u2019t scalable? <strong>You\u2019re Facebook. <\/strong>Scale is what you do. You guys can figure out how to build a scalable blockchain before the end of the week, and still have time for foosball.<\/p>\n<p>I\u2019m giving you one year to decentralize this, Facebook. June 21, 2020. I just set a reminder in my calendar.<\/p>\n<h2>The Bottom Line<\/h2>\n<p>It\u2019s a centralized company launching a decentralized currency run by a centralized foundation moving to a decentralized blockchain. It\u2019s a perfect snapshot of this time we\u2019re in, trying to figure out how centralized institutions work with decentralized systems (four words: Donald Trump\u2019s Twitter feed).<\/p>\n<p>I can\u2019t predict whether Libra will succeed long-term. But I can predict that a global currency will. It\u2019s inevitable. It\u2019s what the world wants. The world wants money that\u2019s free, instant, scalable, and trusted: FIST.<\/p>\n<p>The world wants global money. Libra is our best shot so far\u2014as long as it\u2019s fair.<\/p>\n<p><a href=\"https:\/\/www.bitcoinmarketjournal.com\/join\/?__mscta=2372_77638_10247\">Sign up here to get more Libra intelligence and insight in our free weekly newsletter.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I don\u2019t usually make predictions. (There\u2019s a reason fortune tellers only charge five bucks.) But in this case, it was fairly obvious: the New York Times reported that Facebook was launching its own alternative to bitcoin. In our Bitcoin Market Journal newsletter, I suggested that you might want to look into Facebook stock in advance<span>&#8230;  <a class=\"read-more\" href=\"https:\/\/www.mediashower.com\/blog\/facebook-stock-vs-libra-coin\/\">Read More&#8230;<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":14604,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[459],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/posts\/14603"}],"collection":[{"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/comments?post=14603"}],"version-history":[{"count":5,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/posts\/14603\/revisions"}],"predecessor-version":[{"id":14609,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/posts\/14603\/revisions\/14609"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/media\/14604"}],"wp:attachment":[{"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/media?parent=14603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/categories?post=14603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mediashower.com\/blog\/wp-json\/wp\/v2\/tags?post=14603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}