Facebook Libra, a World Currency and More – Ming Duan
Coming from China, a place where people are used to paying through Alipay and WeChat Pay without using cash or credit card in their day-to-day life, I was excited to see a progressive move finally takes place in the US around the legacy payment system.
I have read quite a few articles on Facebook Libra. At first, I was drawn by how similar Libra is trying to achieve with what Alipay and WeChat Pay have achieved in China. Cashless transactions, reduced transaction fees, mobile payment enabled infrastructures such as subway — those are the exact benefit over a billion (yes billion) people in China have been enjoying: they pay through mobile apps for everything such as subway tickets, taxies, grocery, utilities or hospital bill; transaction fees are much less on merchants than that of credit cards; money transactions have become so easy by just setting up a QR code to reach out to your customers…
Isn’t it a wonderful thing? Why is everybody so angry about it?
On one hand, it is about data privacy. The truth is, Facebook or not, this one will be controversy whenever a company potentially gains such power with such an amount of private data. At the same time, it is solvable. We have governments and lawmakers who work hard to catch up with the knowledge so as to build a thorough legislation and monitoring system that protects private information and enforces a fair market environment.
On the other hand, it is about the threat to a country’s monetary policies. This is the part that put me into thinking. There is a major difference between the approach Alibaba and Tencent take versus Libra — Alibaba and Tencent never try to replace a currency or challenge the Chinese government’s holy function to create and enforce its monetary policy. They achieved their goal through digitizing the banking system. Libra, on the other hand, is built on the idea of creating a world currency, with which it aims to enable a seamless transaction flow. In its white paper, Libra talks about how the Libra coin is pegged to major currencies. The key point here is not about how or whether they can keep the value stable, but in the grand vision Libra may have, I see a world that the Libra coin replaces national currencies and becomes the dominant one measuring and representing value and circulating from phone to phone without touching a national currency. That’s why they can bank the unbanked — they will become a monetary system themselves.
When my thoughts of Libra came to this point, I was truly amazed by the ambition Facebook and the Libra team have.
There is no conclusion from me on whether this aggressive move is right or wrong, or whether Libra would succeed or fail. To me, this is more about that Libra happened, and the entire world was awoken and started to look at the project and see how buzz words like digital currency, blockchain and decentralization could change their lives. All the discussions, debates, hearings, criticisms will be profoundly beneficial to the development of the blockchain industry in the long term. For now, at least blockchain has finally made it to the mainstream, in becoming a street topic as the first step.