Facebook issues cryptocurrencies: the industry is good, but it is extremely scary

The Internet giant Facebook is about to issue cryptocurrencies, and it has recently become a topic that everyone must meet.

What do you think of it? I am both excited and excited about the cryptocurrency industry, and at the same time, I have some serious thoughts on the financial game of big countries…

Giant enters the cryptocurrency

As early as May last year, social networking giant Facebook expressed plans to issue cryptocurrency. In April this year, Zuckerberg also announced the first quarter of the 2020 time slot.

However, just after two months, on June 6, Facebook's cryptocurrency project suddenly increased, the launch time will be advanced to July 2019, and it is likely to announce the project's white paper on June 18.

Facebook is the global leader in social networking, with a current market capitalization of approximately $500 billion, which is roughly equivalent to the gross domestic product of Sweden or Poland. Its main revenue comes from advertising revenue and is one of the most profitable companies in the world today. .

At present, Facebook owns the three major social products of WhatsApp, Facebook Messenger and Instagram, and the total number of users is about 2.7 billion. Its users are almost all over the world. With the lifting of the ban on Facebook by Cuba and Iran, there are currently only two places in the world that cannot use Facebook: my home country and North Korea.

Facebook 's cryptocurrency plan is essentially a set of digital financial payment systems, which cover both payment transactions for individual users, global cross-regional transfer settlements , and the possibility of free cryptocurrency and sovereign currency. exchange.

Facebook's cryptocurrency will be used for transfers between social accounts, content creation incentives, transfer payments, credit card services, and more. At the same time, a physical currency exchange machine in the form of an ATM machine will be introduced.

Of course, such a huge global financial plan will not face fewer challenges, especially in terms of regulatory compliance. There are still many uncertainties.

At present, Facebook is actively promoting communication with the government, and also cooperates with commercial organizations such as Visa and MasterCard.

One-third of the world's population is expected to have cryptocurrency

Since the invention of Bitcoin by Nakamoto, after nine years of development, the world already has about 30 million cryptocurrency holders. But compared to the global population, users of cryptocurrencies still only account for a very small proportion.

How to have more users and to reach a broader consensus has always been the biggest issue for practitioners.

When investing in a project, our team values ​​the amount of users it has and will generate in the future. Removing the numbers that are full of moisture, if a blockchain project can bring hundreds of thousands of real active users, it can be very attractive.

Facebook's 2.7 billion potential users cover almost one-third of the world's population, which is indeed very attractive and influential.

If all goes well, the cryptocurrency finally ushers in the largest landing application ever, and these massive users will bring unimaginable positive changes to the entire industry, which is a super long-term positive.

 

Stabilizing coins anchoring multinational currency

According to public information, the internal code of the Facebook cryptocurrency project is “Libra (Libra)”, and the cryptocurrency that will be issued is likely to be called “Global Coin”. This name also reveals Facebook’s ambition to target the global financial market.

Facebook's cryptocurrency project uses a blockchain-used management structure and has recently established an independent foundation in Switzerland. It acts like a “central bank” throughout the system and will be responsible for governing and controlling the entire Facebook digital finance in the future. system.

It is worth mentioning that the stable currency GlobalCoin is not a single anchor dollar, but will anchor a basket of currencies including the dollar, euro, and yen.

But it is conceivable that the dollar in this basket of currencies will inevitably be the main body. As for whether there will be RMB? What is the ratio of each currency? How to exchange with French currency? These issues are still unknown, and the upcoming white paper is very worthy of our expectations.

Speaking of stable coins, we usually think of USDT, which is nothing more than an alternative to legal currency in cryptocurrency transactions.

However, in the financial dimension, the stable currency is actually very complicated. Because it anchors the legal currency, it also determines that it has to adhere to the existing traditional financial system, and it has to be linked to the whole world. The financial system creates intractable connections that are so complex that it is difficult for ordinary investors to really understand their meaning.

The traditional financial system is still much larger than the cryptocurrency. The main battlefield of the future cryptocurrency must be in the traditional financial field.

The goal that Facebook seeks is actually to start a new round of digital payment systems that are parallel to the traditional legal currency financial system.

On a certain level, we can understand that Facebook is seeking to change from a company to a "digital economy." Blockchain is just its means, not its focus .

In short, although both GlobalCoin and BTC are cryptocurrencies using blockchain technology, GlobalCoin 's stable currency attributes are destined to be completely different from BTC , and the future will eventually move in a completely different direction.

The liquidity value of money will be the largest gold mine

Facebook's future use scenarios and revenue models are very rich, and some examples are easy to understand:

  • Countries such as Venezuela, Zimbabwe, Argentina, and Turkey have experienced sharp currency depreciation in recent years. In such a country where the value of domestic currency is fragile, currency preservation is the most basic demand of the people.

Previously, BTC was almost their only life-saving straw, helping many people in distress to save their assets, but Bitcoin also had some inconveniences, such as price fluctuations, inconvenient use and storage, and so on. The future Facebook stable currency is a very good new choice, which can help people realize value storage more conveniently.

  • Transnational remittance through the banking system is not only expensive but also slow. In the future, the use of Facebook stable currency for international transfers is almost free of fees, and may be easily converted into domestic currency.
  • 80% of the nearly 400 million adults in Africa do not have bank accounts. Especially in sub-Saharan Africa, less than 3% of people use credit cards. But at the same time, Africa's mobile phone penetration rate is more than 70%, and already has a good mobile payment basis. For those who don't even have a bank account, Facebook after issuing stable currency is similar to their bank, so they can enjoy basic financial services through their mobile phones.
  • Of course, the use of Facebook's stable currency is far more than that. If you think about WeChat payment, you can still think of a lot.

    When this huge global financial system is established, even if it only charges a very small amount of fees, Facebook can obtain great direct benefits, which is somewhat similar to the concept of "tax".

    Moreover, the huge amount of legal currency mortgaged by Facebook's issuing stable currency will also be a stable source of profit.

    For example, if Facebook deposits its US dollars into the Fed through a bank partner, it will be able to gain 2.35% of the proceeds without risk, that is, for every $10 billion of encryption stable currency, Facebook will receive $235 million per year. income. Don't forget, this is just the most insignificant benefit of the entire financial system.

    Look at the most amazing source of value in this financial system: the liquidity value of money.

    For example, in the legal currency financial system, under the dual drive of trading and lending, every dollar of legal currency issued will usually generate more than five times the currency liquidity.

    In Facebook's future financial system, it can also generate liquidity values ​​such as transactions and loans. That is to say, every time a Facebook issue of a stable currency, it is possible to derive several times the ability to pay. These extra payment capabilities are The most important source of profit for Facebook in the future.

    Whose cake did Facebook move?

    As an investor, many times we not only need to know how money is earned, but also how to earn money from whom.

    If the above-mentioned Miss's conjecture is basically correct, Facebook will get amazing gains in currency liquidity. Then, from which cake is the income derived?

    In the existing global financial system, the US dollar dominates the currency settlement between countries, and governments dominate the country's currency circulation and settlement, and central banks have benefited a lot .

    After Facebook's future currency issuance, whether it is the currency settlement between the countries or the domestic currency circulation, some of them may be transferred out and flow to Facebook's independent economic system in the form of stable currency.

    Obviously, Facebook is divided into the original cakes of the central banks including the United States and Facebook users. This is very similar to the impact of BTC on the interests of French currency .

    Why does the US support stable currency?

    Judging from the recent advancement of the currency program, Facebook seems to have a smoother communication with the US government.

    The real control of the United States is actually in the hands of Wall Street financial tycoons, and their sensitivity to the financial world has always been self-evident.

    They are very clear that for the financial hegemony of the United States, digital currency is both a big challenge and a big opportunity .

    Therefore, their attitude towards digital currency is to be careful not to miss the strict control of the digital currency .

    In 2018, several dollar-denominated coins such as Gemini Dollar and Paxos Standard have been approved by the US government. This time, Facebook's stable currency has also been approved by the government, and we are not surprised.

    The underlying reasons for the US to support digital and stable currencies are not difficult to understand.

    Although the US dollar has a dominant position in international settlement, at the same time, other governments and central banks will firmly control the issuance and circulation of their own currencies, and it is difficult for the US dollar to penetrate the daily circulation of other countries.

    The digital currency represented by BTC is operated in the form of decentralization and has the characteristics of anti-regulation. Therefore, the new species of cryptocurrency has strong vitality, and even has the opportunity to break the absolute sovereign currency market for the future. Take control.

    I have to admit that the US dollar is still the most stable legal currency of today's value, so most of the digital currency stable currency is also anchored by the US dollar.

    Therefore, for the United States, the stable currency of the cryptocurrency pattern is likely to help the dollar continue its globalization process. Whether it is Facebook 's stable currency or other US dollar stable currency, the future may indirectly help the US dollar expand the circulation scene to the world. In every corner , this is what I started to talk about.

    Compared with the US dollar hegemony, we obviously expect BTC to continue to rise to become a fairer world currency.

    Facebook's strengths and shortcomings

    Compared with cryptocurrencies such as BTC, Facebook's stable currency has both outstanding advantages and obvious shortcomings.

    Compared with BTC, Facebook's stable currency can be used and stored more easily, its value will not rise and fall, the application scenario will be richer, and with the existing 2.7 billion users of Facebook, there is a chance to quickly achieve global scale. Large-scale application within.

    But compared to the decentralized digital currency like the pie, the shortcomings of Facebook's stable currency are also obvious.

    Facebook's stable currency, the application of blockchain technology is more reflected in the currency issuance level, but it has to consider regulatory compliance issues in the overall operation and governance level, so Facebook's entire project is destined to be centered. The way to achieve .

    Although the negative impact of centralization does not seem obvious from the perspective of user usage and market penetration, it will be the most deadly flaw in the future of Facebook's stable currency in the long-term competition with decentralized currencies such as BTC.

    Miss Qianxi believes that Facebook is a very useful project at this stage, and its significance is to significantly reduce the cost of traditional financial transactions.

    But it does not have the characteristics of decentralization, equality, anti-censorship, anonymity, code, law, etc. of the blockchain.

    If you make an image metaphor, I think Facebook Stabilizer is a new species between the French currency and the decentralized cryptocurrency (BTC ) . It has great positive significance at this stage, but it cannot be the ultimate form of the future world currency .

    In the end, smarter people will choose to store their core assets on a more trustworthy decentralized system like BTC , rather than Facebook or dollar currency .

    Digital currency trends

    In fact, in addition to Facebook, the US financial tycoon JP Morgan, the US social software Twitter, the European social software Telegram, they are also working hard to promote their digital currency plan.

    In China, including the People's Bank of China, Ant Financial, etc. are also exploring how to launch digital assets in the blockchain.

    The release of Facebook's stable currency should trigger national thinking about digital legal currency.

    It has already pushed down the first dominoes that the giants entered, which may prompt management of other countries to make a new look at the blockchain regulatory policies , and may also accelerate the acceleration of sovereign digital currencies in other countries.

    Conclusion

    Since Wall Street took away the control of global finance from Europe, the United States has maintained control over global finance.

    Utilizing financial advantages The United States can often exercise its hegemony without blood, not only against rivals, but also against allies, and the most important tool is the "dollar . "

    The United States is a country that is truly controlled by financiers. Even if there is a seemingly mad leader, we should not underestimate their layout and ambition at the financial level.

    Even if the digital economy will become an inevitable trend, the United States still has a great opportunity to continue to sit in the virtual currency field through the unique advantages that the US dollar has established.

    I am very proud to see that in the game with all aspects of the United States, we have been more and more calm and confident.

    After all, "Who controls the currency, who can control the world."

    To truly break the dollar's hegemony over the financial world requires us to show more courage and wisdom. Blockchain may be our best opportunity!