Luo Jinhai: Facebook's "ambition"? The real currency war has just begun

Facebook wants to "issue money"

The world is changing too fast, and today Facebook officially announced the currency.

At 17 o'clock on June 18th, 2019 Beijing time, Facebook's Swiss subsidiary Libra Network (Libra Network) and 26 global companies, released a white paper on cryptocurrency, the official name of the cryptocurrency is Libra (Libra).

The first sentence of the white paper is: Libra's mission is to create a simple, borderless currency and financial infrastructure that serves billions of people.

Without concealing it, Libra is trying to build a “currency without borders”, which is Facebook's goal.

Libra anchors a “basket of currencies” made up of multinational currency, which is defined as “stabilized currency” in the blockchain world. Libra originally had another name, called GlobalCoin, which translates to "global currency." But Zuckerberg, who was old and heavy, finally chose the symbolic name of Libra, trying to downplay the "ambition" of the name GlobalCoin.

The world's largest social platform access to "stable currency", what does Facebook mean?

Means that there will be 2.7 billion users accessing the cryptocurrency payment system;

Three-quarters of the Internet population has entered the world of blockchains;

Hayek’s "Non-Stateization of Money" will be verified in reality;

The battlefield of technology giants has expanded from user flow to the financial world;

Non-sovereign currencies begin to really impact "dollar hegemony";

…………

As a company that has made great achievements in the Internet age, it is entirely possible to sit in the real world's pyramids and take advantage of it. Facebook currency, it is obviously a kind of entrepreneurial way of knives and blood, is this the great journey of the visionary, or the arrogant moth?

What is "stable currency"?

What is a stable currency? What is the value of a stable currency? Why does Facebook issue a stable currency?

As a cryptocurrency linked to the world assets of the legal currency (such as gold, silver, US dollars, etc.) using blockchain technology, as opposed to other highly unstable cryptocurrencies (such as Bitcoin, Ethereum, EOS), the stable currency will be as Keep low volatility.

Stabilizing coins are the “bridge” for the communication between cryptocurrency and legal currency, with the following specific values:

加密 Encrypted payment currency appears

The first contradiction of cryptocurrency is the contradiction between the appreciation of the local currency and the payment of the local currency. The emergence of stable currency has solved this contradiction and has greatly helped the circulation of cryptocurrency.

数字 Digital storage of real assets

There are many ways to stabilize the assets of stable coins. Gold, silver, US dollars, power, credit, securities, and fixed assets can all be anchors. Libra is anchoring the credit assets accumulated by Facebook for many years. The 2.7 billion stable users are digitally mapped in the cryptocurrency world.

稳定 Stable ecological value exchange

To form a stable ecology of stable coins, a stable currency of an enterprise should be able to exchange freely with the stable assets of another enterprise according to specific values. After the exchange of values, the assets of both parties can be “gasified”.

As an Internet giant, Facebook is a must-have for issuing "stabilized coins." It is different from Bitcoin's self-made "single bachelor", which relies on appreciation to get scattered users. It is the "constant value" that the top real-world rich people need. Its core functions are divided into three layers: the first is to digitize existing assets; the second is to obtain residual value in the flow of digital assets; the third is to create a digital value exchange system.

Libra's ambition and struggle

Facebook has released the "Libra Stabilizer" with the following three options:

Option 1: 1:1 anchor the dollar. Option 2: Linked to the US dollar, the euro, the Japanese yen and other currencies, formulate a “one basket” plan, and simultaneously reserve the above three currencies on the international accounts of the companies to which the stable currency is linked, and finally move to the form of a fund. Option 3: a mixture of credit currency and mortgage currency, the value is generated by “behavior mining + user recharge”, the value of the mining part of the behavior is derived from the use value of the products provided by Facebook Ecology, and the currency generated by the user’s recharge, The legal currency mortgage of the user's own country is generated.

The first option is clearly the safest one, and there are precedents in law. In September 2018, the US government approved two stable currencies, the Gemini Dollar and the Paxos Standard, for one dollar each. If Facebook is tied to the US dollar in this way, it will become the most pioneer of the digitization of the US dollar, and the interests of both are the same.

The third option is the strategy of blockchain of many Internet companies, also known as the TOKEN of the generalized economy . The lowest cost method is used to promote the Internet assets TOKEN, "Netease Planet" and Baidu's "degree universe". This is the routine.

The second option is the most difficult in nature, because it means getting ready to become a "world currency" from the beginning, becoming the leader of the blockchain world, and resisting the traditional legal currency world.

Facebook has few rivals in the Internet world. Zuckerberg can steadily and steadily lay out the blockchain and become the "ultimate predator" in the conservative forces. But he chose the second option, why would he move forward in such a radical way?

Active reason: This is Facebook's strategy of pre-emptive and one-stop strategy in the blockchain world. Unlike the traditional world, there is only one kind of unified currency in the digital world. Whoever takes the world first, the Matthew effect will be highlighted, and the challenge will be Some digital currency patterns are difficult to get up to, this is Facebook's "ambition."

Passive reasons: Facebook is being targeted by global public authorities. The data privacy breach in 2018 brought a shadow to Facebook. Zuckerberg was questioned as a “criminal” at the US Congressional hearing. In May of the same year, the EU passed the GDPR bill, and Zuckerberg refused to go to the UK for questioning. And almost arrested, Facebook's business model is facing the threat of public power, which is why Facebook is in urgent need of change, this is Facebook's "struggling."

Since its inception, Facebook has been invincible in the Internet world. Zuckerberg's pioneering social business model is also the most vital product. The success of the Internet world has fueled Zuckerberg's ambition and he wants to step from the Internet. In place blockchain.

Facebook's "open source strategy"

Facebook is not a courageous company, and Internet companies that have worked hard in the market are far-sighted.

The blockchain is a decentralized world. Too much emphasis on Facebook's central position is not the optimal strategy. Zuckerberg's vision is very open:

❶ Establish a stable blockchain ecosystem;

推进 Promote alliance building in a decentralized manner;

主导 Leading Libra's operations in a model of foundation governance;

❹ Combine the POS mechanism of the blockchain to share benefits.

At the beginning, Facebook has attracted more than 20 companies from all over the world, including blockchain, investment institutions, shared travel, payment, e-commerce, social media, telecommunications and many other fields. The following are the first organizations (by industry) that belong to the "founders" published in the white paper:

• Payment industry: Mastercard, PayPal, PayU (Naspers' fintech arm), Stripe, Visa

• Technology and Trading Platform: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, MercadUber Technologies, Inc.

• Telecommunications: Iliad, Vodafone Group

• Blockchain industry: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited

• Venture capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit CapitaUnion Square Ventures

• Non-profit organizations, multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Wom

Facebook's cryptocurrency is managed by a consortium called Libra Association. The association is a digital economy of 100 cooperative alliance nodes, each of which will also serve as a node operator in the Libra Association and have the right to send a representative to the consortium.

At the same time as Facebook, Facebook has begun to monetize its own products:

❶ Apply its stable currency to its three major communications/social tools: WhatsApp, Facebook Messenger, and Instagram;

融入 Integrate Libra Stabilizer into its core advertising system to reward users for their creation, sharing, and dissemination. Users can also purchase their products through Facebook's stable currency;

❸ Libra will also be used for actual payments. Facebook has been negotiating with Visa and MasterCard. The negotiations included the application of Libra to financial information services company First Data and some e-commerce platforms;

❹Facebook allows Libra project internal employees to receive the cryptocurrency as a salary.

Taking the product as the core of the strategy, managing the cryptocurrency with the designated partners, and inviting third-party organizations as “nodes” to participate in community governance, this is Facebook's overall “open source” strategy.

It is not the value of the blockchain that allows all participants to share their interests in order to go further.

Counterattack from "dollar hegemony"

Facebook currency can be regulated by the New York Financial Services Department (NYDFS) like the GUSD, 1:1 anchoring the dollar, but it anchors a "basket of money."

Anchoring "a basket of currencies" means not anchoring any single legal currency, it anchors itself.

The Libra Network could have been registered in the United States, but eventually chose Switzerland.

Choosing this world-famous neutral country as the first stronghold of its own business is obviously going global.

Facebook is not willing to be a pawn of American finance, but wants to play a game outside the existing "dollar hegemony."

Is the Fed and Wall Street willing to be willing?

After a long period of evolution in the past 500 years, the modern French currency finally defeated gold as the world's universal currency and became the most effective weapon for harvesting the whole world. I don't know how many visible and invisible interests are involved. Can you let it go?

"Dollar hegemony" against Libra may have the following means:

❶ Use legal means to suppress stable coins outside the “US dollar system”.

In April 2019, the New York law department attacked Bitfinex, the US company with the world's largest stable USDT, and frozen Bitfinex for $850 million. Although the USDT anchored the US dollar 1:1, it was not regulated by the US financial department. Libra now belongs to this stable currency.

纳入 Incorporate stable currency into the financial system as part of the digital dollar.

In September 2018, the New York Financial Services Department (NYDFS) authorized the digital currency exchange Gemini Trust and the blockchain startup Paxos Trust to issue stable, rigorous and 1:1 dollar-linked encrypted digital currencies. The behavior of the currency is regulated by the government, which is the most popular way for the US financial sector.

建立 Establish mechanisms in the existing financial system to control cryptocurrencies.

On June 13, 2019, Bakkt, a subsidiary of the Intercontinental Exchange Group, the parent company of the New York Stock Exchange, announced that it would begin testing bitcoin futures products on July 22.

❹ Train competitors to check Libra.

This is a legitimate means of a market-oriented country, such as JM coin, which supports JP Morgan Chase in the international traditional financial sector payment system, or encourages companies such as Google and Apple to embed their own cryptocurrency from the bottom.

❺ Issue the national digital currency of the United States.

Of course, the United States generally does not take such extreme measures. It prefers to use the free market to escort the dollar.

For the United States, if the stable currency of the cryptocurrency industry is not under the control of the financial system, then one day it will no longer need power and dollar endorsement. Just like the 1971 US dollar decoupled from gold, it eventually became a worldwide digital currency. This is the territory that the Federal Reserve and Wall Street will not give up anyway. Although Libra is full of ambitions, there is still a long way to go.

Libra vs. Bitcoin, Internet VS Blockchain?

Although Bitcoin has reached a market value of RMB 1 trillion today, it is still dwarfed by Facebook.

In 2018, Facebook's net profit reached 25 billion US dollars, the number of users 2.7 billion, the market value of more than 500 billion US dollars, holding the world's largest user base and endless cash, standing at the highest point of the Internet world.

Libra had 2.7 billion users from the start, and 10 million Bitcoin users were not at all a level.

When Libra hits Bitcoin, what kind of spark will eventually collide between the two?

Libra is a product of the Internet world, it is an eagle flying on the World Wide Web ;

Bitcoin is the original species of the blockchain , it is the nightingale that sneaked into the gray world ;

Now that this eagle wants to invade the gray world, can it eventually become the ruler of the world, or is it just the eagle eye that explores the gray world at night?

The blockchain world does not believe that Libra can succeed. Although Libra's grand vision is astounding, in the world of cryptocurrencies, which is currently in the grassroots stage, the bigger the company wants to come in and seize the central bank's role, the more it will be fatally suppressed.

After all, it is still a guerrilla warfare era, and does not require a huge monster like Libra to launch the "three major battles."

The reasons for these bitcoin against Libra are as follows:

Libra launched by Facebook is just a token. It is not fundamentally different from JPMcoin launched by JPMorgan Chase. It is just a new competitor. What is the actual effect? ​​There are still unknowns. “ The “network stability currency” supported by legal tender and fully anchored, no matter how the design changes, can only be a special token running on a specific network platform, and it is impossible to replace or subvert the fiat currency. ❸ Libra is linked to a basket of currencies and will be more complex than GUSD and JPMcoin, facing more risk challenges. ❹ Libra should strengthen the research and unification of online payment rules, and promote the global unified payment and clearing supervision system, which is inextricably linked with the traditional world.

But things are not as simple as they are supposed to be. In this era of users, that is, no company can open up the real world and the blockchain world like Facebook. Before the price of Bitcoin stabilizes, if Libra becomes the eco-coin of the blockchain, as an ordinary person who cares about the “centralization” or “decentralization”?

The match between Libra and Bitcoin is a "centralization" and "decentralization" confrontation, and is the Internet VS blockchain. The final outcome is the Internet harvesting blockchain, or the blockchain harvesting the Internet, which can only be given time to verify.

Destiny from "Libra"

As long as the nation-state still exists, Libra’s destiny will be bumpy.

We can try to explore the possibilities of Libra's future:

First, there is a constant dispute between small countries and Facebook. Because stable currencies first threaten countries with unstable currency values, residents of many small marginal countries in Africa are more willing to hold Libra than the country’s legal currency. As long as the ecological integrity is complete, Libra is Can purchase goods and exchange foreign strong legal currency, which is very attractive to small nationals;

The strong legal currency of the big country will also suppress Libra. Because Libra has a day, it will always eat away the national currency. As Libra strengthens its potential, once Libra’s currency credit is established, the powerful currency of the big country will not escape the marginalization. Which strong legal currency will be willing to wait for such a result;

In the end, Libra strategically retreated and formed an alliance with the US dollar, becoming an important member of the digital dollar, expanding its digital territory under the protection of US state power, but at this time Libra is no longer a global digital currency, just The dollar of power corresponds to the dollar.

Once Libra's alliance with the digital dollar is formed, it will test the horrible aspects of the digital dollar we talked about in Face to Mathematics, RMB No Opportunity . It is completely different from the traditional US dollar. Its essence is mathematics. Other countries can also control the traditional US dollar through the territory and prevent the entry of the US dollar through financial regulation. However, the digital dollar makes the national barrier impossible, and it can penetrate into any country more conveniently.

Is the currency Utopia era coming?

In 1976, Hayek wrote "Non-Stateization of Money."

In his book, he said that a free monetary system should be allowed to allow various currencies to compete with each other to survive the fittest, rather than naturally accepting the government's power to control the issuance of currency.

In 2009, the emergence of blockchain technology made "non-stateization of money" possible.

In 2019, Facebook and Zuckerberg made this "money utopia" close to our real life.

There are too many injustices in the world of French currency dominated by “dollar hegemony”. It is time to introduce more competitors. Libra’s white paper reveals a strong feeling of compassion: Throughout the world, the poor pay more for financial services. Their hard-earned income is used to pay for all kinds of complicated expenses…

What is Facebook’s “ambition” or “ambition”?

Ready to reshape Facebook's business model in the future?

Building a global “global without borders” from a larger perspective?

Building a "digital empire" of blockchain from a higher dimension?

From a higher civilization to promote the three powers of politics, religion, and economic checks and balances?

Maybe we are all short-sighted and malicious, and Libra means "Libra" in English. Libra symbolizes balance and justice.

Regardless of Libra's ending, the courage and courage of Facebook and Zuckerberg's show once again proved his personal pattern, and his success is no accident. What do other technology giants think?

This is a gold picture that has just revealed the front page.

The real currency war has just begun.

 

Author: Luo Jinhai

Source: Quantum School