After Libra is on the line, what is the odds of Ali Tencent?

In the currency circle, there is no belief that a solar line cannot be recharged. Since last week, BTC has continued to rise, once breaking through the $11,000 mark. Let the silence of the moon for a few months come back to life, and many people who are watching the market have sent friends to record the return of this bull market. Indeed, for the currency circle, it is not as inflammatory as a positive line to say that more application scenarios, technology landings, and value investments.

The biggest thrust in igniting the market this time is the official release of Libra White Paper, a global digital currency from Facebook. In addition to the direct rise in Facebook stocks, Libra's white paper has also raised questions from many regulators. The reason is that Libra is positioned to create a cross-border payment system without borders. However, due to the different stages of financial infrastructure development in different countries, it is still impossible to determine which countries and regions can qualify for compliance after going online. Banks do not cover the financial freedom of countries and regions, and Facebook faces enormous challenges in law.

According to relevant data, the number of Facebook users has reached 2.7 billion, which is twice the total population of China, which is equivalent to three times the total number of Alipay and WeChat users. Even the bitcoin, which is the head of the digital currency, has only a million active daily accounts. It can be said that Libra's volume is not available in all existing digital currency and blockchain systems.

Facebook launched the cryptocurrency and digital wallet business. Many people think that this is a transformation to the super application such as WeChat to make up for the shortcomings of its payment port and break the ceiling of social software development. In recent years, as the domestic payment market has stabilized, China's two major mobile payment giants, WeChat Payment and Alipay, have begun to enter overseas territories and seek overseas expansion to find incremental markets. The data shows that by 2018, Alipay and WeChat payment have already landed in more than 40 countries and regions around the world. So what impact will Libra bring to them?

Whose cheese is moving?

The rise of Facebook has grabbed the slogan of global social development. This time, Libra released the trend to increase blood, speed up the layout of social + payment, and get rid of the dependence on advertising revenue, especially Facebook’s accusation of infringing user privacy in the past year. Reflects the crisis that it relies too much on the revenue generated by a single business. So, in this case, it makes sense for Facebook to introduce Libra to bet on cryptocurrencies.

Libra's slogan is “Building a simple global currency and financial infrastructure that serves billions of people.” In short, using Libra to transfer funds globally would be like sending text messages or sharing. Photos are just as easy, affordable and safe. Behind the Libra blockchain and Libra's currency reserve is a Libra association of 100 independent members – the founding members are responsible for finalizing the association's charter.

From the list of members, Libra basically covers eating and drinking. According to the setting of the white paper, if we want to go abroad without changing foreign exchange, we do not need to pay the exchange fee for foreign exchange. We only need a Libra wallet address, we can directly exchange the national currency for Libra, and then use it directly for shopping. The endless Libra can also be used to exchange currency of other countries.

Many people say that Libra copied Chinese WeChat and Alipay, but in fact there are many differences between them.

One is that the anchors are different. WeChat and Alipay are 1:1 anchored to the renminbi, and Libra is anchoring a basket of sovereign currencies rather than a sovereign currency, so this makes Libra more stable;

 

Second, the payment channels are different. After the completion of each payment action of WeChat Alipay, there are a series of clearing actions carried out by the enterprise and the centralized settlement bank. Libra is an international organization that can be settled without third parties and does not require central bank processing;

Third, the way of operation is different. WeChat Alipay is centrally operated, the user payment process is transferred via WeChat, Alipay and other platforms, and then cleared by the bank. Libra is a multi-center operation, and 4 super nodes are formed by Master, Visa and PayPal (referred to as MVP). There are already 28 head enterprises (super nodes) in various industries who have participated in it. When the company is officially issued next year, 100 super nodes may be formed. The transaction behavior between users and enterprises can be carried out point-to-point without going through the bank.

So who will be grabbing the cheese of Libra? From the above analysis, we can see that Libra and WeChat Alipay are not a dimension of competition in the field of mobile payment. Facebook's 2.7 billion users, plus Libra's package of assets to commit to pay, assuming the United States to join, this basically determines the US digital currency hegemony, as long as everyone's transaction uses the dollar, long arm jurisdiction must exist. At that time, giants such as WeChat and Alipay, and even central banks, will actively or passively join the Libra digital currency system.

The more serious idea is that if Libra is allowed to use it freely in the country in a politically unstable country and the nationals hold enough, then in a sense, the central bank of the country will lose the right to issue money. Therefore, Libra is not the cheese of WeChat Alipay, but the cheese of central banks.

Libra's danger

Global circulation, cross-border payments, from here we can see Facebook's ambitions. However, Libra’s release on the day raised some doubts.

 

The first is platform data management and control capabilities. In 2018, Facebook was deeply mired in user data disclosure scandals and was fined, and data management and control capabilities were questioned. If Libra goes online, it means that Facebook will be able to collect more data and further penetrate the user's life. Is Facebook's ability to ensure that data leaks do not happen again? On the day of the white paper, the US House of Representatives issued a statement asking Facebook to suspend the cryptocurrency project. She pointed out that the current cryptocurrency market currently lacks a clear regulatory framework to provide strong protection for investors and the economy. Given its troubles, she believes that Facebook is not yet in control of the project;

Second is the strong opposition of regulators around the world. US Federal Reserve Chairman Powell said that Facebook’s new cryptocurrency Libra will face strict supervision, and the US Senate will hold a hearing on LIBRA on July 16; European Parliament German Congressman Markus Ferber said that Facebook with more than 2 billion users may It will become a "shadow bank" and regulators should remain vigilant. He also called on the European Commission to begin to develop a regulatory framework for virtual currency. The Russian side rejected the Libra entry through the media. Anatoly Aksakov, chairman of the Russian Finance Committee, said that Libra, the cryptocurrency that Facebook is about to launch, will not be legalized in Russia because it may pose a threat to the country's financial system. In India, according to the Indian Economic Times, Libra, released by Facebook, is not expected to be used in India because the current regulations do not allow the use of banking networks to trade cryptocurrencies, and Facebook has not applied to the Reserve Bank of India (RBI). From the perspective of national attitudes, regulation will indeed be Libra's biggest obstacle.

Then there is the risk of spamming. Here we compare Libra with Bitcoin and WeChat Alipay. Bitcoin is dug up. It is based on people's consensus. Bitcoin can be understood as a series of codes based on algorithmic calculations. The WeChat Alipay 1:1 corresponds to the renminbi, and no new trading unit is generated. It is the renminbi itself. But Libra is collateralized, backed by a foundation, and once collateralized, Libra is not a native asset like gold and silver. In fact, it is more like a corporate bond issued by a foundation composed of dozens of giant companies. Does the association established by Libra support the credit rating of the endorsement required by the global settlement currency? How to avoid the risk of spamming, bad debts, etc?

Finally, the competitors on the original track. Before Libra was released, Facebook was repeatedly questioned about replicating China WeChat. Before Libra described the payment revolution, it was a few years since WeChat Alipay had been done, and it would inevitably lead people to compare it. Suppose Libra can use the developed contract function and the corresponding language move to raise Libra's credibility to the level of sovereign currency, allowing people to use it directly as currency, which sounds like a great "innovation." But when we think about it, will we find that Libra is not our WeChat and Alipay? Cross-border payments on white papers, what Libra wants to do, Alipay can do almost everything, and blockchain technology is not needed. It is interesting to note that Libra's benefits are owned by the Foundation and there is no semi-finance relationship with the users. From this point of view, this is not as good as Alipay's balance.

Is “Facebook” worth to enter?

Since the Libra white paper was issued, the blockchain industry has been carnival, from overseas to domestic, from the currency circle to the chain, large and small seminars are very lively. Aside from the difficult side of Libra's familiar payment revolution and global regulation, the birth of Libra undoubtedly caused the digital currency to resume some volume after being officially suppressed for more than a year. So does the “Facebook coin” with 2.7 billion users have the value of admission?

In fact, this question can be asked more simply. Will you buy Alipay? If Alipay does not give you interest, will you still save money inside? What's more, Libra may not be as convenient or fast as our WeChat and Alipay. For the Chinese, this currency should not be better than Alipay and WeChat, but in countries and regions where the value of the country is unstable and the electronic payment is backward, Libra may be a more convenient and more affordable payment and transfer. tool.

This is also consistent with Libra's background . The Libra project focuses on international remittances. Its target group is 1.7 billion adults without a bank account, and users will be able to make instant cross-border transfers via mobile phone. free.

Second, because Libra is anchored in a package of assets, it is similar to a stable currency. Its price fluctuations are very small and there is no value for speculation and speculation. It's even possible that you can exchange 1Libra currency for $1, and you won't be able to redeem it back to $1 in a month. However, this is a good means of maintaining capital for countries with unstable currency values ​​such as Venezuela. If the proportion of nationals holding Libra is high enough, Libra may become an anchor for emerging currencies.

Since the beginning of 2019, Bitcoin has steadily increased. With the recent favorable news such as Facebook's currency and Buffett's lunch, which has been photographed by the new currency, the market value of Bitcoin has reached a high value of 11,332 US dollars. Although Bitcoin has experienced many cycles of prosperity and depression, from the overall data, Bitcoin has risen far more than high-quality stocks such as Amazon and Apple, and has become the best investment product.

Libra's white paper says that it will minimize price volatility. From this perspective, Libra is not a good investment product. David Marcus, head of Facebook's cryptocurrency, made it clear that Libra's use is to pay and transfer money. People don't buy things with bit-price volatility, and they don't invest in Libra, which is stable in price.

Although Libra can't be the so-called "hundred times of coins" and "thousands of times", most people in the currency still think that Facebook's entry into the digital currency is a positive, representing the regular army's recognition of digital currency. But for the current Facebook book, how to pass the supervision of various governments and the communication of the central bank may be really difficult. Whether Libra, which is known as a genius design, will eventually land, is still unknown.

Author: Lim

[Copyright Notice] This article is the original manuscript of "Chain Institute", and the source of the article is indicated at the head of the article. The picture is from the network.