Facebook Stabilizer Libra: What is the impact on Bitcoin and Ethereum?

Imperfect stable currency

After the release of the Libra white paper, many people will certainly be disappointed, far from the real idealized currency in their minds.

However, our real world is built on the basis of state actors, not in the virtual world. We can see that the concept of the state has not diminished with the flow of information, but it is increasing. This can be seen from the increasingly fierce tariff actions and restrictions imposed by multinational corporations in different jurisdictions.

Libra is bound to bring more regulation. For example, after the release of Libra, French Finance Minister Bruno Le Maire said that digital currencies like Libra cannot be considered as a substitute for traditional currencies. He also called on the central bank of the Group of Seven to prepare a report on Facebook's stable currency and to discuss it at the July meeting. He is concerned about privacy, money laundering and terrorism finance.

The entire world of mankind is full of invisible walls. Behind every invisible wall are countless interwoven interests. Facebook's Libra is clearly disruptive to traditional banking institutions, so it is bound to face increasing pressure. Libra's plan has just been released, and Waters, chairman of the US House Banking Committee, asked Facebook to stop issuing stable currency before domestic and regulatory review.

Libra is the currency of a centrally distributed issuer that meets regulatory needs.

In this case, the cryptocurrency, especially the stable currency, has to break through many invisible walls, and it is almost impossible to rely on its own power.

The third road is Libra's only choice

In this case, a realistic option is that it is a reasonable choice in the middle of the cryptocurrency and corporate system. From the words of the Libra white paper, it has a big dream without the need to license the public chain, but it also knows that this is not the way to go.

The cryptocurrency is an architecture that does not have any central issuer and is invisible to anyone. Its token is publicly available, and its transfer is transparent. There is no cross-border concept here, only whether it is safe or transparent. Whether it is a real concept. This is a decentralized form that includes not only distribution and transfer, but also organizational form and management.

But the company structure includes central governance, private equity, compliance regulation and so on. It is consistent with the central management of the real world.

In this case, as one of the highest beneficiaries of the corporate governance system, Facebook is unlikely to do the same path as Bitcoin from the beginning. All it can do is to combine the characteristics of the two and get out of an intermediate path. .

This intermediate road adopts the structure of the alliance chain, and many well-known nodes ensure the issuance and transfer of money. Although it is far from the true decentralized digital currency, even so, it has made great progress compared to the traditional Fed architecture.

It is not decentralized, but it is not central. It is a multi-centered architecture. There are many industries and institutions such as payment, technology and trading platforms, telecommunications, blockchain, venture capital and non-profit organizations.

At the same time, even if its chain is not a public chain, it is costly and less likely to be faked on its chain. Of course, it still has the problem of centralization, that is, if the node agrees, it can be reversed.

Libra's breakthrough

Libra chose the third road and made a lot of trade-offs. Even so, it is doubtful whether it can be promoted in developed countries or countries with strong economies. Because the node behind it, so far, is mainly based on Anglo-American companies. In the case where the state subject is the highest authority today, if its nodes do not have the degree of decentralization or decentralization in the jurisdiction, then even It anchors assets such as various world currencies or gold. In other countries with strong economies, it will also encounter regulatory obstacles, such as Europe and China. Under the premise of state actors, the flow of this currency is related to the level of national sovereignty. Therefore, it is conceivable that Libra will face great regulatory problems in a strong economy in the future.

Second, Libra's basket of anchored assets is critical. If more than 50% is anchored in US dollar assets, this means Libra is a strong dollar output to the rest of the world, which will accelerate its financial integration and enhancement. The status of the dollar. Libra's anchoring assets will be one of the core governance agendas of its Libra committee. Another major issue is how it meets compliance in different jurisdictions.

Libra's best chances are in developing countries such as Venezuela. First, a small number of countries have high monetary inflation rates that are uncontrollable. No one can imagine how much the French currency will be 100 times more inflation in a year. See the article before the Blue Fox note. What does Bitcoin mean for ordinary Venezuelans? 》. For the ordinary people in these countries, Libra is a fire, a dream lover. As long as there are dozens of dollars of mobile phones, you can realize payment, transfer, and value storage, especially to maintain value stability. This attraction will be great. Second, there are more than one billion people in the world who do not have any banking services. For example, they do not have a bank account, cannot borrow money, and cannot save money. With Libra, a mobile phone is equivalent to a bank, and you can save money, borrow money, transfer money, and the fee is low. This is the real killer app.

In the end, Libra is like a squid, it is about to stir up world finances. The previous cryptocurrency, although it was noisy, but after all, only the market value of hundreds of billions of dollars, and the currency price is unstable, which makes the encryption world feel like a very few people's hype tools, which is in the multi-billion dollar traditional finance. In the world, this is basically a pediatrics. Naturally, it will not attract enough attention.

But Libra is different. It has Facebook's potential more than 2 billion users, many of which are in developing countries. Its scenario is not hype, but application. It is possible for those who do not have banking services to have financial services such as loans and transfers as long as they have a mobile phone, which is equivalent to having real financial services. Transfers do not have to pay high fees and the interest on borrowing is very low. This is a real benefit.

And once it attracts tens of millions of users, it means that it actually becomes a currency, especially the currency of these vulnerable economic regions.

Once this situation is reached, there may be a situation in which the digital currency of the strong economy countries and Libra coexist, and the global currency will become less and less.

The real influence of money comes from daily use, not hype . This is what Libra might be different from most of today's cryptocurrencies, and why it has attracted a lot of attention from the beginning, causing users to pay close attention. s reason.

What impact does Libra have on Bitcoin?

The future may be a world of gradual integration of centralization and decentralization. There is no complete decentralization and no complete centralization. The result of this situation is that Libra is good for Bitcoin.

Bitcoin is likely to become the settlement layer of the world. Because Libra, including Libra, has issuers, there are naturally necessary associations, there will be a lot of controversy and a certain degree of credibility. The biggest advantage of Bitcoin is that it has been running for more than ten years. It has a total amount of restrictions. It cannot be issued, and as its value increases, it can carry more and more value. Its security is also getting stronger and stronger.

Its characteristics will make it one of the best candidates for the future global settlement layer. On the basis of Bitcoin, you can pay, transfer, etc. in the digital currency of Libra, the US dollar digital currency, the Euro digital currency and other legal currencies.

In addition, Libra is not necessarily a good thing for other stable currencies, narrowing the window of their development, but for Bitcoin, it may be a positive.

What impact does Libra have on Ethereum?

For Ethereum, Libra is the biggest competitor. Not only Ethereum, but also public chains such as Boca, Cosmos, Harmony, EOS.

why? When we focus on the Libra Stabilizer, we should pay more attention to its Libra chain, which is the basis of a possible ecosystem. The Libra chain is a coalition chain structure, based on Libra can build a lot of application ecology, such as Libra-based lending services, just like today's Ethereum DeFi service. The success of this system depends to a large extent on its sharp knife, the Libra Stabilizer.

Therefore, compared to Bitcoin, Ethereum has more positive competition with Libra's business. MakerDAO's DAI will compete directly with Libra, MakerDAO will compete with Libra Association, and DeFi such as Compound and Dharma will compete with future Libra chain Pratt & Whitney financial services.

This is a frontal battlefield between the public chain and the alliance chain, but at present, the strength of the two is quite different, and of course there are advantages and disadvantages. With the arrival of Libra, for decentralized finance, the window period may shrink and the pace of user experience improvement needs to be accelerated. At the same time, it is also a stimulus that will stimulate the rapid progress and upgrading of decentralized finance. Look forward to the public chain such as Ethereum, Cosmos, Boca, Harmony, EOS, etc. to accelerate the construction of the ecosystem!


Risk Warning: All articles in Blue Fox Notes do not constitute investment recommendations . Investment is risky . Investment should consider individual risk tolerance . It is recommended to conduct in-depth inspections of the project and carefully make your own investment decisions.

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