Why USV is Joining the Libra Association
A new blockchain & cryptocurrency project, Libra, was announced today. Libra has been incubated by Facebook. USV will be one of the founding members of the governing body, the Libra Association. Libra is a stable, fiat-backed cryptocurrency that will launch inside some of the world’s largest consumer-facing applications. We believe Libra has the potential to be the catalyst that brings the entire cryptocurrency and cryptoasset market into the mainstream.
When USV invested in Coinbase in early 2013, our rationale was that digital currencies and digital assets (like Bitcoin and beyond) were a breakthrough technology, similar to TCP/IP, HTTP and SMTP. But we also knew that it would take significant investment in the surrounding infrastructure to make them useful for businesses and consumers, just like it did with the Web back in the 80s and 90s. At the time of that investment, we wrote:
“There is much that must be built on top of of these digital currencies to make them work well enough to support real business at scale”
This has proven to be true. If we look back at the past 10 years since the invention of Bitcoin, we have seen a lot of infrastructure built to support an increasing variety of use cases. But there is still a long way to go.
We think about the crypto sector as the intersection of Finance 2.0 (“Money Crypto”) and Web 3.0 (“Tech Crypto”), and what we have seen is that the “Money Crypto” use cases have been the earlier to materialize, especially “slow money” use cases (those that don’t require high throughput):
For consumer use cases (including both Finance 2.0 and Web 3.0 use cases), the biggest barrier to date, beyond technical scalability, has been the rollout of crypto wallets to mainstream consumers. As of today, there is still no mainstream web browser with crypto built-in, no mainstream phone with crypto built-in, and relatively few mainstream applications with crypto built-in. As that changes, crypto assets have the potential to move from being curiosities for enthusiasts to being default internet and financial infrastructure.
Once we have crypto-compatibility built-in to applications, browsers, and phones, many new behaviors and use cases will emerge. The financial system, in general, will become more accessible (smartphone adoption is outpacing bank account adoption globally). Payments can become faster, more reliable and less expensive. Magical new user experiences will be possible due to interoperability and reduced friction, the same way that the Web’s native interoperability unlocked countless new use cases and experiences. And, perhaps most importantly, we will open the door to self-sovereign digital identities (private keys) that are the underpinnings of user-controlled privacy and control of data.
So as we think about the potential drivers for mainstream crypto adoption, a simple, fully-collateralized, cryptocurrency used inside the world’s largest applications, touching hundreds of millions or billions of consumers, is perhaps the most promising one. It is our hope that Libra will serve as a major on-ramp to cryptocurrencies and cryptoassets, to the benefit of the entire ecosystem.
USV will be joining as a founding member of the Libra Association, the governing body that will manage both the Libra technology and the Libra Reserve. As one of the initial 20 members of the Association, we will have the opportunity to participate in design and policy choices that will shape the network. It is worth noting that Facebook will be just one equal member of the Association, which was an important factor in our decision to join.
This will be a large and complex undertaking, as there are many unresolved and challenging questions, involving the technology itself (security, privacy, path to decentralization), the regulatory environment, and the nature of the ongoing governance. In some ways, the initial Association resembles a constitutional convention, where the main goal is to draft the long-term governance mechanisms themselves.
To be clear, we view this as both an ecosystem investment and a financial investment. In addition to participating in the governance process at the Libra Association, USV plans to invest in the Libra Reserve, which will provide the stability for the currency. This is an unusual type of investment for us, but we have learned that investing in the crypto sector requires us to explore a variety of new investment structures.
We appreciate that Facebook invited USV to be an initial founding member of the Libra Association and we take our role in that seriously. We will advocate for those things that USV values most: openness, transparency, decentralization, and permissionless innovation. We think that those features will help accelerate adoption within the entire crypto ecosystem — including our many existing investments in the space — and also help Libra succeed in its goals.
This has also been posted on usv.com.
have been waiting a week for this post to drop.consider me sufficiently appeased on USV and others participation.2-way data streaming between FB/Libra is already a given (see below).How will the council keep FB in check when FB properties are directly responsible for their Libra ROI.Quis custodiet ipsos custodes?I hope this hasn’t been a smart way for Mark to buy-off his detractors.”Calibra will not share account information or financial data with Facebook, Inc. or any third party *without customer consent*””the app *will allow* people to import Facebook contacts to their Calibra wallets, to make sending funds easy. However, this feature will be opt-in, rather than automatic””The company does intend to use *aggregated Facebook data* to inform upgrades for its product, including regional usage statistics for monitoring adoption rates”
TV on in background and Jim Cramer talking ‘FB doing good but being cynical.’He basically said ‘think of it as a replacement for those check cashing shysters’.
Was this post embargoed by Facebook until today? You’re dancing with the devil.
Every investment related post we write is embargoed by the portfolio company. So nothing new thereWorking with FB, plenty new there
New, but with extreme asymmetry. The ultimate Z round.
The first VC ‘Z’ Round. Hilarious analogy. LOL!
I see this initiative as more FinTech than Blockchain and Crypto. It seems to be more of a new PayPal competitor than a new cryptocurrency, at least initially. Definitely anti-banks.We will need to see about the programmability aspects of that currency, which appear to be limited at first.
It does seem that way, at least initially.Reminded of CDixon’s (a Libra investor) post about strong vs weak tech products: http://cdixon.org/2019/01/0…I see why they might be keeping the crypto part quieter for now.I’d think that if it stays just paypal-ish it’s an example of weak, if they manage to add the full-blown merits of blockchain/crypto, it could be super strong. ie: To be a true game changer further than just grabbing quick initial adoption, will probably need to go all the way at some point.
That’s the weakest thing I have ever seen Chris Dixon put out.There are multiple things in it that are just fallacies.The whole essay is structured to deliver the ‘permission-less coin driven’ strong tech argument.It’s sad to see him co-opted by his beliefs.
I LOVE the anti-sycophantic controls here at AVC 🙂
It’s nation state monopoly money.
Prediction – big winner, credit cards / banks – you’ll see people buying FB currency with their credit cards.
Blockchain is just a design choice.It’s going to disrupt a bunch of things but not create any stored value.Look @ Jaimie Dimon. He’s just jacking up governments everywhere with his ‘coin’. His goal is to threaten jurisdictions with instantaneous no cost conversions to favourable environments.It’s a cost reduction fintech play.
https://uploads.disquscdn.c… In 24 hrs crypto currency became a commodity, it became a stamp.“It’s the float stupid” Warren Bufffet (who might like FB after this move!)
This is a good entry point for Facebook. Both defensive in the short term and offensive in the long term.
I actually agree.The Blockchain positioning will allow them access to these markets.
Why anti-banks? The reserves must sit somewhere. Feels more to anti-networks, though it looks like some of them are involved in the project.
There are no banks in the initial membership and the first use case- remittances and money transfers hits at their services.
Yes, but the collateral sits in banks. They still get the deposits, just from a more centralized source rather than retail deposits. Correct?
But just depositing in banks is not so value giving to a bank. If anything, it pushes the banks to the lower part of the value stack.Plus, the reserve could be stored in a Crypto Custody type of service (like Coinbase’s), and not necessarily in a traditional bank.
I definitely agree re: value stack.Do custody services spread the collateral across banks? I was under the impression they did to mitigate bank run risk and maximize interest earned.
Not sure. it would depend whether it’s a fiat-pegged stablecoin or standalone cryptocurrency.
I like your response. Thoughtful and measured.It’s a smart move by them. Wonder how much of a threat it will be to the central banks. Could be significant.I found this summary a good one as so many asked and this explained it decently to the no crypto folks: https://techcrunch.com/2019…
thx for that link. definitely some see it a threat. the french finance minister said “this shouldn’t and won’t happen.”
It’s FB wanting to be the Western equivalent of WeChat:* https://www.theverge.com/20…
I was thinking sounds pretty much like a private sector “sovereign” currency approach. So…is this stage where history rhymes? I keep thinking Continentals & Bills of credit to demand notes and greenbacks…lots of dots not sure how to connect those thoughts – in agreement or disagreement- however What I do see here – and agree with – is the trend spotting revealed here by the players involved, which is – usually pretty decent sets of forecasting fodder. Which makes this all very exciting. Crypto Altruism be damned then as massive real world adoption is becoming or can become a pretty much an apparent reality on a multi-billion user system. That’s the slickest inflection point potential to the unbanked and banked I see. Great job.
What happens to Libra when the antitrust issues with Big Tech go live? Because FB is such a walled garden, Libra could exacerbate the antitrust issues.
And so it should. This is a serious problem. I cannot believe there isn’t more “public” outrage about this.
DJL:There are contributors who don’t agree when the sun is shining so this pushback is legitimate and those who can independently think without politics being involved can objectively see the obvious. A skunk is in the room.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT
There are literally going to be 100’s if not 1000’s of these ideas.Its going to be a mess but it will eventually get regulated / settled out.
A hedge to protect existing investments!
Has FB cleared this with the SEC?
What part? Don’t know.
Any part. Voucher, coupon, token, security?
A lot of heat today from all over
I’ll just leave this here. https://uploads.disquscdn.c…
Curious how investing in the Libra reserve has potential financial upside.Also, I think it’s great that organization(s) like USV with strong progressive ideals will be part of this governing body. Riffing on the Continental Congress, I’m hoping that check an d balances like these will make the entire ecosystem stronger and safer.
Good.I’m a FB disliker but I believe in Crypto, I don’t believe in all or nothing, I don’t think you need to tear everything down in order to build something anew, and I believe completely in the power and good will and intelligence of the mass market.And–that the only way to insure that shit is done to your standards is to participate and create helpful tension.In politics. In anything. Actually in all things.
Very interesting. I made a comment on the recent Trust post that, from a user perspective, if something is promoted as a currency then the expectation is that it will be a stable store of value, reasonably. There was also a healthy discussion on the the trust level for Bitcoin vs. the USD.This new association seems to be addressing these issues. If you want consumers to use a crypto currency in volume then their needs to be a high trust level, just like the US Govt. does for the USD. This looks like a step in that direction and possibly a good business opportunity as consumers are willing to pay a small premium for the convenience of using a secured and stable digital asset. I wonder if it is only a matter of time until the old greenback goes digital.It seems like digital assets can behave like currencies, commodities, securities and anything in between. This flexibility is well beyond the scope of traditional currency applications, but no doubt will continue to open the door for yet to be thought, innovative use cases. In a fair, transparent and possibly regulated manner of course.
This disappoints me at two major levels. Wasn’t crypto going to be the breakthrough tech that spawns innovation and helps the “little guys”? (Here’s our way to innovate against the tech giants that discriminate against competitors!)#1: Overnight this project is publicly announced with massive financial support. Firms like USV are “invited” to participate. So the private money club gets invited to the party and everyone else looks in from the outside.#2: I could not think of a worst company to “own” this project that Facebook. (Perhaps maybe Google Amazon or Apple). So now the biggest tech platform on the planet drives the biggest crypto system on the planet? Seriously?Please explain how I am wrong here. I read the announcement this morning and was really pissed.
As ever follow the money
We think this is like Microsoft putting a browser into Windows https://continuations.com/p…
Except that the consumer need had already been established with Netscape.This is about Facebook (who has seen what Wechat has done), and several large guys partnering with them.Also this from Bloomberg – “In theory, a user might receive a token for watching an ad, which they then spend on something they have also seen advertised on Facebook. The company selling the product could then use that token to buy more ad space on the social network, and so the cycle would start anew. That would mean that, even if Zuckerberg had to spend a little bit more to keep his users engaged, the money would ultimately flow back into his company’s coffers…https://www.bloomberg.com/o…Its strange that you would use openness and decentralized in this post about Libra.
That link isn’t working. Do you have the right one?
Hmm…it seems to work…try again ?https://www.bloomberg.com/o…
thanks. weird it landed on a 404 previously.
I understand. As long as other currencies (protocols) and apps (add-ons) don’t get “accidentally” excluded from wallet (browser). I think this is a home-run for USV. But for everyone else not in the club I am highly skeptical.
That’s a really interesting analogy.The nature of IE was identical to Netscape. It became popular because of the massive distribution channel that Office provided. So, the FB:MS analogy is apt. The founders are cut from the same cloth, so its a neat ‘history rhyming’ event. Bill would absolutely do this type of venture.Libra is not like Bitcoin, in its nature (centralized v de-centralized).That sounds like the spirit of the innovation has been co-opted.Not sure the analogy will hold through the wide adoption phase.
Which led to the anti-trust lawsuit against Microsoft…. this could be the best judo move to break up FB!
Consolidating small siphons into a …. one HUGE hose :-).
Could not agree more.
As usual, very well written. I read a few anti-Libra posts in my feed this morning and came here to get a different point of view. I knew USV was a founding member. Your post got me thinking. Thanks for sharing.
This would have gone ahead with or without USV as a founding member. At least this way there is a ‘Fred Wilson’ in the room…. some of the time.Presume FB is still going to call many of the shots – FB is where the value resides at the beginning of the project, no? To me it seems like a sort of built-in, Early-mover advantage.”Hold on to your butts”
Feels like a “let’s let China into the WTO and they will become a democracy” type of argument. I’m as big a fan of Fred as anyone, but I’m initially skeptical on this one. On the surface, it feels inconsistent with what I thought the values/principles of USV, but I am still learning how to play the Long Game, so will reserve judgment.
Oh I’m skeptical too…about FB, about founder members, about China…It definitely feels like a different USV strategy to the story we’re told on this blog every day.
You’ve said before that you’re looking for business models that bring the crypto ecosystem into the mainstream. With USV’s involvement, in the Libra Association, are you now saying there is no point in bringing a business model to USV, that accomplishes the same thing? Or, do you see this investment, and association with Libra/Facebook, as an improved “on-ramp” for other new cryto models (models that USV would consider investing in)?This seems, to me, that USV, along with other investors, is helping Libra become some sort of gold standard. Or, at best, another barrier to entry for the little guy.
We have twenty ish bets on this sector. We don’t know which will win, including this one
How is this in any way a ‘bet’ in the context of the conventional nature of your other investments? You have an equity stake in Libra directly?
Its in the post – they bought ZuckBucks and hold part of the Libra Reserve.
I’ll read it again. Thanks crew mate.
Facebook … enough said.
I remember visiting The League of Nations in Geneva, where Libra is also based.I recall two thoughts:1. What a gorgeous building and set of founding principles. This is amazing.2. And wow was it so abandoned.But it inspired others to create The United Nations (not perfect, but it exists). So maybe Geneva sets course, again.I’m hopeful Blockstack adds ‘support for Move’ for Dapp making. I wonder if that will take their community even a week.
.The USA killed the League of Nations.It took another world war, US leadership, American financial sponsorship and geographical hosting to create the United Nations which has now outlived its usefulness.JLMwww.themusingsofthebigredca…
#clusterzuck#zuckbucksNo one has ANY desire to mix friends and payments.
Reminds me a little of the Launch of the Facebook phone
1. Re: “For consumer use cases (including both Finance 2.0 and Web 3.0 use cases), the biggest barrier to date, beyond technical scalability, has been the rollout of crypto wallets to mainstream consumers”.No. The biggest barrier to date for consumer use cases has been the absence of unmet consumer needs. Little/No consumer need or want.2. Re: “Payments can become faster, more reliable and less expensive”.Check out where Fintech already is today in China and India without blockchain. Crypto = quick, less expensive payments is a false equivalence.3. Re: “We will advocate for those things that USV values most: openness, transparency, decentralization, and permissionless innovation”.This is neither decentralised nor permissionless now.4. Re: “…as there are many unresolved and challenging questions, involving the technology itself (security, privacy, path to decentralization), the regulatory environment, and the nature of the ongoing governance”.That about sums it up.
Ho Humm lack of interest on hacker news https://uploads.disquscdn.c…
What is the cost and safety of this ? I understand it’s in FB’s interested to handle money/payments w/o having to comply with all the regulations on the financial sector, but how is it in users’ interest – except those with an overriding need for anonymity ie criminals. Crypto is exceedingly expensive to use, has a high currency risk, a huge risk of theft with no recourse…Since I don’t use drugs, why would I want to use it ?Edit: we know from air miles what a racket private currencies are. We’ve spent centuries arriving at a semi-sensible management of our public currencies. Do we want to undermine that by re-creating private, unsecured, unregulated currencies ?
Congratulations Fred and USV team! This is very exciting.
What about the impact on climate change?
An anagram for “Libra” is “Brail,” a writing system for the visually impaired. Have association participants been hoodwinked or blinded by fb greed? Maybe. It is, however, a bit ironic that trust is perhaps the largest impediment to crypto indoctrination, and fb is a company with perhaps the lowest trust rating imaginable. The flip side, of course, is there are very few companies out there that can do this at scale and build in the requisite use cases like fb, so perhaps the devil is indeed in the details.
CONTRIBUTORS:This entire rollout from Facebook =Project Libra ♎ =Calibra is nothing more than those with massive power getting ahead and controlling what is hoped the masses will adopt and they will benefit and control.The DJT playbook is being used. (In our opinion) Misdirection, control the narrative, etc. How in the world could Facebook (Zuckerberg) feel this confident after the Kik situation. There is something everyone is unaware.This blogs normal backside kissing, you can’t do anything wrong, wealth worshipping will not question anything about this attempt to centrally control cyptrocurrency.This is actually shameful for those among us who can independently think and can’t be influenced and don’t worship others wealth. We don’t wish we were any of them. We are never envious of those who legitimately earned their wealth.This actually shows this was never about decentralization or the Blockchain.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT
“Cryptography”, e.g., as in Rivest-Shamir-Adleman (RSA) crypto systems and public keys, is serious, powerful, now fundamental stuff.So far banks, credit card companies, stock brokers, Amazon, Wal-Mart, insurance companies, even a Department of Motor Vehicles, do really well with on-line transactions — fast and secure. Web browsers have HTTPS. Web sites have third party authentication. We can assume that generally the data is stored with well designed and managed relational database software which can have astoundingly high reliability, security, and performance and also be distributed, including among server farms hundreds of miles apart. The best work in such data base systems is much of the best work in applicable computer science.I’ve been looking but so far don’t see the blockchain ideas and technology as better than what I outlined just above for any significant use case except questionable ones such as tax evasion, money laundering, drug dealing, etc.Blockchain looks like a solution still looking for a problem, and the research libraries are awash in such.And the blockchain infrastructure looks like big efforts to respond to ET once we do hear: Of course there is the little issue of the speed of light limit that maybe ET has found a way to violate but certainly no one on this planet has. Until we can violate the speed of light limit, thinking about how to communicate with ET is absurd. Since we are not going to communicate with ET, working on infrastructure to do so is pointless. Similarly, since blockchain technology is inferior for essentially any legal use cases to what we already have, working on blockchain infrastructure stands also to be pointless.Of course, still there might be some money to be made in blockchain crypto.But generally, wouldn’t it be so much better all around to look for pairs of (i) important, real problems that need solving and (ii) good, new means of solving them???
.This feels like a barbed enema for every small crypto startup. What currency or token survives against this juggernaut?Reminds me of how the Jesuits converted S America to Catholicism.”Want to become a Catholic?” asked the Jesuits.”No, thank you.””OK, we’re going to have to kill you.””Wait, on second thought, I do want to convert.”JLMwww.themusingsofthebigredca…
Income tax is a temporary measure.I will respect you in the morning.The Calibra Council will move towards a decentralized mode of operation.
Can’t wait for the next US presidential election. Will Russians be allowed to buy Libra?
I don’t see nation states embracing this development. Expect ‘intervention’ to support their fiat. I predict that access to Libra will be blocked by governments around the world. That may only be possible by blocking access to FB itself. Every empire falls, and normally due to decisions taken from within.
I’ve thought of Stable Coins in two (perhaps similar) ways. They act similarly to prepaid cards and the gold standard. Focusing on the latter, do we ever reach a point where there is so much confidence in Libra that it no longer needs 1:1 collateralization (or collateralization at all).We came off the gold standard to true fiat. A lot of that has to do with the currency being back by an executive with a military. For now, FB is outsourcing that to third parties (the sovereign nations whose currencies form the collateral). But at some point society had enough confidence to no longer need gold to back currency….so at what point do we no longer need Fiat to back crypto?
I need help with this one, cuz to me this seems like a profit motive driven club are getting together under the guise of “governing body” (read: cartel) to control the next generation of currency by simply moving the toll booth from transaction fees (FIAT) to Ad dollars generated from the intent (not transaction) of users on the network.So rent seeking has now moved to ad-tech on top of cartel crypto?
This is disappointing. Blockchain is a trust machine, and this list contains many organizations I trust least based on prior evidence. You make the world that you live in.
I’m on board with The Guardian’s take on this: “Have you heard about Facebook’s new “cryptocurrency”, called Libra? Its basic pitch boils down to “we messed up your privacy and gave your data to all sorts, and let foreign actors screw up your elections – now let’s see what we can do with banking!””https://www.theguardian.com…
Fool me once, shame on you,… fool me umpteen times with serial empty, “we’ll do better going forward” apologies, shame on us…. The hubris of Fcebook to even pitch this.. Just goes to show that there are no consequences…Ok… moved fast and broke democracy… next up, break er’ innovate on the financial system!https://www.project-syndica…
Honestly, I find libra very energising and fascinating in terms of making crypto go mainstream. I wanted to ask if uber, lyft, spotify etc. plan to use libra to go around the Apple App eco-system for in-app payments. Instead of giving Apple (or anyone else for that matter) a cut for the transaction customers will be able to buy products in app using libra. This would be extremely interesting and I wonder how Apple can respond to this development. Any thoughts?
To all those whining about this project being monopolist, discriminatory and un-innovative, i don’t think it’s compulsory for you to use it. You could still stick with the traditional financial systems and still be fine, so quit complaining. If you don’t like the idea, no one’s forcing you to. Same as there are still people who don’t have a FB, Insta, Twtr or any social media accout and they’re fine. And btw, a big congrats to USV and the other Libra members for this initiative. You guys rock!
“central bank control of money ended this this morning”https://youtu.be/7S6506vkth…
“social impact investments” = Liberal causes. This stinks to high heaven – no matter what side of the equation you are on.
SIAB is a beard Charlie.
I certainly hope so. I just get very nervous when I hear about “boards” of people deciding on what is positive social impact. Easy to have that process corrupted. Especially when large sums of money are involved.
I love that SIAB is an anagram for BIAS. Oh, to be alive in such times.