The Libra Association
I am sitting in the airport lounge in Geneva waiting to board an airplane. I am here because yesterday was the inaugural Libra Association member council meeting. The Libra Association is a Swiss organization which will operate the Libra blockchain network and the Libra reserve.
Yesterday was an important milestone for the Libra project. We adopted the initial charter for the Libra Association, we elected the initial five board members, and we set in motion a number of important initiatives. “We” are the twenty-one founding members of the Libra Association.
It is fashionable to be negative about the Libra project right now. And it is equally fashionable to call it “Facebook’s crypto-currency project.” Both are understandable under the circumstances.
But yesterday was the beginning of an independent effort, one that Facebook does not control, one where Facebook is one founding member among many, and one where Facebook has one board seat out of five.
But even more important is Libra’s mission to create a stable cryptocurrency that can operate at sufficient scale such that Facebook and others can use it as a means of exchange/payment system in their applications.
The most meaningful conversations I had yesterday were with the members from Kiva and Women’s World Banking who joined the Libra Association because the people they serve are under-banked and under-provided for by the legacy financial system. Like them, I believe a stable cryptocurrency that is broadly adopted around the world will bring new services to people who don’t have access to the financial system that many of us who read this blog do.
One of the powerful things about being in the venture capital business is that we can support projects that are necessary but unproven, unpopular, and/or misunderstood. Not everyone can do that and so it is even more important that we do.
Will Libra censor base layer transactions? If yes, it’s uninteresting. If no, it’ll never be allowed.
Forget individual opinions about Facebook and/or their motives; when this question is answered it will conclude the debate in one fell swoop.Although, should the answer be “no”, I would not be so quick to write off the effort.
check out https://banking.pipit.global. does what Libra can do but with fiat.
libra will dirsrupt bank, but bank will destroy libra earlier
One question: When the financial crisis happened it was governments that bailed out financial institutions using their own currencies. When financial institutions inevitably get voracious and the Libra, in effect a global currency crashes, who will bail it out?
This is a fully reserved stablecoin. Those financial institutions were obviously not fully reserved
No. That’s true. But what does fully reserved mean? Currencies change in price. It will have to have a continuous collateral bucket that’s constantly changed. Who puts that up? FB? The consortium? And what if FB puts up the most? Do they have more say?But the more important question is this: what safeguard guards against greed? The MBS was a pretty good idea at first. AAA bonds bundled and sold. Then the money got good and the standards dropped and … boom.Here the boom would be national economic collapses in highly adoptive countries. What’s to stop the lowering of standards in a currency that really (once it achieves widespread adoption) doesn’t have to listen to anyone?Getting MNCs to pay taxes is difficult. Getting them to listen when they have their own currency? I don’t know.I think it all comes down to trust. Credit means credare which is Latin for ‘to believe’. Who, ten years after the crisis, believes that corporations are trustworthy?
Nothing new here although I admit to often agreeing with Mark Carmey. One does dwell on how the fundamental effects AI 2 AI algos will evolve the game ? https://tech.newstatesman.c…As for Latin for ‘to believe’ for some reason I was reminded of: “The argument goes something like this: “I refuse to prove that I exist,” says God, “for proof denies faith, and without faith I am nothing.” ― Douglas Adams, The Hitchhiker’s Guide to the Galaxy
I’ve always suspected that Adams got sight of an advance copy of Things Hidden Since the Foundation of the World by Rene Girard. 1978 was a vintage year for heresy.
I will drink to that watching Monty Python
And what happens when FB files for chapter 11 ?
If I remember correctly the intention is to have a massive reserve of fiat currency(basket of several). I guess the intention is to function in a similar way to a central bank which includes buying and selling its own currency(crypto in this case) to maintain its value(peg) relative to the “stable” fiat in the basket. So if the fiat currencies go to the floor(in real buying power) the libra currency(for want of a better name) goes with them. We are already in unchartered waters as it is with all the QA and basically free money since the 2008 crisis, so the real question is who will bail out who next time around ? I’m no gold bug but check this out for an interesting perspective….. https://youtu.be/EBY1iTuHvV…The central banks understand this more than anyone….. that’s why they(still) have gold reserves.
Something I’m curious about Fred:Why not support an existing project trying to solve these problems? Why build out something completely new?The DAI stablecoin is making great strides in the emerging markets to solve the problems you are talking about. Is it necessary to build from scratch?
I think what we wrote on our blog back in June covers answers that question wellhttps://www.usv.com/writing…
From that blog post:”…the biggest barrier to date, beyond technical scalability, has been the rollout of crypto wallets to mainstream consumers.”This has already changed significantly in the last few months– Opera now has a wallet built in– Samsung Galaxy S10 built-in wallet– Argent (software wallet) which is offering a similar experience to the best traditional banking apps (www.argent.xyz)What makes me positive about Libra overall, Facebook aside, is that it is of sufficient prominence to move the debate into the mainstream. It’s making people in power sit up, start thinking and talking.
I think what’s missing is a reputable decoupled wallet. One where the consumer gets to decide when, where, and how it is useful to them.I have a Wallet somewhere from 10 years ago, but it is tied to a brand that I no longer am associated with, nor remember. However, had I had a globally recognized, use/store/forget-but-not-lose anywhere wallet, I’d likely still have that bitcoin.We need to decouple the use-value from the have-value, and that is what Libra means to me.
“It is fashionable to be negative about the Libra project right now.” Getting your retaliation in nice and early this morning are we? :-)In a spirit of openness it would just be nice to see someone with a seat at the big table be willing to reference the big elephant in the room, the absence of seven of the original proposed members of the Libra Association. To mute this most obvious of issues with a ‘preemptive’ may be in danger of diminishing this blog.’Beware the company you keep’.
I did in my last paragraph. We can’t be bullied like they were https://www.coindesk.com/us…
Far too subtle. The link is better.Go to CERN. Take the tour.It’s going to take a genius to successfully manage the progress of this project.Correction. Hyper genius.
.It is equally fashionable to pretend that the skepticism is not reasonably evidentiary based.Skepticism about FB and FB-related projects has risen to a low roar in places like the US Congress wherein the discussion is about breaking FB up. FB is in survival mode. Witness only the comments of Sen Warren.If you are in the middle of the ocean swimming for your life, there is little time well spent in asking, “Does this bathing suit go with my sandals? Do I need to get my highlights re-done?”I won a few bets on the WeWork IPO — I took the under that WeWork was never going to be priced. I personally used evidence to arrive at that conclusion. Same thing I am trying to use to evaluate Libra.I don’t think we ever see Libra in a tutu and ballet shoes, let alone dancing.That is not to pick a fight with the organizers as much as to say they have picked a hill too tall to succumb to being eaten with plastic spoons.JLMwww.themusingsofthebigredca…
Are you saying that Facebook’s motivation for Libra is the classic ‘safety in numbers’ strategy? Circle every wagon possible and hope the opposition just goes away?
.I think Zuck is one of the smartest persons on the planet, so much so that he should have to register that brain of his. Like a lot of smart persons, he wears his IQ on his lapel and thinks others are not as smart.He has billions of people ordering their lives on networks he owns and it started with an effort to find the cute girls at Harvard (like finding a unicorn?)He is saying, “WTF else can I feed these zombies? How about I somehow leverage a half a cent on every transaction on the web?”He knows that FB has a suspect rep, so he lures the Fred Wilson’s of the world — who are already all in on crypto — to lend him their bonafides and reputations.It is telling that the guys in the payment business took a hike. All of them.It is the Lemming Strategy. If “everyone” is doing something it has to be cool.JLMwww.themusingsofthebigredca…
Zuck is being slow to pick up on the social, socialization lesson, as I formulate it:Don’t piss people off.He’s got much more money than enough and now to get even more money is giving up something very valuable even his money can’t buy back — his reputation.
“Fashionable” need not be merely fashionable but might be much more serious.For some such cases how does that go, IIRC:Win with honest trifles to deceive in deepest consequence.
Hi Fred, we understand that you came to Geneva for the inaugural council meeting- yesterday was a sunny day around the lake – but we hope in a near future that an association like Libra will leverage Governance Online Voting like our domino.vote app allowing members from New York, Paris, Tokyo, Singapore etc … to take immutable and transparent decisions just in few clicks from their mobile
https://en.wikipedia.org/wi…”The symbol of the scales is based on the Scales of Justice held by Themis, the Greek personification of divine law and custom.”New Weird Order.
SEC sanctioned coin offerings.Coins ‘stabilized’ by reserves of fiat currencies.It’s not quite the manifesto of the revolution that I remember.
I believe this is really empower people globally. Can’t wait!
The annoying thing is not that you are supporting a project led by a company increasingly regarded as untrustworthy that is creating a custodian (aka centralized) wallet and operating a chain admitted to be under KYC rules that will surely impact monetary sovereignty; many us understand the profit potential and thus the compelling business logic. Rather the annoying thing is that you are telling us that it is decentralized and in the spirit of liberty, when it so blatantly is not.
There are issues with the current public/regulated/expensive/exclusionary money system.There are way bigger issues with creating a parallel private/unregulated money system. There are no guarantees whatsoever about anything short term (one transaction), mid-term (right to an account, fees, possible operations) or long-term (value of the currency, acceptance of the currency)It’s not even really crypto, a central authority controls the supply, transactions,…We should focus on fixing the existing, semi-safe, semi-satisfactory system, not on making a whole new one from scratch re-living through all the mistakes, abuses, ruins the first one took to grow up. Even if a handful of people/entities stand to make billions if this pans out.Until Libra is a full-fledged currency offering all the implicit and explicit safeties of the real-money system (and it never will), it’s a scam.
Ken Rogoff’s The Curse of Cash. https://press.princeton.edu…
I do like to see this initiative succeed so we can see what the effects of large scale digital currency can be, but let’s not be fooled by the fact that Facebook will be the initial (and primary) beneficiary of these developments.“ one that Facebook does not control.” is a bit overstated. The path has been set by Facebook, so what happens next is already cast and known.I’m more interested in learning and seeing how the other founding companies will benefit, not just the millions of potential users because Facebook will be their proxy. They lent legitimacy to Libra, so what will they get in return?* Facebook means WhatsApp, Instagram, Messenger, Calibra, etc.
William Mougayar:We continue to enjoy reading your comments that appear always genuine and not for sale. You can’t buy character or integrity. You either have it or you don’t. No amount of manufacturing can replace it.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENTANT
Though this might just be semantics, why market Libra as a cryptocurrency instead of just as a payments network? The latter feels as if it will not induce the fear that the former is currently producing.Since this is a completely collateralized stable coin, it shouldn’t be causing the issues with regulators that it has. It’s “just” a way to move money faster enabling low cost, international RTP that are so inexpensive that micro-transactions become cost effective.Maybe I’m missing something?
The problem is the definition of “money” here. You can’t really run a payments network where everyone sends each other fractions of 20 currencies.
I don’t mean to be obtuse but “why?”If I understand correctly, if it was collateralized by one currency then it would satisfy your definition of a payments network?
That last paragraph Fred is the reason why I follow you on this blog. Thank you.
Having always been in the this-will-never-launch camp (the probability of this launching in larger economies is near zero), I can’t fathom why this isn’t launched as a 100% single currency-backed initiative. Why create something that undermines every single country’s financial sovereignty?Central bank digital currencies (CBDCs) – led, of course, by China – are coming, so maybe there’s no long game for a non government-issued single currency-backed coin, but at least it would give Libra a chance of launching.
.The abandonment of Visa, MasterCard, et al seven in toto, is not so much a vote of no confidence as it relates to the project itself as a clear message that as it relates to payment services there is nothing to be gained.It is significant that one slice of the movement of money — particularly the subject experts — has moved on. All of them.In a Revenue Ruling and a set of FAQs that were released a couple of days ago, the IRS set out two important points — there will be no de minimus amount below which the “normal” rules will not apply and every cryptocurrency use will be a taxable event requiring a taxpayer to establish basis for every crypto coin and to value the transaction as a gain or a loss based on the basis and the transaction value.That makes it difficult to contemplate buying a coffee and a bagel on the way to work with crypto. It adds to the cost and complexity of the transaction.They did clarify that a FIFO or actual coin value can be used. Not a big conclusion, but a clarification.You can find copies of those docs here: https://themusingsofthebigr…This single taxable event ruling drives a dagger through the elegant simplicity of the use of crypto as a currency.With a fully backed crypto, one is forced to ask, “What am I really getting? Isn’t this just a proxy for some currencies I might not otherwise ever want or deal in?” I personally don’t want to own a “basket of currencies” even if I don’t technically own it, but it is backing up my crypto. I’d rather own dollars. USD is the bell cow. Period.It is clear that Libra will not meet a spring 2020 launch date, something I said the first instant I saw the first whiff about Libra. I would consider it a win if Libra launched by the end of 2021.China — some guys who really know how to manipulate currency and who can use their own control to squash competitors — has put the world on notice that they will develop a national digital currency. Already they have taken actions to clear the way.https://themusingsofthebigr…This would be tantamount to the Fed Reserve saying, “We cut a quarter point off the vig and we are going to develop a digital dollar while the US SEC makes ICOs illegal. Anybody else gets in our way and we’ll castrate you also. Have a nice day, y’all.”Walmart has a reason why it wants to get into the crypto game — $2B worth of fees they can get their hands on — but we still struggle for the defining KILLER APP/BIG USE case.The FB problems as it relates to other aspects of their business is polluting the perceived intentions of this Geneva-based initiative. Extra baggage has a cost. Don’t underestimate how that Geneva base pisses off American regulators (who are a little too sensitive to start with).I just don’t see any of this making it to the starting gate, let alone getting out on the track.I do agree that the US gov’t is guilty of bullying, but that’s like complaining about the weather in the summer in Texas. It isn’t going to change.JLMwww.themusingsofthebigredca…
Libra as defined is not going to happen.But what is going to happen is that there is going to be a lot of noise in the months to come about how Libra is good for the world.Separately, would the US have allowed the Libra Association to be classified as not-for-profit ?
.Toward what end would they want to be a not-for-profit or tax exempt organization?The US Tax Code has a plethora of authorized Tax Exempt Organizations. Libra might fit as a Business League or Trade Association.https://www.irs.gov/chariti…From a Tax Code perspective the big question is — Why do you not pay taxes?The IRS is getting progressively harder on tax exempt organizations. As well they should be.JLMwww.themusingsofthebigredca…
The Libra Association is based in Switzerland as a not-for-profit.
This seems a very US-centric view. The stated purpose of Libra is to bring financial access to the unbanked around the world.This is also a major purpose of the growing finance movement on Ethereum (all of the ideas for Libra are based on existing blockchain experiments).I believe we will first see this new paradigm take root in countries outside the current hegemonies. And only once its superiority is proven and undeniable will it then be adopted by them.The US has often been an early adopter, but late adapter.Card payments are a good example, where in most of the world, contactless payments have been standard for years, with chip and pin for years before that.In many places in the US card payments still require a wet signature.
.It is hard to understand where the profit is going to come from in banking the unbanked simply because the margins are not there.It is easy to understand why a bank works in a place like the USA. The margins are all identifiable with each product.The problem with everything related to crypto is this notion that there is a “superior” performance available that will ultimately disrupt existing customers from legacy relationships. Right now there is no service of any substance.You have to have some service before you can have a superior service.All of my banking needs are currently well met. What pries me loose from a legacy supplier of services? Better services or lower prices.Much of the speculation pre-supposes a steady state competitive environment which is not the truth of things.When everybody was excited about more efficient money transfers, a consortium of banks created Zelle. Now I get all of my periodic payments using Zelle.The discussion as it relates to chips, pins, and wet signatures focuses on distinctions with no meaningful difference. I don’t really care that I have to sign something. It is probably a good discipline as it makes me study the receipt.We are still now where we started 10+ years ago — What is the killer app and when is it coming to see me?JLMwww.themusingsofthebigredca…
Odd indeed!Back to your latest response…Democratisation fuels disruption.Whenever something important becomes accessible to the masses, it disrupts.Computers, desktop publishing, mobile phones, digital cameras.Youtube, Instagram, Uber, AirBnB.The UK Fintech sector is booming because it’s become easier to access it. So much innovation is happening.I am more excited about “Decentralised Finance” than Libra specifically. Libra to me is just a catalyst to resolve many questions.Decentralised Finance is Fintech on steroids. It is full democratisation of access to build and use financial products, peer to peer, with no intermediaries.The disruptive potential is unimaginable right now, so I can understand your sentiment around wet signatures.I disagree that we still where we started ten years ago, though.Awareness and perception has changed a lot.I recommend reading about Decentralised Finance and the Tokenised economy. The possibilities this innovation offers are mind boggling.
.I didn’t really look at your name when I replied to your comment. Just now I did.In the database of odd things — I write short stories. Have had a decent number of them published.I recently wrote one in which the protagonist’s name is Graham Blackwood. He is a VC.The story is set in Austin By God Texas. It is at the editor right now.I may change the spelling of his first name if you agree to pay me a substantial amount of money or buy me a BBQ.The female character, a wizard software engineer, is Shelby Bonner.How odd is that?JLM
A big part of the reason this perception exists is how this was rolled out. FB as a company and individual employees did a LOT of PR around it.
.A word about the steadfastness and the immovable nature of regulators.The US SEC Cyber Warriors just obtained a temporary restraining order against the whole TON movement (TON Messenger, Telegram Open Network, TON Blockchain, etc).You may recall that TON started raising money in Jan 2018 with a trading trigger date of 31 Oct 2019.The US SEC and TON went through a similar discussion as did US SEC and Kik/Kin as to what was and was not a security. Like Kik/Kin, TON ignored what they didn’t like and hoovered in the money.A lot of really smart people thought that the US SEC would not be able to obtain a temporary restraining order, but they did. In fact, they won the discussion rather handily.The TON discussion is about disclosures which presumes that the issuance is a security. “We [US SEC] allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require.”They went on to say: “We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement. “Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”This is a Manhattan District case, the heartland of securities litigation so this is the opinion of the saltiest judges in the country on this subject.The Judge didn’t hesitate for a second in granting the emergency relief that the US SEC sought.The US SEC is finally gearing up to fight these battles in public.It is hard to see how the US SEC loses on this type of case in the Manhattan District.JLMwww.themusingsofthebigredca…
PayU is still in.
jason wright:we stand corrected on PayU. We were referring to the founding payment members.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENTANT
Not correcting. Just informing.
This project hits a couple of key points for me – stable value, defined market need. I think these are lacking in something like Bitcoin which I would not categorize as a currency, but more of a speculative digital asset. For the US and developed markets I think the USD, other fiat currencies and the financial systems largely work well for most, at least for now. Not so much for the 1.7B unbanked in developing markets as stated by Libra. This is a really interesting use case.There has clearly been a significant amount of resources put into the non-profit Association, much of it from private sector organizations. This is great. In my mind non-profit, government and private sector organizations all have important roles to play, and should work together. It will be important to maintain a high level of transparency so motives and interests remain clear. This will help build trust and protect the interests of users and other stakeholders.
hey you all
https://www.afp.com/en/news…Confirmation. Facebook is not a nation state.
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Seeing everyone’s comments, I don’t think everyone’s answers are related to the topic, and I don’t know what the topic wants to express.Can you understand?