WHAT DO YOU THINK ABOUT BITCOIN?
Hey <<First Name>>,
This was the question I started getting from my Uber drivers in 2017 and is also when I realized I needed to stay as far away from the phenomenon as possible. No disrespect to any Uber drivers, but when everyone is jumping into an industry, I tend to run the other way as fast as possible.
The cryptocurrency market began rather unspectacularly with the release of Bitcoin in 2008, as a digital currency and a peer-to-peer payment system that was worth mere fractions of a penny on the dollar. Within a decade, Bitcoin enjoyed an enormous surge to superstardom, briefly breaking through the critical $20K per unit barrier, before plunging precipitously to its current price range. At its peak, the market capitalization of digital currencies quickly reached around $800 billion with an estimated 2K + cryptocurrencies operating across 16K+ markets.
Since Bitcoin’s stunning crash last year, a number of start-ups that kept portions of their funds in digital assets have shuttered their operations. Many traders, particularly late-stage traders (from 2017/2018) have cashed out, believing that the cryptocurrency market has run its course. Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), EOS and Litecoin (LTC) dominate the top 5 positions in the cryptocurrency market. Combined, they comprise $101 billion of the $130 billion cryptocurrency market capitalization or 77.7% of the market share. Bitcoin makes up 52% of the total market capitalization at $67.7 billion.
This week, Facebook made a monumental revelation, introducing a new crypto coin and payment infrastructure which will let you make purchases and send money to people with nearly zero fees. It’s mission: “A simple global currency and infrastructure that powers billions of people." You’ll practically buy or cash out your Facebook Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps like Apple Pay, PayPal, and Venmo.”
Facebook is essentially trying to create a stable medium of exchange that can be used for making payments across its networks and therefore across borders. Think the current functionality of WeChat, Venmo, and PayPal but instead of transacting pounds and dollars, users will be transacting in Libra’s.
Want a loan? Ask Zuckerberg. Want a credit card? Ask Zuckerberg. Everything will be at the click of a button on a platform that literally 30% of the planet’s population is using.
Facebook will open-source the technology and will cede control of the blockchain to a neutral Libra Association that will consist of up to 100 founding members including Facebook, each of which will invest at least $10 million to fund the association’s operations, and receive interest earned off the reserve. Facebook will have one seat on the council that oversees the foundation but will have no more rights, no more governance.
Libra won’t compete with bitcoin but rather validates the underlying blockchain technology more than ever. Bitcoin is open, borderless, permissionless, censorship-resistant, and publicly verifiable.
It’s no secret Facebook is doing this for one reason - data. It will be spun as banking the unbanked, revolutionizing payments and connecting the world, but don’t be fooled, this move into the unstable world of cryptocurrency is about tapping new wells of data, the modern-day oil. Facebook is and always will be focused on enriching its reservoirs of data; knowing who you are, what you’re buying, who you’re paying, and how much you spend.
Banks are being squeezed between two hugely powerful forces. Remember, Facebook has built a global phenomenon through reinventing what we’ve come to understand as a user experience. What they’ve done with interfaces, they’re going to do with money, and in that arena, the banks don’t stand a chance.
Further, Libra could crush merchant fees and potentially solve major issues with card fraud. If that wasn’t enough, if Libra is successful in seeing widespread adoption, watch a slew of new coins come to market from the other Silicon Valley heavyweights.
Money is Zuckerberg’s next frontier in his quest to build the internet of money. A friction-free global digital currency for billions of people with mobile phones and Facebook accounts. As Facebook validates blockchain and crypto, they’ll rewrite how the world will look and operate.
In an effort to protect privacy and to address public backlash, in March he vowed in Facebook’s next chapter they would stop “moving fast and breaking things.” Yea right Mark!