A 20-part tweetstorm from ShapeShift CEO Erik Voorhees on the potential impact of Facebook’s cryptocurrency Libra is going viral.
Voorhees says the impact of Facebook’s digital asset should not be underestimated – whether it’s a true cryptocurrency or not. Taking a step back, he highlights the coin’s mere existence and the emergence of major blockchain and crypto initiatives from companies like Microsoft, IBM and Fidelity that are pushing the space forward.
2/ I know, I know, “it’s not a cryptocurrency!!!” some will yell. Well, yes and no. Relative to PayPal or to the US dollar, Libra is very much a cryptocurrency. Relative to Bitcoin or ZCash or DAI, Libra is not all that crypto-y.
— Erik Voorhees (@ErikVoorhees) June 18, 2019
Voorhees says the fact that Libra will be tied to a basket of fiat currencies and securities could make it stronger than the US dollar on day one, and a potential replacement for government currencies.
8/ To whomever bravely navigated Facebook into creating a currency above the US dollar, kudos to you. That took balls and probably a lot of work. It was the right decision. I was worried FB Coin would just be a lame proxy for US dollar, and it is not.
— Erik Voorhees (@ErikVoorhees) June 18, 2019
Whether or not the crypto community loves Facebook’s new coin, Voorhees maps out its potential positive economic impact on millions of people’s lives.
“Finally, and let’s not minimize this one, Libra has a good chance of helping hundreds of millions of people avoid middlemen fees and increase their wealth and financial sovereignty ‘relative to the status quo banking system’ Humanitarians rejoice.”
But Libra does have its pitfalls. Voorhees says the coin will be used as a political football, and Facebook will bow to political pressure to ban the digital asset in parts of the world.
“Now the bad: Libra is clearly not a ‘pure cryptocurrency.’ Nobody should expect privacy by using it. Nobody should expect the true borderless standard of most cryptos. Libra will never be available in Iran due to sanctions, for example.
Next: the governing consortium can explicitly block/prevent txs. You won’t find unstoppable finance here. Again, in this, traditional cryptos are far superior. But let’s be realistic, there’s no way FB could create an unstoppable coin (at least, not in its 1st phase).
Libra achieves stability (a critical feature for most normies) by backing the coin with a basket of a) government fiat, and b) government debt (bonds). Personally, I want nothing to do with either of these ‘assets.’ Over the long term, any currency based on fiat will fail relative to hard assets (Bitcoin, gold, etc.) Politicians debase currency as their modus operandi, and thus if Libra maintains fiat backing it tend toward zero long term. BTC and ‘real’ cryptos will crush it long term.”
In the long run, Voorhees says Libra may take heat from both crypto advocates and its detractors, but the outcome will likely be positive.
“Libra may also become the whipping boy of cryptocurrency. As the politicians of the world get irate at having their fiat supremacy challenged, they will call on FB to answer for it. These struggles, playing out over the coming years, will be fascinating.
Ultimately, Libra’s relationship with those of us in crypto will be mixed. It will be a love/hate relationship, and that’s okay. Libra is challenging the status quo of fiat more than it challenges true crypto, and will pull millions toward sound-er money long term.
Anything that causes normal people to consider new forms of money (apart from their default position of ‘my nation, my currenc’) is a good thing. Libra will crack open further global discussion about what money is, and that sunshine will hurt fiat, and help all sound monies.”
You can check out the full tweetstorm here.
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