What impact will Facebook Coin have on crypto?
As predicted, the payments crypto space is gaining traction, as finally the ‘big boys’ have entered the game. I’ve been lucky enough to be involved in this space since 2015, so have views on the impact, importance and scale.
The hottest news in the crypto space right now is that the Facebook coin has just been released, as well as Ripple’s investment in Moneygram, the second largest remittance company in the world.
This news is arguably the most important announcement in crypto since the birth of Bitcoin. It will be the declaration that will finally disrupt global banking.
Banks win because they control two things — fiat currency distribution and the customer’s bank account. Their business covers three areas:
A. Payments world — the transfer of money between parties.
B. Savings and loans — classic banking (when money wasn’t digital).
C. Other financial services (available because they own the first two).
Their monopoly over fiat currency means they can exploit their customers, and so it is claimed that they earn 100% more profits than they should. It means they act arrogantly and with impunity. Some argue that banks dislike crypto because it breaks their monopoly.
But with the right crypto payments system, the following happens :
1. A person owns an independent crypto wallet independent of banks.
2. You can send money globally, immediately; for effectively no cost using the ‘global reserve crypto’ which utilises blockchain technology.
3. The crypto wallet becomes a new bank account. The cryptocurrency becomes the ‘medium of exchange’ to transfer value from one wallet to another.
4. It destroys any business model based on providing payments — one of banking’s main services.
Just imagine it …
No banks needed. No payment providers i.e. Visa, MasterCard, PayPal, Western Union, Moneygram. No foreign exchange dealers.
A new global crypto payments system does to payments and money what Skype did to making telephone calls. It is global, free and easy. It’s how digital eliminated the CD/record industry, where the most money is now made from live music.
It’s a classic digital disruption reality. Yet, this time with the largest industry in the world.
What about Facebook?
Facebook launches the Libra Coin. A global reserve cryptocurrency. A stable coin backed by assets. Details were published yesterday and it’s genius.
Facebook looks to ‘own’ the individual’s wallet which is based on their Messenger and Whats App platforms. There are currently 1.7bn customers and countless merchants. But Facebook is smart enough to know that they cannot own the currency. For privacy reasons, no details will be shared with the rest of Facebook. So now, in reality, they own the wallets, so they can lead the world in new savings and loans!
Libra Coin is independent of Facebook, ‘owned’ by a consortium of currently 28 companies including Facebook, Visa, PayPal, MasterCard, Spotify, Uber, Vodafone and three of the world’s largest VCs. They intend to increase the 28 to 100 by the launch in Q1 2020 because, by assets, it still has potential weaknesses and devaluation possibilities.
What will the impact be?
1. The credibility of crypto is now assured!
2. Banks must be panicking. Already G20 countries have announced ‘investigations’.
3. This will eliminate the USD as the global reserve currency so the Reserve Bank must be wondering what happens next?
70% of all transactions in China are through WeChat and Alipay who are launching their own coins. When this happens, Libra will have a huge fight on its hands and it means that all reserve cryptocurrencies will also have a big problem. It means that all the crypto wallet providers and the host of ‘middlemen’ companies like those offering debit cards to spend crypto are in trouble.
What do I think?
There will be a few global reserve cryptos used for payments, controlled by consortiums and regionally based.
National digital currencies will be used nationally, based on blockchain technology and controlled by their reserve bank (so banks and governments will retain control).
All middlemen payments companies from credit cards to remittance are dead.
Banks lose their payments advantage and have to fight for savings/loans, services.
When I look at the financial landscape five years into the future, I see…
The payments industry will be very simple and will consist of mobile wallets, QR codes, tap-n-pay and digital currency. Money will be so easy, it’s like digital music is now.
There will be many banking options. From ‘salary’ banks where you may put money in wallets for payments, but not your salary! Salary is where your savings and loans will go. Why not a Vodafone bank — maybe supermarkets have banks! A Facebook bank. A PayPal bank. A Visa Bank (so Visa does not die, it just becomes its own bank).
Crypto will be traded everywhere, like EUR, YEN or USD.
There will be a few big global cryptos — smart contract platforms like Ethereum or EOS. These are for the big exchanges.
There will be a big market for new tokenised lending. Hospital loans raising $500mil from the public with smart contracts in Libra, paying monthly interest in Libra direct to your wallet, bypassing the bank. with coins tradeable on exchanges. This will be a multi-trillion opportunity.
Then there will be a huge market for crowd-based venture opportunities. The key here will be the crowd — Welcome to Dacxi.
These are exhilarating times. There is nothing in the world more exciting than being in The Right Place At The Right Time.