How will Facebook’s Libra Project impact DéMars?

When Facebook Inc announced that they were going to be releasing a WhatsApp cryptocurrency in December 2018, it really piqued my interest and resulted in this article, which I published on Medium at the time. In fact I even reached out to David Marcus, offering our DéMars “lite mobile money” network protocol . Which we spent most of 2018 developing, as a potential technical solution.

On the 18th of June, the Libra Whitepaper was released. Laying out Facebook Inc and their partners, the Libra Association’s plans.

In summary:

  • Libra have releasing a “blockchain based” computer network and protocol, the Libra Blockchain.

  • The unit of account within the network is the Libra Cryptocurrency.

  • They are utilizing their own Byzantine Fault Tolerant (BFT) consensus protocol – so no proof of work (mining) or proof of stake.

  • The Cryptocurrency will be collateralized by a pool of “low volatility” assets. Almost like a  multi-currency money market unit trust, yet the “coin holder” has no legal claim over the assets.

  • The network and collateral are being managed by an association of (for now) mostly silicon valley based technology companies.

  • They’re releasing their own open source wallet apps (WhatsApp isn’t mentioned).

  • The Libra Cryptocurrency may only be bought and sold via regulated exchanges.

  • It appears as if they’ll monetise the solution by levying transaction fees and displaying advertising.

  • They’ll use the interest earned on the collateral pool to pay for operating expenses.

The stated objective of the Libra Project is similar to DéMars – and a host of other projects:

To serve the unbanked and underbanked and lower the cost of cross border payments.

How does Libra impact DéMars (and Stellar)?

In summary I think it’s great news. For the entire “crypto community” as a whole.

I sincerely do hope that it will do for Crypto what AOL did for the internet.

Though potential Users will be disappointed that they have chosen not to elaborate on how they intend on dealing with the real pain point hampering large scale adoption of Cryptocurrencies. The so called “last mile”.

Making the fiat/digital exchange and the anti-money laundering (AML)/ know your customer (KYC) processes as easy and seamless as possible and ensuring that all regulatory obligations have been met.

Though I suspect some of the association members, such as PayPal and Stripe, will have a hand in this.

From a DéMars perspective, it’s interesting to note that Libra, in its current format, may be held in a DMC Wallet.

In two ways:

  • As an Asset on the Stellar Network

  • By adding Libra chain functionality to the Wallet

Libra is essentially just another cash competitor. With on open source protocol, with whom we can integrate. In fact, we may even choose to build a Libra wallet alternative.

The value (for now), is really in the PR.

Expect banks to start taking notice and signing cheques. The Ripple and IBM salesman’s jobs just got a lot easier. Same for Stellar. Expect to see a lot more large regulated institutions implementing distributed ledger technology, issuing assets and running anchors (exchanges) on networks like Stellar (and maybe Libra).

Ripple and Stellar (now via IBM) have been selling to banks for a long time. There are significant  technical advantages of a network like Stellar for existing participants, which Libra just can’t compete with. So I don’t do any downside for these projects. Only upside.

At DéMars, we are razor focused on user experience and making it as easy as possible to “get in” and “out” of the network.

We firmly believe that this is the really hard stuff, not the technology nor the economics.

The fact that the Libra Cryptocurrency will only be sold via (existing?) regulated exchanges, means that it is still going to be difficult to get your hands on it. Especially for unbanked and underbanked individuals.

Yet I’ve no doubt that they will eventually solve these issues. The Libra Association simply have too much money and too many existing Users not to.

Our focus on inter-African cross border micropayments remains. As there are so many localized issues which are beyond the comprehension of large silicon valley companies and far down on their list of priorities.

We have plenty to do and are more than happy to lend a hand to projects like Libra should they require our insight.

 

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