Facebook goes full on into crypto & Mary Meeker's Internet Trends report excludes all crypto
|Jun 14||Public post|| 4|
This week, the biggest story in the crypto-economy is how Facebook is going all in on issuing its own cryptocurrency. In fact, early this morning they hired a former Standard Chartered Bank lobbyist to help them in their efforts.
Story #1: Facebook plans to launch its own cryptocurrency
The announcement of the project was made on June 6 but this week we got to learn details of what FB is calling Project Libra.
Cointelegraph has a good story on what to expect from Project Libra, with features including:
A separate non-profit foundation set up to oversee the cryptocurrency probably in Switzerland since they registered the name Libra Networks there
A no transaction fee coin to use across all their platforms meaning FB, Instagram, & WhatsApp. WhatsApp may be the key due to its huge global popularity.
Will be a stablecoin pegged to a basket of (mostly Western) currencies
Will use proof of stake model and validators cost $10 million to buy the license and operate.
Companies like Paypal, Uber, and Visa have already signed up to be validators for the FB Coin.
Two Opposing Takes on Project Libra
In one of the funnier takes on Crypto Twitter about this project, Open Privacy Exec Director Sarah Jamie Lewis helps boil down the primary criticism of this project.
CoinDesk@coindeskJUST IN: Facebook has reportedly lined up Uber, PayPal, Visa and others to invest $10 million each in the consortium governing its secretive crypto project. https://t.co/lFstb664LO @nikhileshde writes
While comical, in many ways this outlines what many in the crypto-economy think of FB and some of the others involved in this project.
One of my favorite crypto-legal go-to people, Caitlin Long, wrote a great piece for Forbes on what she expects from Project Libra.
Here’s what Caitlin has to say on the project. She makes 6 predictions.
FB intends to market the product primarily to developing countries and in those countries it will be a force for good
FB will pay interest to its Libra holders. And it is this action by FB that will finally lead to calls by the people to stop corporate subsidies for US banks. FB could earn substantial interest on its deposits and to avoid another potential hot button issue with the public Caitlin expects FB to share some of this with holders of the currency.
The FB foundation will become a huge power in global capital markets. They are forming a separate foundation to lessen anti-trust claims as well as claims of decentralization. Yet, the foundation can become powerful on its own….and fast.
FB will face regulatory uncertainty and this will show the public how outdated many financial regulations are.
FB’s regulatory reporting program will open all kinds of interesting discussions. Particularly things like how many fake accounts are on the network, financial privacy and overseas asset reporting (which could be a big issue for them given how global they are as a company).
FB’s cryptocurrency will end up being a trojan horse that benefits Bitcoin.
Our CNON Take: This last point of Caitlin’s predictions is the strongest one in my mind and what I thought from the beginning when I heard this news from Facebook. I also believe in her point #1. In developing countries with unstable currencies, there’s a good chance a FB stablecoin is more stable and therefore a force for good.
Back to point #6, I can’t see any way that a FB Coin is not tremendously bullish for Bitcoin. Here are my reasons:
FB is going to spend HUGE resources of time, money, and content on expensive online real estate on their platform to educate people about cryptocurrencies in general and theirs in particular. This is bullish for the entire crypto-economy.
FB is going to prove the training wheels to many people all over the world on sending money electronically without a bank or FI involved. And people will love it for its speed, low to no fees, and lesser bank nonsense. Again, super bullish.
Exchanges will be quick to include Libra and the ability to exchange it for Bitcoin or other cryptos. This will be the easiest on-ramp to cryptocurrency we have seen. Making it easier to buy = Bullish
After trying the pretender, they will want the real thing. In fact, I said this to Caitlin and fellow early Bitcoiner Hannah Rosenberg of Velas Commerce and co-founder of the Chicago Bitcoin Meetup
FB coin will be centralized, Bitcoin is not. Bitcoin is scarce, FB coin is not. After seeing all the benefits of using an online currency, people will advance and want the best and safest ones. And that means Bitcoin. It might mean some others too but it DEFINITELY means Bitcoin.
For less than $2 per issue, you can get actionable cryptoeconomy news just like this in your email box. No ads, no nonsense. Just news.
Story #2: Mary Meeker’s Internet Trends Report Omits Cryptocurrencies Entirely
Mary Meeker’s popular Internet Trends report is out for 2019. You can click the link to read the report for yourself.
With Meeker as a former Morgan Stanley analyst, Kleiner Perkins (VC) principal and now Bond Capital principal, this report is a big deal every year for what it includes and what it doesn’t. Interestingly, one thing excluded was web search and traffic, as noted by Rand Fishkin, the founder of Moz, one of the most reputable SEO firms around.
And yet again, no mention of cryptocurrencies save for 2 partial mentions on 2 slides……out of 333 slides. But there is some good information in the report including
Only 51% of the world is online. Many companies/groups/governments are working to try to get the remaining 49% online
The internet as cesspool/bullying apparatus will continue and probably get worse
Subscription services like Netflix, Spotify and Peloton are huge and growing fast
7 of the top 10 market cap companies in the world are tech. Only Berkshire Hathaway (Warren Buffett’s company), Visa, and Johnson & Johnson are in the top 10 as non-tech firms.
E-Commerce is about 15% of all US retail sales
There are lots of things worth reading in this report, but cryptocurrency is forgotten yet again.
Our CNON Take: In a way, the lack of cryptocurrency mentions in a 333 slide internet/tech report helps make the argument for how the FB Coin Libra helps the crypto-economy through the education it will provide.
There are a subset of VCs that make blockchain investments and they include people like Meltem Demirors, Pomp, Tim Draper, and Matthew Roszak but not everyone in Silicon Valley techland does. Meeker’s firm Bond Capital clearly doesn’t.
I think regulation is the primary reason why. The path is uncertain. Depending on what kind of cryptoeconomy business you have, you might have to answer to:
The Dept of Treasury as a money service business (MSB) or money transmitter
The Office of the Comptroller of the Currency (OCC)
and potentially more
So am I surprised that this mainstream tech report omits cryptocurrencies? Well, yeah….actually I am. In the context of seeing that there’s no information on search or where web traffic comes from, then I understand why there’s no information on cryptocurrencies either. After all, this is a report by a VC for other VCs. It’s not meant for the broad market after all, even though it is useful to us.
For those of you that hold cryptocurrencies, this is a sign of how early in the game you are and how many more people have to be educated about their benefits.