Facebook Libra: Disruptor or Poop?

Facebook coin, it's finally here. It's called Project Libra, and it's gonna really change fundamentally what's gonna happen in the cryptocurrency space. Now all the journalists are going mad about this, and I really wanted to talk to you guys about what are the strengths of Facebook coin, and what are its severe weaknesses as well. I've read through the white paper, the technical white paper, the wallet website. I'll put links down on all of this so you can make your own judgment as well. And I did a little bit of a strengths, weaknesses, threats, opportunities analysis to see what this thing actually is, what's it for, and is it even good to do what it's set out to be. I'll address all these questions about privacy that we see memes popping up. Yeah, Facebook coin, you don't need any KYC because they know everything about you. We'll talk about and address that, and address how it's regulated, but it's also very different. So anyways, that's what this video is gonna be about, and let's get started. Let's get this out of the way first. Facebook coin is the complete polar opposite of Bitcoin. So it's like, it's so different. It's on a totally different end of the spectrum that's not even like the same thing. First of all, Facebook coin is centralized. Facebook, Libra, it's kind of leading the whole thing. It's also regulated. Facebook coin is also backed. So it has some Swiss francs, some US dollars, some bonds, everything. Monetary value backing it. And finally, the consensus mechanism, the technology behind it, it's not permissionless. So it's restricted to a few what they call validators that can join the network. So it's kind of very much like, almost like how Visa works in a way. You know, they have a permission system where they have a bunch of servers, eight servers around the world that communicate with each other. Well, Facebook kind of just does the same thing, maybe just like a hundred instead of eight. But it's not what Bitcoin is, because Bitcoin is decentralized. So there's no leader, no one controlling it. It's open consensus, anyone can join. And that's why you can, even technically, you can run a node and start validating transactions on a network. This leads to a fact that Bitcoin is completely censorship and also regulation resistant. So no government can say, yeah, I want to stop you. And what can I do? Nothing, because it's an open system that anyone can join and they can't take over the network. And finally, Bitcoin is not backed. So Bitcoin, what's the value of Bitcoin? There's no fiat currency government backing it. So that's why it's completely different. But the problem it's trying to solve is also very different too. So I wouldn't immediately go and say, yeah, Facebook coin is shit because it's centralized. Well, a lot of things are centralized, like Visa payments, even WeChat pay, which is what I think Facebook coin is trying to target. Because in the Western world, there's still things like Visa cards and MoneyGram transfers. But what you see in China is that they're almost like, what I say, like five years ahead. In a sense that they already skipped that Visa phase. And you can pay anyone with your chat messaging program, which is WeChat. So the moment you can go out, you can pay your kid, there's tuition fees. You can pay for like what I was doing, like the ATV driving services, everything. Hotels accept WeChat pay. Beggars on the streets, they accept WeChat pay. It's pretty much become the form of digital currency, the internet of money. What, well, we should have had in the Western world for a long ass time. And I think this is where a lot of journalists miss the point. They're like, oh yeah, it's gonna break the resistance, the remittance market. That's what Facebook coin is trying to target. No guys, Facebook coin with their vision, with what they have with WhatsApp, because Facebook owns WhatsApp, and they also have Facebook, and they have so many partners like Uber. You can do anything you want with it. You can go out anywhere in the world, start paying for your Ubers, start paying for shops, start replacing and disrupting what Visa is, and kind of changing the scope of how we pay around the world. I think that's the real ambition of Facebook coin, Project Libra, whatever you want to call it. But that is really their objective. They don't want to just take a small portion of the international money transfer market. They want to change how we pay for everything. So let's talk about the advantages of Project Libra. So they got Facebook on board, and Facebook's got Facebook, Instagram, WhatsApp, pretty much the world's communication system right there, ex-China. And reportedly, they have 2.4 billion monthly active users, which is kind of ridiculous. And with the partners that they're bringing on board, you know, your Ubers, your MasterCards, and whatnot, this is the biggest kind of alliance and the use of cryptocurrency that the world's ever seen. So that's just really great. And I really see this as a way that a lot of people can get used to this idea of using a cryptocurrency. It just reaches so many people that it's kind of ridiculous. Now, in terms of other strengths, to having the brand there is really important, the recognition of the brand. We've been talking about branding for a long time. It's not, this is not something new, or it's not something that has too many negative connotations. I know that Facebook has this whole privacy issue that they're going through. But at the end of the day, what I've been commenting is that there's a cognitive dissonance there. We know that they explore our privacy, but people still use Facebook. It's not like Facebook has been losing users en masse. 2.4 billion monthly is still a lot. So this is their biggest strength. Oh man, when it comes to weaknesses, Facebook coin is terrible. So if you read their white paper, they talk about how Facebook coin is pseudo anonymous, just like every other cryptocurrency out there. Like, it's like, oh yeah, we're just as weak in terms of privacy preserving as say Bitcoin. But there's a huge difference here because Bitcoin can open as many accounts as you can. And we also have a lot of privacy preserving cryptocurrencies in this space. We've been talking about Monero, Mimblewimble is out. There's so many ways to actually preserve our privacy, our transaction history, because that's actually the weakest part about crypto. The moment you send someone cryptocurrency, they know everything that there is to know about that account. They know your past transactional history, your present, what you're doing, and the future as well. They can watch that wallet and see what you're going to do in the future. And that's hella scary. And that's a problem we haven't solved yet. And I was hoping that Facebook will have some form of privacy preservation because once you link payment history with the person, the identity of that person, God, you know everything about them and what they are doing and what they will do. And that's just not suitable for a coin where there is regulation coming through and Facebook themselves, they know what's happening. And analytics companies that have been doing analysis on Facebook users and breaching on privacy, they will know everything there is to be about you. And really the reason why I think they don't have privacy features is they want to cater to the dApp space. So Facebook, they're not just a currency, this whole idea of Project Libra, it's not just a currency, but it's a dApp platform too. So it's much more like Ethereum in terms of what they're trying to do. They don't have EVM support. They're supporting their own language called Move and they want as many developers to come on it as possible. And I don't see why not. And there's a huge opportunity as well for any developers coming into the space. Facebook has in the past been really a cradle for developers to come in. You saw the formation of Zynga, these huge Facebook applications. And by having a decentralized version of that, I think this is going to lead to a lot of developers seriously consider developing in the dApp space. And I think this is also why there's no privacy because if you want to be a dApp platform, privacy preserving contracts, we're just at the infancy of that. We're so early on that stage. And this is why they opted to have more features, to have more dApps. But at the same time, they fell short a lot on the privacy requirements. Lastly, this is interesting. Facebook claims to be backed by fiat assets or a bucket list of assets. I found that really weird. It's like, how much exactly? Not very specific. It's almost like how Tether does things, but worse. Because Tether is like, yeah, trust us, we're backed by crap. By fiat, one to one USD. But we won't show you our accounts. We all want to do audits. Facebook coin is a little bit weird. It's a bucket. It's not just one asset. It's a bucket of assets. I guess it's just a lot of trust settlement there. I can see that it kind of works as long as people believe that there are assets there and those assets are worth something. And I think your average Joe will believe that. I mean, people just want to use things, right? And if other merchants are accepting it, they'll go for it. But I definitely see that presenting some issues later on. You know, it's not a stable coin. It's not stable. It's going to fluctuate with every currency. And the real value of it is like, what is it backed by? What's the exact kind of bucket that they have? And that's something we'll have to wait to see to see if this actually works or not. People start believing that because honestly, right now they're very flaky about exactly what's inside. It's just like, this is the most ideal way of doing things. So we put a bunch of things in. So you're stable. It's got value. It's got backing. But really, is it? Can you also make the counter argument that WeChat Pay works when there's really much no privacy with respect to the government? That argument could be made to a point because we know that WeChat Pay is extremely popular. It's pretty much a dominant form of payment in China. And the Chinese government has direct access to all that information and access to all those messages too. Tencent being a heavily regulated entity in China. And people are the average Joe is still willing to use that. But I think there is a difference here between Facebook Coin and WeChat Pay in the sense that with WeChat Pay, that information is only open to the government. So yeah, the government, big brother spying on you. But with Facebook Coin, that information is open to everybody in this world. So everybody can be a big brother to spy on you. The moment they link your Facebook wallet address with your Facebook account or your identity, that's game over. I think, yeah, that sort of privacy violation, I think that's the right word for it, that's disastrous. That's going to prevent me personally from using it. So we'll have to see how people react to this when it gets released in 2020. So at the end of the day, I feel like this is trying to solve a different issue. It's a good on-ramp. And I really feel like after this, people start understanding Bitcoin a lot more as well. Because there's going to be certain regulations that they need to pander to. They need to make sure that they're regulated and they can be used around the world. And those regulations are going to cost them a lot because people are going to start realizing regulations, it's not their friend. It's keeping the big banks in power. I'm sure you're going to cut out the middlemen that's on top of the big banks, but the big banks are still in power. And that's still the biggest issue here. And this is where I feel Bitcoin itself has a lot of strength to show people. Once people get used to the idea of a centralized cryptocurrency, they'll want a decentralized one.