WEBVTT - Libra - The Failed Facebook Currency 0:00:04.400 --> 0:00:07.800 Welcome to tex Stuff, a production from I Heart Radio. 0:00:12.080 --> 0:00:14.720 Hey there, and welcome to tech Stuff. I'm your host, 0:00:14.840 --> 0:00:18.200 Jonathan Strickland. I'm an executive producer with iHeart Radio. And 0:00:18.360 --> 0:00:22.800 how the tech are Yeah, well, let's get to it. 0:00:22.960 --> 0:00:27.880 In the summer of twenty nineteen, Facebook, the company, you know, 0:00:27.920 --> 0:00:31.639 the one that's now known as Meta. I keep forgetting 0:00:31.680 --> 0:00:36.600 to call it that anyway, Facebook announced a project called Libra, 0:00:37.159 --> 0:00:41.479 and it was to be a new cryptocurrency sort of 0:00:42.280 --> 0:00:45.599 more on that in a second. In fact, I think 0:00:45.600 --> 0:00:47.120 it might be more fair to just call it a 0:00:47.200 --> 0:00:50.280 digital currency. But it was meant to be a currency 0:00:50.360 --> 0:00:53.280 that would allow folks to send money around the globe 0:00:54.040 --> 0:00:57.720 with a minimum of fuss, including stuff like transaction fees 0:00:58.040 --> 0:01:02.120 and you know, currency convert Asian fees and all the 0:01:02.200 --> 0:01:05.039 stuff that mounts up as you try to move money 0:01:05.280 --> 0:01:08.880 from one region in the world to a different region. 0:01:09.560 --> 0:01:13.240 And it was going to work all through various applications 0:01:13.360 --> 0:01:17.560 such as Facebook Messenger or WhatsApp, both of which obviously 0:01:17.600 --> 0:01:22.920 are Facebook slash Meta properties. Now that alone would have 0:01:23.000 --> 0:01:26.920 been a huge benefit to millions, perhaps as many as 0:01:26.920 --> 0:01:30.560 a billion people. There are so many folks who leave 0:01:30.600 --> 0:01:33.640 their families behind in order to travel to some other 0:01:33.680 --> 0:01:36.440 part of the world where they can get work, and 0:01:36.520 --> 0:01:38.880 a lot of them want to send money back home 0:01:39.160 --> 0:01:41.360 to their loved ones. You know, maybe they're able to 0:01:41.840 --> 0:01:44.600 earn a decent wage whereas back home they couldn't, and 0:01:44.640 --> 0:01:46.920 they still want to be able to support their family. 0:01:47.400 --> 0:01:52.560 But international money transfers are, to put it lightly, somewhat clunky, 0:01:52.600 --> 0:01:56.200 and various fees often eat away significantly at any money 0:01:56.240 --> 0:01:59.200 you actually send back, so the amount that your family 0:01:59.280 --> 0:02:02.200 receives might be a fraction of what you actually sent. 0:02:02.760 --> 0:02:05.800 A digital currency that could streamline that process and work 0:02:05.920 --> 0:02:09.440 natively within apps that billions of people are already using 0:02:10.120 --> 0:02:14.520 seemed like a no brainer. But we recently learned that 0:02:14.639 --> 0:02:18.600 silver Gate Capital, which is a bank located in California, 0:02:18.720 --> 0:02:22.280 has paid two hundred million dollars for the assets of 0:02:22.320 --> 0:02:26.640 what was once called Libra. So today I thought we 0:02:26.639 --> 0:02:30.440 would talk about what Libra was, how Facebook was involved, 0:02:30.919 --> 0:02:33.760 the changes that the currency went through, and how we 0:02:33.840 --> 0:02:39.000 got to where we are now with the project essentially disbanded. 0:02:39.440 --> 0:02:42.960 So let's start at the very beginning, which is a 0:02:43.040 --> 0:02:48.160 very good place to start. According to CNBC, the natural 0:02:48.240 --> 0:02:52.160 starting point is with a woman named Morgan Beller who 0:02:52.240 --> 0:02:55.440 joined Facebook in ten. She joined as part of the 0:02:55.480 --> 0:03:00.320 company's corporate development department. Now, in case you're not down 0:03:00.320 --> 0:03:04.240 with business speak, corporate development is usually the part of 0:03:04.240 --> 0:03:07.640 a company that's always looking for the next deal, you know, 0:03:07.680 --> 0:03:12.799 whether it's a merger or an acquisition, divestiture, a partnership, 0:03:12.880 --> 0:03:15.840 anything like that. When you get down to it, it's 0:03:15.880 --> 0:03:19.360 really the part of big companies that's always looking for 0:03:19.400 --> 0:03:22.680 ways to grow the company further and to restructure it 0:03:22.760 --> 0:03:26.200 so that it works more efficiently. Um Typically, when I 0:03:26.240 --> 0:03:29.799 think of efficiently in these terms, it's really how can 0:03:29.840 --> 0:03:34.400 we do more but with fewer resources and with better revenue. So, 0:03:34.440 --> 0:03:37.120 in other words, what are we doing now? Can we 0:03:37.160 --> 0:03:39.080 do more of that? And can we do more of 0:03:39.120 --> 0:03:43.080 that without spending so much? It's really how how it 0:03:43.120 --> 0:03:48.920 boils down in Beller began reaching out to crypto experts 0:03:48.960 --> 0:03:52.240 with the question, Hey, if you had access to a 0:03:52.280 --> 0:03:55.920 couple of billion people through a platform you had built, 0:03:56.360 --> 0:04:01.160 how would you integrate cryptocurrency into that platform and you know, 0:04:01.320 --> 0:04:05.520 use that to the benefit of both yourself and your users. 0:04:05.840 --> 0:04:08.920 The implication being that Facebook, the company, which again would 0:04:08.920 --> 0:04:13.800 not be called meta until late had this enormous user 0:04:13.880 --> 0:04:17.640 base more than a billion people, and a digital currency 0:04:17.680 --> 0:04:20.960 that was native to Facebook could be an incredible source 0:04:20.960 --> 0:04:24.400 of revenue as well as potentially help countless people out. 0:04:25.320 --> 0:04:29.839 CNBC reports that Beller was the sole employee in the 0:04:29.880 --> 0:04:34.200 company working on blockchain initiatives in those early days in seventeen. 0:04:34.880 --> 0:04:39.600 In January eighteen, Mark Zuckerberg himself posted on Facebook that 0:04:39.680 --> 0:04:44.120 he wanted to delve further into technologies like encryption and 0:04:44.160 --> 0:04:48.839 cryptocurrency due to their potential to create decentralized assets that 0:04:49.040 --> 0:04:53.520 quote take power from centralized systems and put it back 0:04:53.760 --> 0:04:59.200 into people's hands end quote. Yes, Mark Zuckerberg, man of 0:04:59.240 --> 0:05:02.680 the people. I'm sure when you think who represents the 0:05:02.720 --> 0:05:07.240 average Joe, Mark Zuckerberg leaps to mind. Uh. It wasn't 0:05:07.279 --> 0:05:11.080 an outright admission that Facebook the company was getting into 0:05:11.120 --> 0:05:15.839 cryptocurrency or even blockchain, but it was an early sign. Also, 0:05:15.920 --> 0:05:18.680 I do want to say that while the model is 0:05:19.040 --> 0:05:23.480 conceptually decentralized as and you don't have like a centralized 0:05:23.600 --> 0:05:28.400 bank or financial authority at the center of most cryptocurrencies, 0:05:28.960 --> 0:05:34.279 the Internet itself conceptually is decentralized, but in practice we 0:05:34.320 --> 0:05:38.279 tend to see a few very powerful players take center 0:05:38.360 --> 0:05:42.360 stage in various domains, if you will, of those technologies, 0:05:42.400 --> 0:05:47.080 and effectively at least parts of the system become centralized. 0:05:47.120 --> 0:05:50.280 Those those companies become the centralized authority within the system. 0:05:50.360 --> 0:05:54.680 So you can have something that you know in theory 0:05:54.839 --> 0:05:58.760 is decentralized and still in reality it can change into 0:05:58.800 --> 0:06:01.479 more of a centralisis to him, a great example of 0:06:01.520 --> 0:06:07.760 that is UH cloud hosting, like various you know, applications 0:06:07.880 --> 0:06:12.320 and things of that nature. Amazon has essentially a lockdown 0:06:12.360 --> 0:06:16.039 on that, effectively a lockdown. If you talk about Internet search, 0:06:16.200 --> 0:06:20.760 Google has a lockdown on that, and what is in 0:06:20.839 --> 0:06:24.920 theory decentralized in practice becomes very centralized. A lot of 0:06:24.920 --> 0:06:28.800 people have argued cryptocurrency falls into that same category, but 0:06:29.200 --> 0:06:33.359 that's a discussion for another time now. It wouldn't be 0:06:33.480 --> 0:06:37.960 until the spring of when Beller's work started convincing folks 0:06:38.040 --> 0:06:41.719 higher up on the corporate chain, which ironically is not 0:06:41.800 --> 0:06:45.760 a blockchain, that she was onto something and that more 0:06:45.760 --> 0:06:50.400 people should pay attention. In May, David Marcus posted on 0:06:50.520 --> 0:06:53.320 his Facebook account that he was taking the lead on 0:06:53.360 --> 0:06:57.479 a blockchain working group in Facebook. He also said the 0:06:57.480 --> 0:07:01.040 group was building everything from scratch and maybe I missed it, 0:07:01.080 --> 0:07:04.320 but it seemed like he didn't acknowledge Beller's work at all. Like, 0:07:04.480 --> 0:07:08.200 from what I can tell, the reason that Libra even 0:07:08.240 --> 0:07:12.200 got started is because Beller was hard at work trying 0:07:12.240 --> 0:07:16.080 to figure out ways to incorporate blockchain and cryptocurrency technologies 0:07:16.360 --> 0:07:19.640 into Facebook products UH, and so I thought it was 0:07:19.680 --> 0:07:23.160 a little odd that there was no acknowledgement here, although 0:07:23.200 --> 0:07:27.720 from all accounts, Beller was an integral component in the 0:07:27.920 --> 0:07:33.800 creation of UH the Libra initiative. Anyway, David Marcus had 0:07:33.800 --> 0:07:37.240 previously led the Facebook Messenger division within the company for 0:07:37.280 --> 0:07:40.400 nearly three years um or maybe it was like almost 0:07:40.400 --> 0:07:42.640 four years, and before that he was president of PayPal, 0:07:43.080 --> 0:07:46.920 So this was someone familiar with both financial organizations and 0:07:47.000 --> 0:07:51.120 communications organizations, and of course that was the crux of 0:07:51.360 --> 0:07:56.200 Facebook's value proposition. When the company was actually ready to 0:07:56.280 --> 0:08:01.880 talk about this currency project, in the meantime, Marcus and 0:08:01.960 --> 0:08:04.840 Beller began building out a team to draft out ideas 0:08:04.880 --> 0:08:07.920 for a digital currency that could work with Facebook, as 0:08:07.920 --> 0:08:11.800 well as a digital wallet that would interoperate with Facebook services. 0:08:12.000 --> 0:08:14.800 And the wallet is the part of the system that 0:08:14.880 --> 0:08:20.320 the end user UH interfaces with right The wallet is 0:08:21.040 --> 0:08:25.200 where the user accesses their funds or they purchase more 0:08:25.720 --> 0:08:30.800 crypto units, uh, and its stores the crypto units that 0:08:30.840 --> 0:08:34.360 they own. It has their account on it. Essentially, it's 0:08:34.400 --> 0:08:37.320 called a wallet because it acts like a real world 0:08:37.400 --> 0:08:42.040 wallet would and UH, it would be a delicate thing 0:08:42.040 --> 0:08:45.240 to talk about this moving forward because Facebook was trying 0:08:45.480 --> 0:08:50.000 very very hard to position itself as we are really 0:08:50.040 --> 0:08:53.240 focusing on the wallet side of this. And yes, we're 0:08:53.360 --> 0:08:57.240 involved in drafting out what the currency will be, but 0:08:57.360 --> 0:09:01.960 that's that's not our thing. Know, it's not Facebook's currency, 0:09:04.120 --> 0:09:06.200 but we are going to create a wallet. However, it'll 0:09:06.240 --> 0:09:08.680 just be one of many wallets that could be created 0:09:08.800 --> 0:09:11.920 for this currency. So Facebook in the very early days 0:09:11.920 --> 0:09:16.400 was still trying to create a narrative that gave a 0:09:16.440 --> 0:09:20.800 little bit of separation between the company and the currency. 0:09:21.040 --> 0:09:25.360 Now occasionally the tech media would remind everyone that Facebook 0:09:25.400 --> 0:09:29.880 was working on something in the cryptocurrency realm, and by 0:09:30.000 --> 0:09:33.720 May twenty nineteen, journalists had pretty much confirmed a Facebook 0:09:33.760 --> 0:09:38.320 cryptocurrency like service was coming. At the time, people were 0:09:38.360 --> 0:09:42.360 referencing this as Facebook Coin or sometimes as global Coin, 0:09:42.840 --> 0:09:45.360 but for the most part, you know, it was it 0:09:45.400 --> 0:09:48.720 was pretty quiet news outside the company. You know, you 0:09:48.760 --> 0:09:50.880 didn't hear about it very much until June of two 0:09:50.920 --> 0:09:54.200 thousand nineteen. That's when the website for what was then 0:09:54.320 --> 0:09:58.040 called the Libra Association launched. There's gonna be a lot 0:09:58.080 --> 0:10:01.800 of then called because all the stuff I'm gonna talk 0:10:01.800 --> 0:10:05.440 about has changed names. Facebook changed its name, the Libra 0:10:05.480 --> 0:10:10.000 Association changed its name, The Libra unit of currency changed 0:10:10.040 --> 0:10:14.280 its name. Calibra, the digital wallet that Facebook was gonna 0:10:14.320 --> 0:10:17.840 make changed its name. Everything changed its name. It's almost 0:10:17.880 --> 0:10:20.959 like everyone wanted to try and assume a brand new 0:10:21.000 --> 0:10:26.120 identity and wipe the slate clean. That's foreshadowing, um. But anyway, 0:10:26.520 --> 0:10:28.880 in June two thousand nineteen, that's also when someone and 0:10:28.920 --> 0:10:32.560 I'm not sure who, published a piece in Facebook's newsroom section. 0:10:32.600 --> 0:10:35.400 There was no attribution as to who wrote it, but 0:10:35.480 --> 0:10:39.480 this was announcing Calibra. Now, that was the digital wallet 0:10:39.559 --> 0:10:46.240 service specifically crafted to work with the Libra unit of currency. Okay, 0:10:46.360 --> 0:10:49.160 let's do a quick overview again, like a quick rundown. 0:10:49.400 --> 0:10:52.600 We have the Libra Association. That's an organization that would 0:10:52.640 --> 0:10:56.800 oversee the development of this digital currency. The currency itself 0:10:56.880 --> 0:11:01.760 was called Libra, and Facebook digital wallet was called CA, 0:11:01.960 --> 0:11:07.160 Libra c A, l I, B R A. All Right, Now, 0:11:07.200 --> 0:11:09.959 folks in the currency division have been hard at work 0:11:10.080 --> 0:11:14.040 forming relationships with numerous companies to create a sort of alliance, 0:11:14.320 --> 0:11:17.719 the Libra Alliance that would or a Libra Association that 0:11:17.760 --> 0:11:21.720 would collectively be the force behind the Libra digital currency 0:11:22.280 --> 0:11:24.440 um I figure. They realized pretty early on that if 0:11:24.440 --> 0:11:26.480 Facebook tried to do this all on its own, people 0:11:26.480 --> 0:11:28.880 would bring up a whole bunch of tough questions, which 0:11:29.040 --> 0:11:34.040 they did anyway. Plus Facebook just didn't have the deep 0:11:34.080 --> 0:11:37.160 background of expertise in the financial world to be able to, 0:11:37.760 --> 0:11:42.120 you know, authoritatively, come forward and take the reins on everything. Now, 0:11:42.160 --> 0:11:46.280 initially the Libra Association had twenty seven partners in it 0:11:46.440 --> 0:11:49.840 besides Facebook, and there were some really big companies in 0:11:49.840 --> 0:11:53.800 this association like Visa and MasterCard. Now these are financial 0:11:53.800 --> 0:11:58.160 institutions with a very long history of processing transactions. There 0:11:58.200 --> 0:12:01.880 was also a PayPal, David Marcus, his old stomping grounds uh. 0:12:01.920 --> 0:12:05.240 Spotify was on there too, way before the company would 0:12:05.280 --> 0:12:08.400 become mired down in a mess of battling ideologies and 0:12:08.440 --> 0:12:12.960 misinformation campaigns. Then you had Uber and Lift that were 0:12:13.000 --> 0:12:15.679 also on that list, as well as coin Base, and 0:12:15.840 --> 0:12:19.520 lots of others. Now, the digital currency being proposed was 0:12:19.600 --> 0:12:23.720 in some ways similar to cryptocurrencies and in other ways 0:12:24.440 --> 0:12:27.520 very different, and a lot of outlets would refer to 0:12:27.559 --> 0:12:30.720 Libra just as a cryptocurrency as sort of shorthand, but 0:12:30.920 --> 0:12:34.800 some were a little more nuanced in their description. For example, 0:12:35.120 --> 0:12:38.960 Elizabeth Lapato, who's an editor at The Verge, wrote a 0:12:39.000 --> 0:12:42.840 phenomenal piece about Libra back in June of two thousand nineteen. 0:12:43.080 --> 0:12:47.960 It was titled simply Libra Explained. Now, first, miss Lapato, 0:12:48.480 --> 0:12:50.840 you are far too modest. Not only did you explain 0:12:51.000 --> 0:12:54.400 Libra thoroughly, I mean seriously, it is an excellent article. 0:12:54.440 --> 0:12:57.200 You should read it. But Lapato also did in a 0:12:57.240 --> 0:13:00.200 way that was really entertaining as it was informative. Also, 0:13:00.320 --> 0:13:03.240 just side note to miss Lapato, I also have a 0:13:03.280 --> 0:13:06.120 habit of capitalizing words for comedic effect, and I don't 0:13:06.160 --> 0:13:09.280 care if I'm the only person who finds it funny. Anyway, 0:13:09.559 --> 0:13:13.320 Lapato's piece points out how the proposed currency has laid 0:13:13.320 --> 0:13:17.920 out in a white paper compares to a cryptocurrency like bitcoin. 0:13:18.440 --> 0:13:20.920 Uh So, with bitcoin, you have a finite number of 0:13:20.920 --> 0:13:23.640 bitcoin that will ever be in circulation, and once they 0:13:23.679 --> 0:13:26.880 are all in circulation. That's it. That's all that will 0:13:26.920 --> 0:13:30.040 ever be in circulation. They will continue to circulate, but 0:13:30.160 --> 0:13:33.559 you won't generate more. You can't print more, you can't 0:13:33.640 --> 0:13:37.320 mind more. That's it. Now. In the beginning, most of 0:13:37.320 --> 0:13:41.240 the bitcoin were locked away essentially, and the process of 0:13:41.520 --> 0:13:44.960 mining would liberate a certain number of bitcoin every ten 0:13:45.040 --> 0:13:48.760 minutes or so. That number released would diminish over time, 0:13:48.840 --> 0:13:53.679 so every four years it reduces by half. Originally, if 0:13:53.720 --> 0:13:55.880 you were on the ground floor of bitcoin when it 0:13:55.920 --> 0:13:58.960 first launched, those first four years, if you were the 0:13:58.960 --> 0:14:02.640 one to mind a block, you know, to essentially verify 0:14:02.720 --> 0:14:06.680 a block of transactions in the blockchain of bitcoin, well 0:14:06.840 --> 0:14:10.400 you would be awarded fifty bitcoin for your efforts. Four 0:14:10.480 --> 0:14:13.680 years after that, it was down to twenty five bitcoin 0:14:13.840 --> 0:14:17.040 per block. Four years after that twelve and a half bitcoin. 0:14:17.400 --> 0:14:19.440 Then you get to where we are right now. If 0:14:19.480 --> 0:14:21.880 you were to mine a bitcoin successfully, if you were 0:14:21.920 --> 0:14:25.560 to you know, verify a block of transactions in the 0:14:25.560 --> 0:14:29.400 bitcoin chain, you wouldn't at six point to five bitcoin 0:14:29.480 --> 0:14:33.760 per block. That's gonna jump down to three point one 0:14:33.840 --> 0:14:36.720 to five bitcoin per block. This, by the way, is 0:14:36.760 --> 0:14:41.560 one of the elements that might actually stabilize bitcoins value 0:14:41.640 --> 0:14:45.560 over time. Uh and and also have lots of other effects, 0:14:45.600 --> 0:14:50.440 like we might see a huge decline in massive operations 0:14:50.480 --> 0:14:56.520 that have huge electricity consumption needs. But again that's a 0:14:56.760 --> 0:15:00.000 topic for a different episode. And then there's the block 0:15:00.080 --> 0:15:03.240 chain itself. You can think of bitcoins blockchain as a 0:15:03.280 --> 0:15:06.440 record of all transactions going back to the very beginning 0:15:06.680 --> 0:15:10.160 of bitcoin. It would be a little bit different with 0:15:10.320 --> 0:15:22.920 liebra I'll explain more, but first let's take a quick break. Okay, 0:15:23.000 --> 0:15:28.240 let's talk about blockchain. So it is a chain of blocks, right, 0:15:28.360 --> 0:15:32.400 and each block, new block that joins the chain has 0:15:32.880 --> 0:15:36.880 information in it that relates back to the previous blocks 0:15:36.880 --> 0:15:40.960 in the chain. It's it's got a value that's tied 0:15:41.440 --> 0:15:44.640 to the previous blocks, and then the subsequent block, the 0:15:44.680 --> 0:15:49.320 next new block, will have information of all the links 0:15:49.320 --> 0:15:51.440 back to all the blocks that came before it. The 0:15:51.520 --> 0:15:54.760 benefit of this approach, or one benefit of this approach, 0:15:55.200 --> 0:15:59.560 is that should somebody, some nefarious ne'er do well, decide 0:15:59.600 --> 0:16:02.280 they to make a change in the history of all 0:16:02.320 --> 0:16:06.800 those transactions. Maybe they spent their bitcoin back, you know, 0:16:06.960 --> 0:16:09.200 ten years ago, and they used it to buy a pizza, 0:16:09.520 --> 0:16:12.920 and they had thousands of bitcoin, and they're just ruining 0:16:13.000 --> 0:16:15.440 the day that they did that because now the bitcoin 0:16:15.480 --> 0:16:18.200 are worth so much more than they were way back then. 0:16:18.760 --> 0:16:21.080 So what they want to do is go back and 0:16:21.200 --> 0:16:24.400 change a couple of numbers in that list of transactions 0:16:24.480 --> 0:16:27.560 that suggests they never spent that money in the first place. 0:16:27.640 --> 0:16:31.160 All those thousands of bitcoins are still There's that would 0:16:31.320 --> 0:16:35.360 instantly make the millionaires. Well, because of the way that 0:16:35.480 --> 0:16:40.640 the chain forms, if you make a change in a block, 0:16:41.400 --> 0:16:45.000 every block that follows it is going to also change 0:16:45.080 --> 0:16:49.560 because they're all tied to this value that's associated with 0:16:49.600 --> 0:16:51.960 the block, and that means that if you try to 0:16:52.000 --> 0:16:55.320 alter the system, everybody knows it, everybody can see that 0:16:55.400 --> 0:16:59.160 you did it, and they can invalidate the changes you make, 0:16:59.480 --> 0:17:03.800 go back to the stable blockchain, and your attempt to 0:17:03.880 --> 0:17:07.320 hoist money through the blockchain would be thwarted. There are 0:17:07.359 --> 0:17:11.680 other ways to hist cryptocurrency, but this is one that 0:17:11.760 --> 0:17:17.080 the blockchains design itself is uh is going to combat well. 0:17:18.680 --> 0:17:21.640 Libra would not use a block chain system. It would 0:17:21.680 --> 0:17:26.840 use kind of a unified ledger, just an unbroken ledger 0:17:26.880 --> 0:17:31.960 of transactions, not a not a a series of blocks. Also, 0:17:32.040 --> 0:17:35.159 bitcoin is what we call a permissionless system. That is, 0:17:35.200 --> 0:17:38.160 to participate in bitcoin mining, you just have to join 0:17:38.200 --> 0:17:41.879 the bitcoin ecosystem and boom, you're part of it. You 0:17:41.920 --> 0:17:44.440 don't have to secure permission from any entity, you don't 0:17:44.480 --> 0:17:47.520 have to do anything special, just join the system and 0:17:47.680 --> 0:17:49.840 there you go. Now, just because you join doesn't mean 0:17:49.840 --> 0:17:52.600 you're gonna raake in any bitcoin, because mining is such 0:17:52.640 --> 0:17:57.240 a computationally intensive activity, because bitcoin is a proof of 0:17:57.280 --> 0:18:01.600 work cryptocurrency, and you've got other group that report literally 0:18:01.720 --> 0:18:08.000 millions of dollars into computer resources, massive computer systems, all 0:18:08.160 --> 0:18:10.280 just so to get the jump on everybody else in 0:18:10.320 --> 0:18:14.040 the ecosystem. It means you don't stand a chance if 0:18:14.080 --> 0:18:16.720 you just like have your laptop hooked into it, but 0:18:16.800 --> 0:18:19.199 you are technically allowed to participate. It's just you're not 0:18:19.240 --> 0:18:23.639 gonna You're not gonna mind anything. Uh. Libra, in contrast, 0:18:23.840 --> 0:18:27.400 was to be a permissioned system, at least initially. The 0:18:27.520 --> 0:18:30.040 entities that could ment coins would be limited to the 0:18:30.119 --> 0:18:33.960 partners in the Libra Association. Each partner would contribute a 0:18:34.040 --> 0:18:36.960 certain amount of money dedicated to the system. For the 0:18:36.960 --> 0:18:39.479 major partners, this was said to be around ten million 0:18:39.520 --> 0:18:44.800 dollars each and individual users would then buy into the ecosystem, 0:18:44.800 --> 0:18:47.080 but wouldn't be able to participate in any kind of mining. 0:18:47.119 --> 0:18:49.840 So you and I, if we wanted to use Libra, well, 0:18:50.040 --> 0:18:53.440 we could use whatever our native currency was to purchase 0:18:53.800 --> 0:18:58.400 Libra units of currency, but we couldn't mind Libra. In fact, 0:18:58.400 --> 0:19:01.960 the original idea kind of went like this. You decide 0:19:02.280 --> 0:19:04.760 you want to purchase some units of Libra so that 0:19:04.800 --> 0:19:07.560 you can send some money to your dear sweet auntie 0:19:07.560 --> 0:19:11.119 who lives in a different country, and you spend whatever 0:19:11.119 --> 0:19:13.840 your local currency happens to be. Let's say it's in euros, 0:19:14.280 --> 0:19:18.359 so you spend ten euros to purchase libra. Your money 0:19:18.359 --> 0:19:21.359 would then enter into the Libra reserve that would be 0:19:21.400 --> 0:19:24.680 this big pool of resources. That pool of resources backs 0:19:24.720 --> 0:19:28.520 the value of every Libra unit of currency, and you 0:19:28.520 --> 0:19:31.600 would receive an amount of libra equivalent to the ten 0:19:31.640 --> 0:19:34.760 euros you paid, right, So whatever the Libra equivalent of 0:19:34.760 --> 0:19:38.000 ten euros was, that's what goes into your your digital wallet. 0:19:38.600 --> 0:19:43.200 Then you send the digital Libra to your auntie. And 0:19:43.280 --> 0:19:46.320 let's say your auntie lives in Canada and she wants 0:19:46.320 --> 0:19:48.439 to cash out, and she wants to trade the Libra 0:19:48.560 --> 0:19:52.840 in for Canadian dollars, so the Libra association covers the 0:19:52.840 --> 0:19:56.440 cashing out of the process. So the reserve like ten 0:19:56.960 --> 0:20:01.880 whatever the the equivalent in Canadian dollars is, gets chucked out. 0:20:01.960 --> 0:20:04.760 At your auntie, she gets her money, and then the 0:20:04.840 --> 0:20:07.439 Libra that she used to trade in to get that 0:20:07.480 --> 0:20:11.160 cash that got deleted. So Libra units only exists as 0:20:11.200 --> 0:20:13.960 long as the user has them in a digital wallet. 0:20:14.000 --> 0:20:17.560 But once you cash out, the Libra would get deleted 0:20:17.880 --> 0:20:21.879 rather than recirculated. It's a big difference between Libra and 0:20:21.960 --> 0:20:26.159 other cryptocurrencies. And like I said, not a blockchain, just 0:20:26.240 --> 0:20:31.120 a long list of all transactions that the partners would 0:20:31.119 --> 0:20:34.919 be able to see. Um again, not in blocks, just 0:20:35.000 --> 0:20:39.520 as this this tree like structure that they described. Uh. 0:20:39.640 --> 0:20:42.840 Then there was the fact that bitcoin is not a 0:20:42.880 --> 0:20:47.480 commodity backed currency. It's not a fiat currency either. A 0:20:47.520 --> 0:20:50.479 fiat currency is a government issued currency that is not 0:20:50.600 --> 0:20:53.480 backed by some other commodity like gold. You know, way 0:20:53.520 --> 0:20:55.159 in the old back in the old days of the 0:20:55.560 --> 0:20:58.920 dollar was on what was called the gold standard, where 0:20:59.359 --> 0:21:03.239 there was a reserve of gold that backed up the 0:21:03.320 --> 0:21:06.080 value of the dollar. End In theory, you could trade 0:21:06.080 --> 0:21:08.439 your dollar in for a dollar's worth of gold at 0:21:08.440 --> 0:21:12.200 any time. But we've long since abandoned the gold standard, 0:21:12.520 --> 0:21:15.080 and now the US dollar is a fiat currency. It's 0:21:15.119 --> 0:21:18.480 government issued, but it is not backed by a specific commodity. 0:21:18.640 --> 0:21:21.159 Bitcoin is not issued by a government, and it is 0:21:21.200 --> 0:21:25.240 also not backed by a commodity. Like gold, Bitcoin's value 0:21:25.280 --> 0:21:28.280 comes from a restricted supply and a high demand. So, 0:21:28.320 --> 0:21:31.320 in other words, bitcoin is valuable because people want it. 0:21:32.000 --> 0:21:35.040 There's nothing magical about bitcoin that makes it valuable on 0:21:35.119 --> 0:21:39.000 its own. Hamlet would say it's valuable because thinking makes 0:21:39.040 --> 0:21:42.200 it so. Then again, you could also apply that same 0:21:42.240 --> 0:21:44.400 logic to stuff like gold. You could say, like, well, 0:21:44.440 --> 0:21:47.119 gold is not really valuable on its own, it's valuable 0:21:47.119 --> 0:21:51.119 because people want it, right, Like, there's nothing intrinsic about 0:21:51.119 --> 0:21:53.640 gold anyway. If you go down that road long enough, 0:21:53.640 --> 0:21:55.960 you start to question what is real. I don't recommend 0:21:56.000 --> 0:21:59.280 you do it. It's pretty tough out there. Already, Libra 0:21:59.720 --> 0:22:02.919 would not be a fiat currency because it wasn't issued 0:22:02.960 --> 0:22:07.000 by a government. However, it would be backed by a commodity, 0:22:07.040 --> 0:22:10.160 and the initial commodity consisted of the money pooled by 0:22:10.160 --> 0:22:13.480 the various partners in the Libra Association. Now The idea 0:22:13.560 --> 0:22:16.120 was that Libra's value would be tied to a quote 0:22:16.200 --> 0:22:21.600 unquote basket of resources of commodities, which would include fiat 0:22:21.600 --> 0:22:26.400 currencies and low risk investments. Uh. The Association would take 0:22:26.400 --> 0:22:29.320 this big old poll of cash from the twenty eight 0:22:29.400 --> 0:22:32.439 partners who were part of the association and then invest 0:22:32.520 --> 0:22:35.679 that money in various low risk investments and guarantee the 0:22:35.760 --> 0:22:39.359 value of the Libra currency from that investment pool. And 0:22:39.400 --> 0:22:42.400 the partners in return would actually earn interests off of 0:22:42.440 --> 0:22:46.240 those investments, like if they actually made money, Well, that 0:22:46.320 --> 0:22:48.959 money would go to the partners, it wouldn't get circulated 0:22:49.040 --> 0:22:53.119 into the Libra ecosystem. Uh. The association, the members of 0:22:53.160 --> 0:22:57.560 the Association would enjoy those profits uh, and then that 0:22:57.640 --> 0:23:01.919 would continue to back the initial pool. There would continue 0:23:01.960 --> 0:23:06.240 to back the value of the Libra currency in circulation. Now. 0:23:06.240 --> 0:23:08.639 The Association said that this approach would make the Libra 0:23:08.680 --> 0:23:12.720 currency less volatile than cryptocurrencies, and that has been a 0:23:12.760 --> 0:23:16.920 real issue with lots of cryptocurrencies, especially recently. If you've 0:23:16.960 --> 0:23:19.000 heard me talk about crypto before, you know one of 0:23:19.040 --> 0:23:22.280 my big complaints is that for a lot of cryptocurrencies, 0:23:22.320 --> 0:23:25.760 the volatility is so great that you can't really rely 0:23:25.880 --> 0:23:29.960 on crypto to act like a real currency. If I 0:23:29.960 --> 0:23:33.080 have a unit of currency that can buy five dollars 0:23:33.080 --> 0:23:36.520 worth of goods or services today, but then tomorrow I 0:23:36.560 --> 0:23:39.160 could use that same unit of currency to buy twenty 0:23:39.200 --> 0:23:42.480 dollars worth of goods or services, I would be petrified 0:23:42.520 --> 0:23:45.200 of spending any cash at all, because I'd be worried 0:23:45.200 --> 0:23:48.080 I'd be bleeding wealth in the process. I would constantly 0:23:48.119 --> 0:23:51.800 be thinking this could buy me four times as much 0:23:51.840 --> 0:23:54.800 tomorrow as it can buy me today, and two days 0:23:54.840 --> 0:23:57.440 from now I might be able to buy twenty times 0:23:57.440 --> 0:24:01.639 as much stuff. I would never spend anything because the 0:24:01.680 --> 0:24:04.400 following day I would think, oh, I just I totally 0:24:04.480 --> 0:24:07.960 wasted all that buying potential. That's the way I feel 0:24:07.960 --> 0:24:12.880 about cryptocurrency. So Libra would instead be connected to real 0:24:12.920 --> 0:24:17.320 world assets that would have, in theory a more predictable value, 0:24:17.359 --> 0:24:21.040 a more stable value to them, and that would make 0:24:21.240 --> 0:24:25.679 Libra a bit more stable. In return, Libra would literally 0:24:25.680 --> 0:24:29.000 be what we call a stable coin. The major partners 0:24:29.040 --> 0:24:32.159 in the Libra Association would each have a single vote 0:24:32.320 --> 0:24:36.000 over matters of governance that would include Facebook. Facebook would 0:24:36.040 --> 0:24:39.240 have one vote, just like all the other partners and 0:24:39.320 --> 0:24:42.280 that was probably a move to help kind of dilute 0:24:42.280 --> 0:24:45.760 the perception that Facebook was behind a digital currency, because 0:24:45.840 --> 0:24:49.359 various governmental officials around the world were already pretty leery 0:24:49.440 --> 0:24:51.639 of Facebook at this point, and that would be a 0:24:51.640 --> 0:24:55.960 trend that would intensify over the following years. And you know, 0:24:56.000 --> 0:24:58.159 it's pretty easy to see why Facebook would want in 0:24:58.240 --> 0:25:01.080 on this. The company has a long history of integrating 0:25:01.119 --> 0:25:03.920 products and services that are proven to be successful or 0:25:03.960 --> 0:25:08.399 at least popular elsewhere. Facebook as a rep for acquiring 0:25:08.400 --> 0:25:11.879 potential competitors, and if that's not an option for copying 0:25:11.960 --> 0:25:15.160 competitors and and their products in their services, and an 0:25:15.160 --> 0:25:18.320