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Supervisory siege of Facebook's "coin-issuing" independence from the Federal Reserve

via:DeepTech深科技     time:2019/6/21 10:28:21     readed:898

Text / Lin Jiayi

Some people say that this may be the most important white paper for cryptocurrency since Bitcoin in 2009 and Ethereum in 2013. Some people say that Facebook will become a decentralized global central bank that transcends national borders and realize a truly electronic cash.

The Economist also believes that Facebook will create a global digital currency. Libra has great potential. Facebook has more than 2 billion users. Even if only a small part of it converts savings to Libra, it can immediately become the world's most circulated and widely distributed. One of the currencies. If it is widely adopted, its impact on the global financial system can be extremely profound.

But compared to the obscurity of the Bitcoin white paper, Libra spread to the world in the first place and set off a huge wave.In front of Facebook CEO Zuckerberg, there are three battles to fight, namely, regulatory warfare, commercial warfare and technical warfare.

(Source: Libra)

Regulatory war: National supervision and siege of Libra, Fed’s solidarity

In Europe, French Finance Minister Bruno LeMaire and Bank of England Governor Mark Carney both called for the G7 Group to strictly review and supervise Libra. Lemaire even directly approved Facebook's cryptocurrency as having no ability to become a sovereign currency. Facebook should also be required to provide a guarantee that Libra will not become a competitor with a sovereign currency. Carney stressed that the Bank of England is "open-minded" to this plan, but not "open the door."

Giovanni Buttarelli, European head of data protection, is concerned that this will enable Facbook to further integrate personal data and financial information, posing additional risks to user privacy.

The United States seems to be full of doubts.Members of the US Senate and House of Representatives have expressed doubts about Libra, and even said that they hope Facebook will suspend development. The latest news pointed out that Libra, which was born only two days ago, has been finalized on July 16th to receive a hearing from the US Senate Banking Committee. David Marcus of the Facebook blockchain project is expected to attend.

SheilaBair, former chairman of the Federal Deposit Insurance Corporation (FDIC), also said in an interview that Libra's words in the white paper are vague about how the company will handle the money for users to purchase tokens. This is a worry.

But it is worth noting that Fed Chairman Powell, who holds the US dollar monetary policy, said at a news conference on Wednesday that “there is no fear that the US central bank will be unable to enforce monetary policy because of cryptocurrency.”

“I believe that Facebook has had a fairly extensive discussion with global regulators, including of course.” Powell said that for the Libra project to move forward, “the Fed will have a high level of supervision from a safe and stable perspective. Expectation."

Figure | Federal Reserve Chairman Powell said at a news conference, "Do not worry that the US central bank will be unable to implement monetary policy due to cryptocurrency" (Source: YouTube)

In response, a senior domestic payment industry analyst analyzed DeepTech.The Fed's best strategy may be to let Libra run first, and then take back the management when the time is right. This is similar to the development process of third-party payment in China. Finally, the third-party payment company's provision is still collected and managed directly by the central bank. But at this stage, after all, the lack of scientific and technological strength of the regulatory agencies, the major upgrade of the financial infrastructure, relying on civil power is the fastest and most effective way.

(Source: Libra)

In fact, Facebook has long anticipated regulatory issues, as evidenced by its registration of LibraNetworks, a subsidiary in Switzerland. Cai Weide, director of the North China Blockchain Laboratory and founder of Tiande Chain, analyzed DeepTech. Although Facebook is an American company, Libra is actually Swiss, and Switzerland is a very friendly region for digital currency, and also meets the EU. legal.

But countries’ attitudes toward Libra’s attitude,"Basically, it will be attacked by other countries, and the United States will be a clear-cut attack."Cai Weide believes that countries will see Libra will change the financial market and order, which is bound to be dissatisfied. It will be questioned from the perspective of regulatory law, whether it is the US Senate, the French Finance Minister, or the Governor of the Bank of England. As you can understand, regulatory discussions like this may continue for a while, but in fact, US regulators support Facebook and will help Facebook advance Libra.

why? Cai Weide's analysis pointed out that because these stable or stable coins are impossible and will not replace the legal currency, it is a tool for legal currency, which is to help the legal currency.Libra will certainly support the dollar, and it will also support the dollar when it circulates around the world.

Business war: Libra is ambitious and will compete with WeChat and Ali for overseas payment market

Global circulation and cross-border circulation are the ambitions of Facebook. As the Libra white paper begins, it is aimed at “the world’s 1.7 billion adults who cannot enjoy traditional banking financial services”.This shows that Libra's main battlefield will be a population with no bank accounts spread across Asia, Africa and Latin America.

(Source: Pixabay)

And this is also the overseas territory that China's two major mobile payment giants, WeChat Pay and Alipay, have been desperately trying to capture in the domestic market. Therefore, the parties turned their attention to the response of the two giants in the first place.

Tencent CEO Ma Huateng commented in the circle of friends, "Technology is very mature, it is not difficult. Just look at whether regulation is allowed." Tencent did not respond to CoinDesk's inquiry, only forwarding Ma Huateng's past remarks, blockchain "technology is Ok, but how to use it is another aspect. We don't consider sending money because I think this is a very risky thing."

Ant Xianjin CEO Jing Xiandong said in a public event in 2018 that the blockchain boundary of Ant Financial is “three do not do”, and the third does not include not making air coins without real value, Do technical applications that violate laws and regulations, and do not do harm to user privacy and data security. Today, this position has not changed.

From this point of view, Tencent and Ali do not consider follow-up to the currency in the short term, but will rely on the existing mature payment application technology to compete with the new Libra for overseas bank accountless people.

Meng Yan, vice president of CSDN, said in an interview with CoinDesk that Facebook users are scattered all over the world, and it is difficult to establish a global payment network in the traditional way. There is no better way than the blockchain and cryptocurrency technology. Meng Yan believes that the traditional approach means applying for permission and establishing foreign exchange reserves in each country or region, which probably does not apply to Chinese payment companies.

However, Yang Mindao, the founder of dForce who is familiar with crypto finance, told DeepTech that countries and regions not covered by banks are often not even the most basic financial facilities (bank branches, payment settlement networks, etc.). Libra can skip these payment channels and Settle the network and build a new financial infrastructure. Well-known electronic payment tools, such as WeChat and Alipay, rely on traditional financial infrastructure.

In addition, although Libra is dominated by Facebook, it has claimed from the first day that it will practice the decentralization of the blockchain. As a first step towards “decentralization,” the Libra agreement has been handed over to a new organization, the Libra Association, and its members will each hold Libra tokens and vote on the chain to make governance decisions. .

“Over time, it will transfer node membership from the founding members who had an interest in the beginning of the creation to all the people who hold the Libra token and have an interest in the ecology,” Facebook Blockchain Technical director Ben Maurer said in an interview with CoinDesk on Tuesday.

“Zuckerberg is very human. It is very likely that he understands that the most successful business is often altruistic. Libra has released control from the beginning, which is the most extraordinary design of its design.”Yang Mindao said.

According to Yang Mindao, each member of Libra has only 1% of voting rights. Facebook is the same as everyone else. In Libra's governance, they are just ordinary members. Although the Libra Ecology's first heavyweight application, the Calibra Wallet, is wholly owned by Facebook, there is no strong binding relationship between the two.

Cai Weide also said thatTraditional third-party payments, such as Alipay and WeChat, are single owners, and users must fully trust the two companies. Libra uses blockchains and has a consensus mechanism, which is a big difference from third-party payments.The Libra's entire alliance partners, including financial institutions, payment companies, credit card companies, and Internet companies, are world-class lineups. "This means that Libra is not just a stable currency, but a world-class business model." Cai Weide said.

It is still unclear in which countries or regions Libra will qualify for compliance in the first time after launching the line. Is it true that the so-called countries and regions not covered by the bank have been successfully implemented? For example, it has been reported that its Calibra wallet may not be able to enter India. Here is the market for FaceBook with 260 million users.

“If Libra succeeds and continues to operate, it may evolve into a legal digital currency managed by the central bank,” said Ma Zhitao, deputy governor of Weizhong Bank, in an interview with DeepTech. “Monetary issuance management is an important financial infrastructure. The economic development has far-reaching effects, and all sovereign countries will focus on control. Therefore, I personally think that it is unlikely that it will be dominated by the private sector for a long time.” Weizhong Bank is one of the financial institutions in China that is committed to providing services to people without bank accounts.

However, he also added that the initial development of digital currency does require a large number of application scenarios to promote the landing and popularization, so it is also necessary to be driven by civil forces.If Facebook succeeds, it will provide confidence for countries to issue a new generation of financial infrastructure such as legal digital currency.

Technical warfare: attempt to achieve the original intention of Bitcoin, or become the most powerful opponent of Ethereum

A large number of application scenarios to promote landing and popularization means that Libra has the potential to realize the mission that Bitcoin has not been able to accomplish so far – an electronic cash.

It's not hard to see that Libra's designers selected the best features they thought the blockchain technology has developed to date, and also injected their own improvements and updates.The success of Libra will also be an important test for the development of blockchain and cryptocurrency technology.

(Source: Pixabay)

At the beginning of the invention of Bitcoin, it was originally intended to become an electronic cash system. However, after ten years of development, it was limited in terms of scalability and compliance. In fact, it has not become a popular payment tool. Become a value storage tool similar to “digital gold”.

The president of the University of Fire Co., Yu Jianing explained to DeepTech that due to factors such as large fluctuations in currency prices, slower transfer rates, and higher difficulty in use, Bitcoin cannot temporarily become a real electronic cash, and cannot be used in the payment scene. From the perspective of Libra's design, it is trying to solve these problems. It is worth mentioning that,“The goals, technologies, implementation paths and timelines presented by the Libra White Paper seem to be more realistic.”

According to Yu Jianing, “If you use a public-chain structure such as Bitcoin or Ethereum, it is difficult to solve the problems of payment speed, user and throughput, cross-border use, asset independence, etc.”, so Libra temporarily adopted the alliance chain. Structure, but still very hard to make this project not controlled by a single subject, can be said to be an optimization design at this stage.

Cai Weide also said that from the Libra white paper, the technical part is not difficult, so many people think that the white paper technology is not creative. But is this really the case? If its system can be used in the billions of people, it can be successfully expanded, which is the most powerful technology.

Although Libra's design is linked to a basket of currencies, it is a low-volatility cryptocurrency, but is similar in nature to the "stablecoin" that is currently anchored to anchor a single currency.

"Stable coins, as a better value storage, trading medium and pricing unit, have already surpassed the trend of bitcoin in terms of market trading volume, market pricing, and over-the-counter trading volume. The core value appeal of Bitcoin has been gradually eroded." Yang Mindao analyzed that Libra technology uses the dual token mechanism of “stable currency + equity tokens” to further strengthen this consensus, and will further establish that the digital currency payment network must be a stable currency as a trading medium, rather than a volatile one. Native tokens.

Not only that, but Yang Mindao also expects Libra, a smart contract platform, to cut directly into the financial infrastructure, which is the core strength of Ethereum.

Libra, like Ethereum, makes the currency programmable, and Libra's design can be seen from the Ethereum in terms of the need to pay for fuel, the gradual approach to non-permitted chain consensus mechanisms, and scalability. The reference.

"In addition to Libra's clear roadmap for non-licensed chain switching and a node alliance with great potential, it will be the most powerful opponent in Ethereum," Yang Mindao concluded.

Regulatory warfare, commercial warfare and technical warfare, multi-line warfare, this is a big taboo, but the winner's reward is really tempting, enough for Facebook to be willing to take risks, to challenge the many uncertainties of the current cryptocurrency, perhaps write another legend .

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