At a dinner last week, The Ledger observed Michael Casey and Paul Vigna, coauthors of The Age of Cryptocurrency and its blockchain sequel The Truth Machine, get into the sort of row that only coauthors (and perhaps long-married spouses) know. Casey downplayed Facebook’s potent power to promote its cryptocurrency, saying its incumbent position will not guarantee success. Vigna, smacking his hand on the table, pushed back, arguing that the media giant’s reach—a stupendous 2.4 billion monthly active users—cannot be so easily dismissed.
The moment exemplified how Facebook’s ambitions have torn asunder the tribe of cryptocurrency enthusiasts. These tech and finance aficionados tend to fall into either one of two camps: Lovers, or haters. Some people can’t stand the thought of Facebook encroaching on their territory, believing it will spell doom for existing cryptocurrency projects, like a kudzu squelching sunlight in its climb. Others believe Facebook’s foray will provide cover for the rest of them and, ultimately, benefit all.
The opposition has two major objections. First, critics lay into Facebook for its seemingly monopolistic dominance. Maya Zehavi, a blockchain consultant, raised the specter of antitrust issues in a comment made to CoinDesk, the cryptocurrency news site. “They are creating an anti-competitive moat,” she said, referring to the powerful alliance Facebook has reportedly brokered between so many corporate giants, including Visa, Mastercard, PayPal, Uber, and others. Against such oligarchs, how can any upstart compete?
The second objection regards Facebook’s extensive record of privacy failures. To Bitcoin hard-liners, the company’s data surveillance-dependent business model epitomizes everything they have historically fought against. Peter Todd, a Bitcoin developer, said such corporate virtual currencies will result in “privacy disaster panopticons that give massive power to big corporations and thus government.” Pouring diesel over the embers, Preston Byrne, an outspoken lawyer, dubbed Facebook’s coin a “Panopticoin.”
Not all cryptocurrency fans are opposed to the endeavor, however. Zooko Wilcox, CEO of the Zcash company, which develops a privacy-focused cryptocurrency, offered some support. “Unpopular opinion: I think the fact that Facebook is working on a crypocurrency is awesome,” he said. Barry Silbert, an early Bitcoin acolyte and entrepreneur, lavished praise on Facebook. “The launch of Facebook’s cryptocurrency will go down in history as THE catalyst that propelled digital assets (including bitcoin) to mass global consumer adoption,” he said. “It will be remembered as just as important — and transformative — as the launch of the Netscape browser.” And Yoni Assia, CEO of eToro, an Israeli fintech startup, agreed with the assessment, saying, “$FB coin is going to make #Crypto mass market.”
Not so fast, countered Peter Schiff, CEO of broker-dealer Euro Pacific Capital. “‘Libra’ is bad news for Bitcoin,” he said, referring to the Facebook project’s codename. “Facebook will target the very market Bitcoin is counting on for growth, the unbanked in nations with high inflation. Libra will be stable, and much easier and cheaper to use as a medium of exchange than Bitcoin.”
Stock analysts, meanwhile, were ambivalent about the fate of Bitcoin, and cheered on the news, showering Mark Zuckerberg’s kingdom with “buy” and “outperform” ratings. Mark Mahaney, an analyst at RBC Capital Markets, called Facebook’s experiment “one of the most important initiatives in the history of the company to unlock new engagement and revenue streams.” An analyst at SunTrust said the move positions Facebook for growth, “putting the company front and center in areas beyond advertising, including commerce and financial services.” And an analyst at MoffettNathanson said that the social network could become “the world’s leading ecommerce platform.”
Expect Facebook’s plans to be a major topic of discussion this week at Fortune’s inaugural Brainstorm Finance conference, which you’ve heard so much about lately. (If you’re not attending, you may view the livestream here.) Something tells me we may learn more about Facebook’s initiative just in time for our finance festivities to kick off…
THE LEDGER’S LATEST
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Cryptocurrency, IoT, Scooters? A Zany Plan to Take on Telecom by Robert Hackett
Does Capitalism Have a PR Problem? by Erika Fry
‘You Can’t Not Be There’: Why Wall Street Is Lending Billions to China’s Hottest Tech Unicorns by Carol Zhong and Crystal Tse
Fortune Brainstorm Finance Livestream 2019: Watch It Here by Andrew Nusca
To the Moon… Facebook has assembled a corporate justice league for its cryptocurrency launch. Amazon creates a credit card for the underbanked—and a blockchain for corporate pension deals. Visa gets real about the blockchain. Walmart, KPMG, Merck, and IBM team up on a blockchain for pharma. Facebook invests in an Indian fintech startup. Challenger bank Chime is exploding. Cryptocurrency winners are emerging. Slack is expected to be valued at $17 billion after direct listing. Ripple goes to Brazil. Monzo and Binance are coming to the U.S. Big bank consortium is tokenizing fiat currencies. Naspers bought a Turkish payments firm for $165 million. BB&T and SunTrust will be named “Truist” post mega-merger. Wyoming welcomes cryptocurrency.
…Rekt. China pummels Telegram. Jamie Dimon “feels the Bern.” Nordic banks to replace compliance staff with robots. Italy proposes tax on savings stashed in safety deposit boxes. Meanwhile, Italian mobsters are using the old lira as currency. Hong Kongers ship wealth overseas in the face of Chinese extradition law. Banks overcharge for foreign exchange. A privacy researcher scraped 7 million Venmo transactions. Burn cash like it’s 1999. Binance to block Americans. Circle shutters payments app. Too few places to put our money. Central banker confab loses relevance. See the delayed Harriet Tubman $20 note.
BALANCING THE LEDGER
In lieu of Balancing The Ledger, here’s a clip of The Ledger’s Jeff Roberts debating Fortune’s Lisa Marie Segarra about the significance of Facebook’s cryptocurrency play. Let us know who you think won this round of Tech Debate.
22-22.9 million tons
That’s the amount of carbon dioxide emitted by the entire Bitcoin network in 2018, according to a study by researchers at the Technical University of Munich and the Massachusetts Institute of Technology. The output is comparable to a single city such as Las Vegas or Hamburg, or the to the country of Sri Lanka. For reference, global CO2 emissions totaled 37 billion tons last year.
MEMES AND MUMBLES
Please, sir, I want some more. Perhaps you caught the heartwarming—yet simultaneously disconcerting?—story of a 9-year-old boy in California who paid off his third grade class’s school lunch debt. When the child learned that some students were in the red on meals, he spent his allowance settling their balances. Patrick Blanchfield, an associate at the Brooklyn Institute for Social Research, shared his sardonic take on Twitter.
This will surely help mitigate the student loan debt bubble.
FOMO NO MO’
Jack Dorsey, CEO of Square and Twitter, shared his thoughts about the future of finance in a worthwhile interview with Quartz. One of his predictions: As algorithms take over more responsibility for our financial lives, they will need to be able to explain themselves and the decisions they’re making. Another trend: A stateless, Internet-native cryptocurrency is inevitable. (Dorsey favors Bitcoin, and he avoids passing judgment on Facebook’s coming coin.)
…we have all these currencies for every nation state, but if you consider the internet to be the equivalent to a nation state, it will have a currency native to itself, and there is not going to be any one party or institution that makes this happen, and there’s not going to be any one party or institution that can stop it from happening. And having a global currency that is native to the internet will allow companies like ours to move much faster and reach a lot more people.