Are you surprised Zuckerberg failed to please Congress with his testimony on Libra? It brings up the question, what purpose does Libra serve? How are Wallys different?
Libra currency’s purpose is to turn Facebook into a payments processor like Western Union. When you’re the size of Facebook, and growing that fast, you can’t increase profits by, say, selling T-shirts.
Since Facebook earns in the ballpark of $50B of revenues a year from people’s data, it made sense they decided to enter the trillion dollar payments industry. It’s big enough to make a difference to their bottom line.
So what’s the plan? Zuckerberg wants to help you convert your dollars into Libra tokens, which you could then send across any Facebook app as easily as you message. He wants to make transferring money as easy as texting!
Making money transfers as easy as texting will take place in our lifetime, but as I’ve noted before Facebook is an untrustworthy place. Forget that most Congressman don’t understand how Facebook makes money. Facebook gave up millions of users’ data without consent, so they lost trust before we ever got to Libra.
Labor (Libra) vs Data (Wallys)
Wallys will be easy to transfer in texts. But the key innovation here is creating a new money for your data. Libra isn’t new money, it tokenizes the money we already have.
The money we have today symbolizes work (aka labor). You can tell an investor you want to dig holes in the ground and they’ll give you money – see here and here.
But tell an investor you want money for scrolling on Facebook and you’ll get slapped. Facebook gets your data, and it’s clearly valuable… Why don’t you get value as you send Facebook data?
That’s where the banks enter the picture. A bank capitalizes a base unit of value into fungible currency. The Federal Reserve capitalizes labor. The Tree of Wally capitalizes data.
Labor and data are both valuable units, but they are different measurement units.
You wouldn’t measure the distance between the Earth and moon in the same units you would the height of a human. But it doesn’t mean that 62 inches are not valuable when compared to 238,000 miles. If you multiply 62 inches by the number of humans on Earth, the cumulative height of all humans is over 6,000,000 miles long!
Today we measure data in miles when it needs to be measured in feet and inches. Tree of Wally is the bank to do that. Libra is not much in comparison.
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