Accepting Libra as a replacement for the US dollar is a huge leap for most crypto-enthusiasts. However, a recent post by the people at Loom (they were mentioned in a previous post) may help shift this sentiment. We all know that using Libra will make all of our transactions transparent to Facebook, and who knows who else. Libra will also be pegged to a basket of currencies which are controlled by a multitude of central banks. Most people would agree that this defeats the purpose of cryptocurrency. We wanted to have a decentralized network of validators and miners that no central authority could control. While this argument might be true, it is also true that the majority of people that use money don’t care about who controls or creates their money. They just want it to be transferable as fast as possible and not depreciate over time. Accepting Libra as a replacement for the US dollar is a tough pill to swallow. But if Libra can be transferred faster and hold its value better than the USD, then we must view it as a viable alternative.
As China starts to push out their cryptocurrency (through intermediaries like Alibaba and Tencent), we need to start considering how we can compete. If their currency is frictionless enough, we could see it slip into the hands of hungry consumers in the United States. If Libra is rolled out, billions of people would become cryptocurrency users in a very short period of time. Libra should be seen as a ‘gateway drug’ to other cryptocurrencies. After users get their first hit, people will start to experiment with other cryptocurrencies. Some will want harder (more privacy-focused crypto like Monero) or more utilitarian cryptocurrency like Ethereum or the Basic Attention Token.
More and more countries are starting to make moves into crypto instead of the reverse. Portugal’s government is the latest example, they said that there is no income tax on crypto-earnings. The trend is clear, we know where we’re going. The questions is how will we get there and how long will it take us?