When people think that the encrypted digital currency represented by Bitcoin has staged an ups and downs in the past 10 years, Facebook tells us that it is just a prelude, and the digital currency drama has just begun.
Global Currency Dream
On June 18, the world's largest social network company Facebook officially announced to the world its plan to issue currency. Zhu Jiaming, economist and director of the Institute of Digital Assets (CIDA), told the journal that according to his opinion, there were six major events in the history of world finance and currency since World War II before June 18, 2019: 1944 The establishment of the Bretton Woods system in 1971, Nixon’s announcement of the decoupling of the U.S. dollar from gold in 1971, the signing of the 1985 square agreement, the issuance of the euro in 1999, the subprime mortgage crisis in 2007, and the birth of Bitcoin in 2008, and Facebook issued this week. The news can be called the seventh.
Someone ridiculed and designed the physical form of "Libra". Source: The Verge (William Joel)
To be precise, this time it is not Facebook issuing currency, but led by it, uniting several private enterprises and financial institutions to jointly issue a currency. The unit of currency is named Libra, the English word meaning Libra, which symbolizes justice and fairness, and is also the currency measurement unit of ancient Rome. Currency will not have the form of cash, it is a digital currency that exists on the Internet. Libra will be officially released in the first half of 2020, and the release plan white paper will be announced on June 18.
Imagine the following scenario: an American tourist travels to Nepal. He buys goods in a small shop and wants to pay the owner. Whether it is in US dollars or Nepalese rupees, both are inconvenient; a Venezuelan university student , While working at and saving tuition fees, but when he deposited the sovereign Bolivar in the bank, he was worried in his heart-on June 13, the Venezuelan government once again expanded the currency denomination to curb the viciousness that is still happening inflation. According to the promise of Facebook, after 2020, no matter the American tourist, Nepalese shopkeeper or Venezuelan college student, there will be a new choice in common: Libra currency, which can transfer money point-to-point without borders in real time and maintain long-term currency stability. As long as there is a smart phone that can access the Internet, it can store and circulate Libra just like sending a Facebook message-free flow of information becomes free flow of wealth. Libra will adopt various technologies including blockchain to become a decentralized cryptocurrency, easy to obtain, safe and stable, and get rid of the traditional financial system’s layer-by-layer control in exchange rate settlement and foreign exchange control. ". The
global character is a major feature of this currency different from the existing currencies on the market. According to a report by foreign media , when Libra was not officially named in the preparatory stage, the internal name of Facebook was "GlobalCoin" (Global Coin), which was simple and straightforward. The US dollar is currently the de facto world currency, but this is mainly in terms of macroeconomics. In daily life, the US dollar is not easily available to people in most countries. The digital Libra may be different. According to data provided by Facebook, there are 1.7 billion adults in the world who have no access to the financial system and cannot enjoy the financial services provided by traditional banks. Among them, 1 billion people have mobile phones and nearly 500 million people have access to the Internet-most of them Is a Facebook user. Facebook's 2.7 billion users obviously contains huge possibilities.
usage scenarios
In the Libra project white paper, Facebook declared that to replace the traditional telecommunications network with the Internet and use the newly established "Internet of Money" to change the traditional financial system, the final situation of should be: "No matter where you live and what work you do Or how much you earn, transferring funds around the world should be as easy, cost-effective, and even safer as sending text messages or sharing photos." These few words of
are permeated with an astonishing optimism, and you can almost immediately imagine that many people are motivated by it. Fidgeting for different reasons. The fact is true, and political forces responded with a rather tough attitude. On June 18, Democrat Maxine Waters (Maxine Waters), Chairman of the Financial Services Committee of the US House of Representatives, demanded that Facebook immediately suspend the Libra plan until Congress and regulators make a review. The Governor of the Bank of England Mark Carney also stated that the Libra currency must be safe, otherwise it cannot appear, and the world's major central banks need to supervise it. On the 23rd, France, as the rotating presidency of the G7 Group (the United States, Britain, France, Germany, Japan, Italy, Canada), and its central bank governor Francois Villeroy de Galhau announced that it has established A G7 joint working group to study how to ensure that cryptocurrencies like Libra are regulated from anti-money laundering laws to consumer protection rules.
Although Libra is currently only a currency issuance intention and plan, and has not yet been actually issued, it has obviously caused a lot of waves around the world.
Inherited Bitcoin "Legacy"
At 14:10, October 31, 2008, New York time, hundreds of members of a cryptography mail group received a letter from someone who claimed to be "Satoshi Nakamoto" (Satoshi Nakamoto) Incoming email. Satoshi Nakamoto said: "I have been working on a new electronic cash system, which is completely peer-to-peer and does not require any trusted third parties." A nine-page paper was attached to the email, which described a new currency. System conception. This is the moment when Bitcoin (BitCoin) was born.
gave birth to the Bitcoin of blockchain technology. Its ideal was to become a global free currency. However, 10 years later, outside of the "currency circle", Bitcoin has not really entered the daily lives of most people. The instability of the currency is an important reason. The price of Bitcoin often fluctuates tens of times or even hundreds of times in a short period of time, making it unable to be used as a currency for daily use-but as a speculative tool for many people. was exposed and recorded that he was Li Xiaolai who "cut leeks" by issuing "air coins", and Justin Sun, who used the coins to cash out billions and spent 30 million yuan to photograph Buffett’s lunch, are among the "leaders." . Similar incidents have also left many bystanders with a negative impression of encrypted digital currencies, and even doubts about blockchain technology itself. In fact, blockchain as a technological means has long become an internationally recognized frontier field, and mainstream financial institutions including the People's Bank of China are conducting related research. The fundamental reason for the large fluctuations in the value of
is that this type of cryptocurrency has no counterpart in reality, and its value depends entirely on people's confidence. takes Bitcoin as an example. The total number of Bitcoins is determined to be 21 million. They are rewarded in batches to the person who solves the problem the fastest according to the rules set by Satoshi Nakamoto-this is "mining". Satoshi Nakamoto used the ellipse encryption algorithm and the hash algorithm to design a very difficult mathematical problem. He could only use the program to continuously try all possible solutions to calculate the answer. Whoever calculated it first would be rewarded with the Bitcoin corresponding to this block. Who, "mining" is actually a process of grabbing the right to bookkeeping — the story of "mining" that later competes against computing power and even electricity comes from this. The mechanism ensures that no one can manipulate the currency issuance process without authorization, but it also makes any bitcoin not necessarily directly related to the real world.
As a currency that can be used by a real majority of people who want to achieve "stability, low inflation, universal acceptance and interchangeability", Libra naturally needs a new way to ensure its value and stability. The method used by LibraThe formula is very simple and easy to understand, that is, it is linked to the existing mainstream legal tender, and all real asset reserves are used as a guarantee. Only when new real assets are injected into the Libra reserve pool jointly maintained by the cooperative institution, a new Libra coin will be manufactured (mint), otherwise once the assets in the reserve flow out, a Libra coin will be burned (burn) . This makes Libra fundamentally different from the previous encrypted digital currencies, and also largely eliminates the possibility of speculation, because the conversion rate between Libra and "real" currencies is stable.
Libra will not only be linked to a certain currency, but a currency basket. Facebook is currently collectively referred to as "a series of low-volatility assets, such as cash and bonds provided by reputable central banks." Although has not officially confirmed the news, there is speculation that after conversion, 1 Libra coin can be exchanged for about 50 US dollars in the future.
is a Libra advertisement
and what Libra retains from Bitcoin is the underlying technology of its "distributed accounting", that is, blockchain technology. The current traditional digital payment of , whether it is the payment of online banks in various countries, , WeChat, , Alipay, and the Tencent "Q coin" that many people mistakenly compare Libra to, there is a "center" for accounting. The center-the bank or , Tencent, , really controls the books, and people trust this center for fairness and accuracy in accounting. The mechanism of Bitcoin is completely different. There is no such "center" where people need to bet on trust. All participants (nodes) participate in bookkeeping. The principles of cryptography, mathematics and computer science make distributed bookkeeping possible. No single node can tamper with the ledger. Judging from the white paper, Facebook has made sufficient technical preparations for blockchain. The difference between
is that Bitcoin uses a "public chain" and Libra is a "consortium chain". Every user of Bitcoin is a node, and Libra currently only has a few specific institutions become super nodes, but this has ensured that the entire Libra system is not controlled by a single institution. Facebook does not exclusively operate the Libra currency, but specifically registered the Libra Association, and the members of the association are jointly responsible for the maintenance of Libra blockchain technology and the management of Libra asset reserves. The Libra Association is registered in neutral Switzerland and is a non-profit international organization.
What organization has participated in the Facebook alliance? At present, there are dozens of founding members with enough heavyweights, such as credit card companies VISA and MasterCard, travel companies Uber and Lyft, payment application companies PayPal and Stripe, Argentina's e-commerce companies, investment companies and non-profit companies. According to the analysis of Gu Yanxi, a blockchain researcher who used to work for an American option settlement company, the participation of different types of companies will be very helpful to the promotion of Libra, and it is worth noting that direct competitors in some industries have participated. This association, such as VISA and MasterCard, Uber and Lyft, Gu Yanxi believes that this shows that "the design of the Libra Association is obviously to ensure the fairness of the association's decision-making." At the same time, can also see that these opponents have joined Facebook’s huge plan. They are no longer standing in line with a certain company’s business strategy, but working together to build the underlying system of the world financial system.
According to the plan of Facebook, the scale of the Libra Association will gradually expand, and the degree of decentralization will gradually increase. Compared with Bitcoin's "one-step" fully decentralized construction, Libra has taken a gradual development path, with fewer nodes and more nodes, and a balance between decentralization and promotion efficiency.
If Bitcoin is a great thought experiment, Libra has truly become a pragmatic program of action for premeditated and organized practice of its thought heritage. The blockchain technology, the stability and independent governance of currency valueThe rational organization forms the three cornerstones of this new currency concept. The key to the
social infrastructure
Libra currency system is that, by design, once the currency is issued and operational, Facebook no longer has any special status in the entire system. Facebook only maintained its leadership position until the end of 2019. Since then, it has become an ordinary member of the Libra Association, without any preferential treatment in terms of finances and voting rights, and "undertakes the same responsibilities as other members."
From the currency design, this is the meaning of the question. As long as Libra has a leader, it is not "decentralized" and all its ideas lose meaning. But what people cannot help asking is that Facebook has taken such painstaking efforts to launch the Libra currency concept and will not occupy a leading position. What is the motivation?
Many analysts believe that since the "privacy gate" of data breaches, Facebook has been seeking more diversified development directions. Its advertising revenue once accounted for more than 90%, and its structure was too single. Libra will bring new revenue growth point. However, Gu Yanxi analyzed that Libra is currency, and it is a very basic service in the financial market. It is absurd to hope that the currency itself can obtain high profits, and it is not expected that the Libra Association will issue new Libra coins out of thin air every year. It is also impossible to expect the Libra Association to use leverage to issue new currencies like banks, because these practices are contrary to the original intention of Libra. "Libra's reasonable profit income should be derived from the income generated by various business applications on this basis, such as cross-border remittances and loans." Gu Yanxi believes. However, it is still unclear how large the gains from this revenue can be.
Facebook’s Libra project is even more reminiscent of Zuckerberg’s Internet utopian tendency. As early as 2017, Zuckerberg issued a declaration against the isolationist stance of some government , claiming to use technology to build a more equal and global society, and the role of Facebook will be this new world Infrastructure. The manifesto reads: "In the past 10 years, Facebook has been focusing on helping users connect family and friends. The next step is to become a new social infrastructure to ensure community safety, enhance everyone’s participation in social affairs, and Improve social inclusiveness." Today's monetary and financial solutions can naturally be regarded as part of the social infrastructure. The mission of the Libra project is described as "re-creating currency, reshaping the global economy, and enabling people all over the world to live a better life" .
Regardless of Facebook's "initial intention", it is conceivable that this bold idea of Libra will definitely collide with the existing political order. How will Facebook respond? Meituan founder Wang Xing gave his prediction in a Weibo comment: "Facebook’s strategy for pushing Libra is very clear. The persimmon picks up the softness and gradually replaces the weaker currency systems in 200 countries around the world. When encountering a very small number of powerful countries, of course, you should bow your head and collude if you collude.”
was previously questioned by the US Congress due to the data breach scandal. The picture shows Zuckerberg attending a five-hour hearing in the U.S. Senate in April 2018. Source: Visual China
Another question that people have is that Facebook launched this plan in conjunction with many American companies. Can other countries, especially Chinese Internet companies, issue similar currencies? This journal asked the blockchain team of Tencent company on this issue, and the response was that Tencent is actively exploring the application of blockchain technology and has achieved many results. However, as for whether to issue coins, it is still based on Ma Huateng in 2018. In the national "two sessions" statement shall prevail: "Although digital currency is very hot now, we have not participated in it, We don’t think about sending a coin and so on, because I think this is a very risky thing. After Facebook released the Libra plan, there was a comment from Ma Huateng's circle of friends on the Internet: "The technology is very mature and it is not difficult. It depends on whether the supervision allows it. " Tencent also confirmed the authenticity of this comment.
's ambitious plan for Facebook is not only the voice of applause. Wang Yongli, former vice president of the Bank of China, believes that is for Libra, regardless of its actual operation. , Or its theoretical basis, both require further observation and reflection. Wang Yongli of responded in writing to several questions that he asked for consideration: “How does Libra’s currency basket constitute, its composition and management rules, and how to supervise it. The currency reserves are not yet known, so I just assume that it can run smoothly. Is it really that easy? "" is now called global currency or borderless currency, which refers to sovereign currencies that transcend countries, but these coins are still dedicated currencies for various online communities or platforms, without borders, but with chain boundaries! In the online world, is this really decentralized? Completely decentralized, how to ensure the efficiency of adjusting the rules? Is going to the center necessarily the best choice for human society? "
is only half a year away from the planned official currency issuance time, but the days of the "big tree" Libra will certainly not be smooth sailing. The US Senate has determined that on July 16 it will convene Facebook high-level officials to hold a hearing on the Libra project in Congress. Yes, you can imagine, this is probably only the first hurdle it has to deal with.
(This article was published in Sanlian Life Weekly, Issue 26, 2019. Click the link at the end of the article to place an order, and you can read the reporter’s comments on economists and digital assets. Interview with Zhu Jiaming, Dean of the Research Institute, and intern reporter Zhang Yumeng also contributed)
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