PopFinance – E03 – Facebook Announces Its Own Cryptocurrency “Libra”

[00:00:00] FA: Welcome to Just Curious Media. This is pop finance. I’m François Auré. I’m a Forex analyst and author and U.S. markets contributor for CCN. 

[00:00:10] SH: I’m Sarah Helms. I’m an attorney, but I’m also a pop culture guru. Welcome.

[00:00:14] FA: Today we are going to be talking about Facebook and the new Libra cryptocurrency and a number of the controversies that are surrounding it. 

[00:00:23] SH: In other words, we’re going to be talking about Facebook’s yet 10,000th attempt to save itself from sheer sure doom. It’s going down for real and this is just another attempt as was everything else a #facebookmarketplace, which is still there and no one uses. 

[00:00:41] FA: What is the Facebook marketplace?

[00:00:42] SH: You’ve never seen this?

[00:00:43] FA: No. 

[00:00:44] SH: It’s this pathetic, pathetic attempt, and sometimes I just click on it accidentally when I’m not even meaning to. I’ll click on it and it will be like, “Joe Blow and Glendale is selling this bedframe. Do you want it?” Why Facebook? Why do you think I’m interested in this bedframe? I’ve never in my life been interested in this and I’m certainly not interested in it now. Leave me alone.

[00:01:06] FA: I’ve literally never heard of that in my entire life.

[00:01:08] SH: Exactly. Exactly my point.

[00:01:11] FA: Well, they have had some successes. Instagram, for example, is under their umbrella.

[00:01:16] SH: It’s a subsidiary though. So you can’t really argue.

[00:01:18] FA: True. To be honest, Facebook go out of their way to say, “We’re absolutely nothing to do with it,” because their reputation is so horrendous. 

[00:01:26] SH: Is that what they’re doing here?

[00:01:28] FA: Essentially what they’re doing here is they are trying to find ways to make themselves, number one, seem more relevant. Number two, to try and get some trust back from the people who use their website. 

Libra is, without going into too much depth, it’s a cryptocurrency, but it’s not. Bitcoin essentially derives its value from a blockchain, a decentralized blockchain and no one is really in charge of Bitcoin. It simply runs and exists as in of itself. Whereas Facebook Libra is going to be supported by – They like to use this word real assets, U.S. dollars, U.S. treasuries. They’re trying to make it a stable coin, and if they make it stable, they think that’s going to encourage people to use it. 

Essentially what Facebook are trying to do here is they’re trying to make sending money online easier and quicker. By utilizing the technology that cryptocurrencies run of sorts, they are trying to make it as easy to send money as it is to send an emoji, which is probably a little catchphrase you can hear a lot moving forward. 

[00:02:39] SH: Yeah. I mean, I have a lot of issues with this. Not surprisingly. The first of which is that I just simply, if I can speak my truth, don’t understand what they are trying to do here, because the simple fact is that I want to march into my bank and I want my money. I want to see it. I want it to be real. I want to be able to log on to my Bank of America, whatever app you have, and it’s there. 

I take issue with this idea that, one, I’m going to have this weird Mickey Mouse money online. Two, Mark Zuckerberg is going to be running it, because that man is not capable of – 

[00:03:17] FA: Well, in response to your fears over Mark Zuckerberg running it, which is probably the number one fear that most people have when it comes to anything related to Facebook, because the company has obviously had trust in it just decimated since all the scandals about private information. 

They have come out recently, Facebook, with a statement saying basically, “Don’t worry. We’re not going to be involved with Libra at all.” The Libra Foundation is going to run Libra, although we would quite like it if you used the wallet, which is basically made by Facebook. 

If you believe that they’re not going to have their hands in it, that’s fine, but they are trying to distance themselves from this project.  

[00:04:00] SH: Yeah. I mean, it’s not surprising. I mean, as I said at the very beginning, Facebook is the longtime coming that it’s on a downward spiral. I guess what they’re maybe trying to do is integrate all the apps we already use, Venmo and all that stuff, and make it easier so it’s in one place, which I’m all for condensing the apps. I don’t want a gajillion apps. 

But what I also don’t want is anyone getting their griddle hands on my weird electronic digital money, which I don’t understand to begin with. But I don’t want their hands on it.

[00:04:27] FA: Which is always a slight risk. I mean, there’s always a risk of losing any money. Anyone could take – Anyone can hack into things and they can steal it. But obviously there have been plenty of high-profile thefts of cryptocurrencies and digital currencies. So that is a concern. 

But I think what Facebook also – Although they are trying to say were’ doing this for lots of people who – The unbanked so to speak. People who wouldn’t normally have access to financial services. They are trying, and I think they’re largely trying to do this to get on better footing with regulators and law makers who have been up in arms about the idea that Facebook is trying to undermine the U.S. dollar, which is obviously not a very popular thing in Washington.

[00:05:07] SH: Yeah. I think the big issue though is, is the fact that people know it’s associated with Facebook and that presumably you use Facebook to get access to it, because the problem is, is that I see more and more people who are I guess – I hate the term millennials, but of the younger age group, the younger generation, are going away from Facebook. 

If the only people on Facebook left in, say 5 years’ time, are our mothers and fathers who are posting pictures of family barbecues and their big toe that looks weird, or whatever people post about these days. I don’t know. Then are these people of this age group going to be using this? Because I’d highly doubt that they want to or know what it is or engage in the conversation.

[00:05:47] FA: Facebook does still have some millennials who do use it, but they are – Facebook, absolutely, they’re going to want the thing that the popularity of cryptocurrency is going to drive some interest back into Facebook. But I think the main issue here is that Facebook has 2.4 billion people worldwide who use it, and Facebook are just thinking as many different services as we can prompt into Facebook, we can get these 2.4 billion people using it. I don’t know how many people use Venmo. Certainly, I never heard of anyone in England, where I used to live, that is where the accent comes from, people. I never heard of it. I think Venmo is U.S. only. Facebook  is not U.S. only. Facebook is global. 

If they can have – Essentially, they can be the Venmo for the world, and if they can improve no Venmo, which is what they’re trying to do here, they’re trying to be the first to dive in to use cryptocurrency to make a better, faster Venmo. Because money doesn’t move the weekends. There are lots of old-fashioned things that we kind of take for granted about regular fiat money, which is just regular dollars and pounds and euros.

[00:06:52] SH: American money. Yeah.

[00:06:53] FA: American money.

[00:06:53] SH: America.

[00:06:54] FA: It doesn’t move the weekends. It’s often rather slow. The costs are often rather high. What Facebook is trying to do is they’re trying to get in on the front row of kind of this new generation of payment systems, but it is not – And I repeat, this is not a cryptocurrency and it should not be viewed as such.

[00:07:12] SH: Well, and that’s I think what’s largely confusing about it, is I think people are saying it’s a cryptocurrency. From what little, and when I say little, I mean very little I know about cryptocurrency, is that it’s supposed to be hard to come by. That you have to mine it and then it’s very difficult and –

[00:07:27] FA: Yeah, this is not mineable. 

[00:07:29] SH: Okay. See? That was going to be my next question, because I feel like the whole point of having this digital currency is that there’s a certain amount of it that you can only mine so much. People are calling it a Bitcoin, but, François , it is not a Bitcoin. 

[00:07:43] FA: It is not. 

[00:07:43] SH: It is a different type of digital currency.

[00:07:46] FA: And it is also going to be scaled. So depending on supply, depending on needs, the Libra Foundation. 

[00:07:52] SH: Cough-cough. It’s actually Facebook. Don’t be fooled.

[00:07:56] FA: Allegedly. The Libra Foundation are essentially going to scale the supply and they’re going to function, as I understand, much like a central bank and that they’re going to make sure there’s sufficient liquidity, lots of these things. Bitcoin doesn’t do that. Bitcoin has a limited supply and a limited output and there’s finite amount of coins that will ever exist. It’s algorithmically organized that way. 

Facebook can essentially just – If they think they need more or whatever, they’ll just do whatever they can. They’re completely in control of this and –

[00:08:29] SH: That’s what so scary though. It’s the control

[00:08:31] FA: I think that’s what’s frightening. They’re regulators as well, because they are thinking that, “Oh! Facebook – I don’t really think this has any – This is not a threat to the dollar.” When you see these law makers in congress saying they’re worried that Facebook’s Libra is a threat to the dollar. It’s absolutely not a threat to the dollar, because it is founded on the dollar. That’s my biggest issue, is when you have a coin like this that essentially is attached to a bank account virtually where $1 for one Libra, it runs on the dollar. Just use a dollar. 

[00:09:01] SH: I mean, that’s true. I mean, that’s true, and that’s my point, is just Venmo. Just use the large – Other cryptocurrencies that we have, or the other, I’m sorry, electronic exchanges of money that we have. Why would I put my precious, precious money into the hands of Mark Zuckerberg? What incentive does he give me? 

[00:09:18] FA: Has he been that trustworthy in the past? 

[00:09:20] SH: No.

[00:09:20] FA: Which brings us on to his relationship with the Winklevoss twins, and I can’t help but think there’s a certain – I don’t know what the word is, but there’s a certain element here that Zuckerberg is sticking it to the Winklevoss twins. He’s saying – But who are, in case you don’t know, considered the world’s first Bitcoin billionaires. They bought a huge amount of Bitcoin with the money that Zuckerberg paid them in their settlement when they accused him of stealing their idea for Facebook. He gave them I think roughly $60 million, something like.

[00:09:49] SH: Social Media. It’s a great movie. It’s that what it’s called? Social Project? 

[00:09:53] FA: It was called – I don’t know.  

[00:09:55] SH: Social – I’m going to get this. Social –

[00:09:58] FA: The Social Network my producer is saying.

[00:09:59] SH: The Social Network. Yes. 

[00:10:01] FA: The Social Network. Clearly, Jesse Eisenberg’s masterpiece. Did not have much of an effect.

[00:10:06] SH: I know. 

[00:10:08] FA: Essentially, getting back to my head, there was a payment that was made to the Winklevoss twins by Facebook and they put a large portion of that into cryptocurrency, into Bitcoin, which is why they are as wealthy as they are. 

Now we have Mark Zuckerberg waiting into the cryptocurrency arena, and clearly, if not trying to disrupt Bitcoin, he’s trying to create his own little niche in the cryptocurrency world and is not letting them get away with it.  

[00:10:37] SH: But why let poor Marky Mark be the face of this? I guess that’s what you’re trying to say, is they’re trying to distance themselves as much as possible despite the fact that it really is Facebook. I mean, the idea that Mark Zuckerberg is going to have my banking information on his home computer, because let’s be honest, he has all my other information on there.  

[00:10:55] FA: He has everything. 

[00:10:55] SH: Everything. Literally, every time I drink a glass of water. I’m sure he knows. 

[00:10:59] FA: That’s why you drink a glass of water and it will say, “Would you like to –”

[00:11:03] SH: Mark’s watching.

[00:11:05] FA: Well, that is something you could take – No. It will say, “Would you like to buy some Evion after you drip buy —”

[00:11:12] SH: Which is my other big issue with Facebook. As an aside, why is there so many ads? Mark, Mark, we need to have a strong conversation about this. I go on social media to see people I know. I do not want an ad for the cat bed that, yes, I did purchase. Yes, it worked. But that’s neither here nor there. Stop giving me ads. 

[00:11:29] FA: Which takes us to an interesting point that might still be the case. I haven’t seen this widely publicized, but when we first heard rumblings of Libra, the concept or the idea was that there was going to be a way that Facebook could reward people for interacting on Facebook. One of the most important metrics is user time spent on Facebook, user interaction, people posting status, people liking status, interacting with the community. 

A while ago, I think there was a feeling that Libra was going to be used as a means of rewarding people for using the platform.

[00:12:02] SH: That’s a different story. I think because what people love getting free money. If it means that they can just scroll through Facebook and doing something that they’ve already been doing for most of the day anyway and they can get money from it, that they can then use to purchase things. That is a whole different story. If there’s a connection there – But to just have your money in a digital currency is not appealing. 

I mean, I think that they do need to tack on. If they haven’t done it already, they do need to tack on that element, because I do think it makes it more appealing.

[00:12:29] FA: Yeah, because you’re not going to get cryptocurrency enthusiasts excited about Libra, because there is no real opportunity for appreciation. I mean, a huge amount of people in like Bitcoin, a lot of that is simply because they like that it does up or that it has been a good investment. Libra is going to be worth a dollar.

[00:12:50] SH: Will always be worth a dollar.

[00:12:51] FA: Zuckerberg is going to do his absolutely best for it to be worth a dollar. None of the cryptocurrency community is going to be that enthusiastic about it. On the other side of that, people who like fiat currency and just want their dollars and not interested in Bitcoin or anything like that at all, they’re not going to trust this online magic money as Sarah said. 

[00:13:07] SH: I mean, I certainly don’t. Mickey Mouse money I think is what I called it.

[00:13:10] FA: A Mickey Mouse money. They’re not going to trust both sides. Really don’t like this. It seems like Facebook are trying to tread the line for regulators to try and get mass appeal, and I think they’re running the risk of having zero appeal to anyone. They’re trying to have a little appeal to everyone and they might end up with a little appeal to anyone.

[00:13:28] SH: I mean, it’s in its early stages. We’ll see what happens once it’s released. I mean, like I said, if they can tack on something with a little bit more appeal that we might see some interest generated. But for now, I’m just not seeing it.

[00:13:40] FA: Moving back to the Winklevoss twins for a second. On Twitter, one of the Winklevoss twins, and I apologize, I can’t remember which one it was because they seemed to like to make sure they’re always the twins. We refer to them as actually –

[00:13:53] SH: Twins do that. 

[00:13:53] FA: Actually, the twins twitted. They do have separate accounts. But the twins twitted that – Well, made a prediction that by this time next year, all of the FANG companies, that’s Facebook, Amazon Netflix and Google, will be launching a cryptocurrency much along the lines of Facebook. What Facebook  is trying to do here is they are trying to get out ahead. These cryptocurrencies, these corporation-controlled currencies, which in many ways corrupt the original purpose of cryptocurrencies. They’re the opposite. They’re basically saying we’re going to create our own currency.

The whole point of cryptocurrency was that it would be decentralized. So they are corrupting the purpose of cryptocurrency here, but they are coming. These corporations, Nike has filed for one. Land Rover, Jaguar. These cryptocurrencies are coming. Now we look around, there aren’t that many of these corporate ones. There’s going to be a ton of them.

[00:14:47] SH: I mean, I think it’s scary to me. I don’t like it. It’s weird. It’s Mickey Mouse money. I’ll say before, I’ll say it again. However, the difference here is that if Facebook is going to be the guinea pig for this new change, I think that they’re going to come out on the bottom of everything because all these other companies are doing so much better than they’re doing. 

So not only are they going to learn from Facebook’s mistakes, i.e. you need some sort of other appeal on it, but also these other companies are just doing better. People use them more. Naturally, they’re going to be using their currency more.

[00:15:18] FA: You can’t deny Facebook’s 2.4 billion users.

[00:15:22] SH: You can’t.

[00:15:23] FA: They are possibly on the decline, but this is still an extremely influential company that is making this foray.

[00:15:29] SH: I’m not sure that users –

[00:15:30] FA: We can’t discredit it. Discredit it in the sense that it’s not significant.

[00:15:36] SH: Yeah, but I don’t think – I guess if you’re using the users as a launching off point, but I don’t necessarily think there’re a ton of people that are technically – They have a profile with Facebook. They’re a user. They’re not actively using the platform. I mean, there are plenty of people who probably haven’t logged into their Facebook in 10 years or however long they’ve had it. I don’t know how long. How long we’ve been around? 15 years at this point, Facebook?

[00:15:58] FA: Possibly.

[00:15:59] SH: Yeah. I mean, but people have them, but they don’t use them. It’s the fact that, yeah, you have whatever billion users, but I don’t actively use my Facebook. People sometimes forget the passwords and never log in again. I mean, it’s because it’s such on the down.

[00:16:11] FA: It’s still a very profitable company and they say that they’re making a lot of effort to protect your data and to be less haphazard with their data, but this is still basically a farm for your data. They’re still profitable because they sell your data to other people. That is the business model.

[00:16:29] SH: Translation, they probably already have access to my bank account.

[00:16:32] FA: Right.

[00:16:34] SH: It’s probably already there. I mean, it’s a natural progression to the fact that you’ve probably already hacked into it at some point.

[00:16:38] FA: At this point, I think privacy online is an illusion anyway, because your credit card company – I apologize. The credit ratings company knows even more than Facebook do. I mean, Facebook might know where you live, your likes. I mean, basically, nowadays, Google Analytics – I can tell your likes, your dislikes, your age. Essentially, where you are likely to shop just from what websites you use. Facebook have even more information than that, and then credit rating agencies have – They know how many apples you buy. They know everything, absolutely everything. 

Actually, there have been big hacks of those recently. Privacy is probably an illusion. We shouldn’t be too concerned that this is going to mean Facebook can look into our money, because they – As you just said, they probably already can, which is again one of the big arguments for Bitcoin and financial independence. But we won’t get bogged down in that today.

Where is Facebook might not be our favorite place to shop? Sarah, would you consider using Libra to buy anything on Facebook marketplace?

[00:17:43] SH: I certainly, certainly wouldn’t. Can’t tell you that enough. Do nose use marketplace.

[00:17:49] FA: Even if they gave you free Libra for posting 50 statuses a day, you wouldn’t be tempted to purchase that bedframe?

[00:17:56] SH: Never in my life, in my life. 

[00:18:02] FA: Be on the lookout for Libra. It will be coming to a Facebook account near you sometime in the next year or so.

[00:18:09] SH: It will not be coming to mine, for clarification.

[00:18:10] FA: We’ll probably be back to do an update as we hear more and we learn more about what Facebook are planning to make use of Libra for. 

Thank you for listening. Please subscribe to us on iTunes or any other platform you might find us. 

[00:18:25] SH: Feel free to leave us a lovely, lovely review. Thanks so much.


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