Have you read about Libra, the new cryptocurrency by Facebook?
If Facebook has disrupted traditional media, have you thought of how Libra will disrupt traditional finance? And what does this future mean to you, your career, your business and your life?
As I was reading the technical whitepaper of Libra this morning, I was super excited. Because I believe that while the first era of the digital economy was sparked by a convergence of computing and communications technologies, the next era Industrial Revolution 4.0 would be powered by a clever combination of computer engineering, mathematics, cryptography and behavioral economics.
Here’s my thoughts on 3 things that you must know about Libra that will affect your business and your life.
1) The Future of Finance
The rules of money were created by central banks that was controlled by a very few people on the top of the financial food chain. As time passes, the game of money has yet evolve as the people who were later fed into the system were often burdened by legacy and culture despite wanting to make a difference. The fresh approach of ‘Facebook and friends’ is a huge advantage. In fact, many of the great innovations that have changed the world were consummated by outsiders.
Netflix wasn’t invented by Blockbuster.
Spotify wasn’t invented by Tower Records.
Amazon wasn’t invented by Barnes & Noble
Well… You get the idea.
While Facebook won’t fully control Libra, do take note that the new subsidiary of Facebook, Calibra, is the company to build financial services and software on top of the Libra blockchain. Thanks to its proximity to the technical development of Libra, and its ability to leverage WhatsApp, Messenger, and Instagram, Calibra could very well become Facebook’s next big thing to disrupt financial services, which includes banks, insurance, fund management, loan, etc.
Yes! The next guys who will be disrupted are the central banks and traditional financial services institutions!
Therefore, if you’re working for the ‘Blockbuster, Tower Records and Barns & Noble’ of the financial industry, be very fearful because the ‘Netflix, Spotify and Amazon’ of the new financial services industry is coming!
2) Change or You’ll Be Changed
Among Facebook’s applications for Libra is cross-border payments, otherwise known as remittances. People who want to send money internationally would transfer funds between local currencies and Libra, rather than pay a bank like Western Union a few to transfer the money.
No wonder Western Union shares drop on fear that Libra will take money transfer business. In fact, Western Union was one of the worst performing stocks on the S&P 500 index during Tuesday trading.
The logic is simple… Why does Western Union need 500,000 points of sale around the world, when more than half the world’s population has a smart phone? It’s faster to mail an anvil to China than it is to send money through the banking system to China. Money is already digital, it’s not like they are shipping pallets of cash when you do a wire. Western Union will not be the only company facing disruption. In fact, I believe there will be many more companies and jobs out there that will be disrupted.
Think about it…
Accounting have become known as the language of finance, unintelligible to all but a few disciples. If every transaction is available on the blockchain, then why would we need public accountancies to translate for us? Blockchain also lowers and sometimes eliminates trust altogether in certain transactions. So, what’s the future like for auditors, trustees and lawyers?
3) New Business Models
With the rise of a global peer-to-peer platform for identity and reputation (Facebook) and trust and transactions (Libra), we can finally re-architect the deep structures of a business for innovation and shared value creation.
Smart companies will work hard to participate fully in the blockchain economy rather than play victim. In the developing world, the distribution of value creation (through entrepreneurship) and value participation (through distributed ownership of the firm) will hold the key to the new rules of wealth creation.
As of today, the Libra Association has 28 co-founders, including MasterCard, PayPal, Visa, eBay, Spotify, Uber, Lyft, Vodafone Group, Andreessen Horowitz, and of course, Facebook. In total, it hopes to work with more than 100 members and to make Libra Blockchain open to everyone — consumers, developers and businesses alike.
Facebook is going to be the first of many of such enterprise that create platforms and they are opening up their products and technology infrastructures to outside partners to co-create value or new businesses.
And this brings the birth to the world of prosumers; customers who produce. Prosumers communities will be the heart of new, networked models of value creation!
The inconvenient truth is….
If Libra truly becomes successful, it is destined to become a game changer to our human history. It will be disruptive to many. But always remember that in a crisis, wealth is never destroyed. It’s merely transferred from one side to another. The question is… Which side are you on?
As for myself, I’m pretty excited about the potential Libra. On whole, I’m excited about the massive wave of innovation that is being unleashed and its potential for prosperity and a better world. And to be alive to witness one of those critical junctures in human history.