This has been an exciting week in blockchain, not only did Zuckerberg testify for Libra, most impressively president Xi outright stated China will seize opportunities created by the blockchain technology and become a global leader in the space. I want to take a quick moment here to share some of my thoughts.
Although Zuckerberg explicitly states Libra is not trying to replace sovereign currency, stablecoins definitely has the potential to disrupt the US dollar as a reserve currency.
The commonly accepted idea is third world countries can benefit the most from blockchain backed finance. Over a billion people do not have access to banking services, but many of them do have access to mobile phones. A simple and easy to use mobile banking could dramatically improve the quality of their lives. With obvious benefits, blockchain backed banking and stablecoin could potentially quickly spread and gain dominance.
However, the benefits gained from blockchain backed finance applies in all countries, not just in the third world. Currency has a strong network effect, the more people that use the same currency, the more valuable the currency becomes and the quicker its user base grows. If enough people in the world uses such a stablecoin, it could (in theory, although very unlikely due to sovereignty) unseat USD and become the new reserve currency for the world.
President Xi’s statement in support of blockchain technology comes after a long period where China’s stance is uncertain–and is a very much welcomed clarification, especially with the USA’s comparatively colder attitude. Here I would like to point out that, Libra’s basket of currency includes 50% usd, 18% euro, 14% japanese yen, 11% britsh pound, 7% singapore dollar–but notably missing RMB.
Zuckerberg is right that whichever nation launching a dominant stable coin, boosted by early mover advantage, will gain significant global financial leadership. On that note, it can be argued that the USA has the most to lose if another nation launches a powerful stable coin first. However, I don’t see anything in his argument that argues for why Facebook and why Libra.
In closing, I am invigorated by President Xi’s support for blockchain technology, and I hope other nations will soon follow. ThunderCore is a global team, and our products reaches people all over the world. We will keep doing what we do best–deliver the best in blockchain technologies and deliver the tangible benefits of this technology.