22 Nov 2019
Welles Partners thinks Facebook’s Libra is a game changer in the cryptocurrency world. This is the fourth and last article of a series which explains why.
Why is Libra a game changer for Welles™?
A simple answer is the size of its commitment.
Facebook plans to address the needs of 2 billion unbanked people in the world. Facebook plans to hoard a reserve of 200 billion USD worth of a basket of fiat currencies, to address the stability of its currency, thus earmarking the appellation “stablecoin”.
The current market value of all cryptocurrencies is around 250 billion USD worth. Facebook is just doubling the market for all the financial industry which is serving this segment, more specifically the so called “tracking services”.
We at Welles Partners prefer the term “tracing services”, in the sense that with our product Welles™, we report the compliance degree of a known crypto-deposit at time t, and give an assurance that it was compliant at that time, but we do not track it henceforward.
Even though Facebook issues its own currency, this latter remains connected to other cryptocurrencies. Companies that have joined the Libra Association, which are either working with blockchain technologies or payment systems, like Coinbase, Xapo, Anchorage or Stripe, envision Libra as on onramp to other cryptocurrencies.
People who would like to own Libras will have to “purchase” them in the first place, on “exchanges” marketplace like Coinbase or Xapo or Anchorage, with deposits which, sooner than later will be labeled in cryptocurrencies, thus raising the demand for more “tracing services”.
On the other hand, cryptocurrency markets are like any other security markets. People come in, people get out. In getting out, they will be using the same instruments, the same tools like when they were managing their crypto-deposits, a wallet on a mobile phone or a tablet, more so the younger generation who are brought up using these devices. It would be no wonder that they would choose a channel which has similar characteristics like the markets they leave. They would certainly find it more convenient to convert to a stablecoin like Libras. More traffic through the exchanges, but at another scale. More “tracing services”, in bulk.
In other words, yes, if Facebook’s Libra flies, it will benefit Welles™
Stay tuned !