Why IOUX should benefit from Libra
By Edward W. Mandel
At IOU.io, we are pleased to welcome our newest competitor, Facebook.
You may have heard that this scrappy social media startup has launched its latest venture, a digital asset known as Libra.
Libra’s libretto
Within five months of his company making its first purchase of a blockchain development shp, CEO Mark Zuckerberg had a white paper onlineand some rough code in GitHub.
So what does this white paper tell us about the new Zuckerbucks?
“Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people,” the document begins.
Tall order.
“Blockchains and cryptocurrencies have a number of unique properties that can potentially address some of the problems of accessibility and trustworthiness,” the authors say, and I agree. “But the existing blockchain systems have yet to reach mainstream adoption. Mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.”
So how does the social media platform for the CompuServe generation intend to do use blockchain to empower the unwashed masses?
Facebank
Any currency — crypto or otherwise — is predicated on its users’ perception that it’s worth something. In bitcoin’s case, its liquidity makes the case that it can be used readily as a substitute for fiat currency to make transactions, and its unit price history over the past couple years has clearly demonstrated that, although we don’t know objectively what it’s worth, we know for a fact that it’s worth something more than about $3,500. IOUX, meanwhile, is predicated on the market’s judgment of the creditworthiness of the individual holders. Basically, everyone who trades in IOUX serves as their own central bank, issuing notes just like the Federal Reserve.
Libra takes a markedly different approach.
“Libra is fully backed by a reserve of real assets,” the paper continues. “A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value.”
Let’s remember that Facebook itself is the world’s 274-biggest company by revenue with assets in the neighborhood of $100 billion, so it’s well-placed to back up its own, personal currency. Each one of its partners has also agreed to pony up $10 million to get Libra off the ground.
America’s leading centralized exchange Coinbase is part of the launch and, as for payment processor, both Mastercard and Visa have signed up with Libra, as have PayPal, Stripe and PayU. There are also a number of online retailers committed to accepting Libra, as well as some charities who will take contributions denominated in that asset.
So Uber, Lyft, eBay, Spotify and Booking.com are among the retailers that will accept Libra on Day One. If you want to donate to Kiva or Mercy Corps and you want your contribution to go to operations rather than processing fees, Libra can help you out there too. That’s a pretty good start. You can hardly ask for a better wide-end-of-the-marketing-funnel than (still!) the world’s largest social media platform.
Aside from the Facebook platform itself, though, Zuck’s company owns the much more youth-skewed Instagram. It also has WhatsApp as well as Facebook Messenger. Any and all of these can serve as conduits for moving value from one account to another, irrespective of borders and without middleman fees. (With both Visa and Mastercard on board, let’s see how long that lasts.)
Why IOUX stands out ahead
As we keep emphasizing in this space, IOUX is not intended as a cryptocurrency in the way that bitcoin or Litecoin is. It’s essentially a utility token that enables you to participate in all the features available on the IOU platform. If the market decides there’s a speculative value beyond that, we can’t stop that — but we can and do reiterate that this was never the intended purpose and we can and do counsel against trading IOUX as a significant part of your financial portfolio.
But Libra also defies definition as a cryptocurrency, for the same reasons as well as others.
Libra is a stablecoin. That is, you can expect it to be pegged 1:1 to a fiat currency, most likely the U.S. dollar. Stablecoins might be considered cryptocurrencies, I suppose, but they’re really just a dollar’s worth of digital signatures.
IOUX is a utility token — that is, something intended as a tool to be used on-chain rather than as a universal currency or an asset to be traded on speculation. But what utility tokens, security tokens and cryptocurrencies have in common is that they have a consensus protocol — a way of making sure that every unit of value transferred is counted exactly once.
Libra has one to, and looks like the one that Ripple uses. which is predicated on Byzantine fault tolerance. In my other blog, I recently rantedabout how Ripple “is unique among major cryptocurrencies in its friendliness to legacy enterprises.” It has ongoing relationships with Bank of America Merrill Lynch, American Express, MoneyGram, Santander, Standard Chartered, Westpac, BBVA and, among many others, the aforementioned Visa which is also partnered with Libra.
In short, Libra is custom-made for private, permissioned, highly centralized blockchains. That, in itself, is not a bad thing, as long as we all understand that Libra users will have their transactions intermediated by a company with enough assets on its books to function as a central bank, but also one that has a checkered-at-best history of keeping your personal and financial data confidential. Check your account setting, is all I’m saying. Make sure you’re not giving consent by default.
Rising tide?
IOU.iosees all this as positive for the IOUX token. Facebook’s sudden interest in having a similar asset on offer does one thing for us that it would take us years to do for ourselves: get our business model in front of a mass market.
We know our place. It’s Mark Zuckerberg’s world and we just live in it. We know we’re not going to eat his lunch. But it was sure nice of him to offer to buy ours for us.
Edward W. Mandel is a strategic advisor for IOU.io , he is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.io P2P Hedge Exchange helping traders connect with each other to leverage their crypto assets.
IOU is a blockchain-based peer-to-peer platform designed to unify ecommerce transaction and customer retention processes, incorporating trade-able IOUs. It is currently raising capital through ICO. The platform can be found online at IOU.io and its community on Telegram at https://t.me/IOUCommunity.
