Letter to Mosendo investors — Libra update
Publicly releasing our letter to investors which we sent out as part of last week’s investor update.
This week, Facebook officially announced the release of their digital currency initiative, Libra.
Facebook and all of the partners involved in the Libra project are some of the largest organizations on earth, and are widely seen as legitimate and trusted organizations. It is highly likely that they will be able to quickly get more users using their digital currency than all of cryptocurrencies put together have been able to achieve so far.
As Mosendo aims to provide a very similar service to what the Libra project aims to do, we’ve been tracking this very carefully and planning our strategy in light of this unprecedented announcement.
While full details are not yet available, we’ve been able to map out a few different scenarios, and the good news is that overall, each scenario bodes well for Mosendo and our mission to bring open money and finance to everyone on Earth.
The Beginning of the Currency Wars
The Libra announcement marked the first time in history that a non-governmental organization creates an international currency of a significant size.
With 2.3 billion Facebook users and countless other users in the Libra partner network, this could be the largest captive audience gaining access to a new currency, ever. No COUNTRY has ever launched a currency with such massive potential on day 1.
Such an unprecedented move will not go unnoticed by not only governments worldwide, but also other mega-corporations who may feel inspired or threatened by the Libra project, and we are already seeing moves by world governments such as France and the US to halt the launch of Libra.
We expect that we will see more similar coalition currencies announced in coming years, from small countries working together to create a regional currency, to mega corporations wanting to cash in on the additional monetization potential of having their own currency. In South East Asia, we are already aware of early talks to exploring what a regional currency might look like.
We expect that major US tech companies such as Apple, Amazon, Google, and Microsoft will seriously consider the threat or benefit of Libra and possibly conclude they should create their own currency. In Asia, we expect the mega-corporations such as Kakao, Samsung, Alibaba, Hanwha, and many others to collaborate with each other and sovereign nations, to form their own coalition currencies.
There is even a possibility that world superpowers start leveraging digital currencies as a form of outright neo-colonialism, and a digital or physical war emerges to make their fiat currency the official currency of the world. As you may know, China is already doing this indirectly through predatory lending practices with African and Asian countries.
As the second and third order effects of the Libra project become clear to those in power, expect to see more Libra-type projects come onto the market and politics start to heat up.
What does this all mean for Mosendo?
We started Mosendo as a way to sustainably solve some of the major injustices we see in the world.
The money system as it is, a system of control for the ruling political class, keeps billions of people in poverty and excludes them from financial opportunities that could be available to them.
The change we want to see in the world is one where all people have access to stable and secure money, and safe and beneficial financial products, services and tools.
This means that people in a country like Venezuela do not suffer from the decisions of a ruling dictator, and are instead enabled to replace the despot.
This means that people all over the world can freely send money to anyone else, across borders, without fear of censorship or loss.
The means that the greedy and powerful are less able to leverage their control of monetary systems to extract wealth from the less powerful.
For us to fix these problems, we realized needed to use a decentralized and neutral platform so there is no possibility for bias or corruption.
We also realized that for this new platform to gain usage, we needed a way to incentivize people to use and encourage usage on this platform. The best way to do this quickly and consistently is by leveraging natural human greed, and design ways for people to either earn or save money using our system.
Thus, Mosendo was born, as a for-profit business that makes using decentralized money incredibly simple, while leveraging token incentive systems for user growth.
We always knew that at some point, major corporations and governments would realize the massive advantages of digital currencies.
We’ve also known that depending on the architecture of the system, digital currencies could be used as a force for good, to reduce and distribute absolute power and make things a bit more equitable, or as a force for evil, a tool for consolidating power and increasing inequality in the world.
We’ve always felt that we are in a race to make the more equitable version of digital currency widely available before more tyrannical versions monopolize the market, and the announcement of Libra certainly turns up the pressure on this timeline.
Now is the time to prepare ourselves for the coming battles, and choose our alliances carefully.
It remains to be seen if the Libra project will turn out to be a force for good or an attempt at creating a future ruled by corporate sovereignty over democratic sovereignty.
Either way, the Libra project actually accelerates our mission in multiple ways, either as an ally contributing resources to the cause, or as a Goliath whose resources can be redirected towards a benevolent cause.
We can use our agility to our benefit and leverage guerrilla strategies and asymmetric tactics enabled by decentralized technologies.
The war is about to begin, and now is the time to defend the future we want.
Libra, friend or foe?
Libra’s marketing materials make many claims that resonate with us, they say they are a cryptocurrency, they say they will finally reach the unbanked and underbanked, they say they are operating an open network that anyone can participate in.
However, when digging into the details, we’ve become skeptical that these claims are true.
Unlike a cryptocurrency, the Libra token is backed by fiat currencies in a bank account instead of provably scarce assets on a cryptographically secure blockchain.
From a consensus level, their network is closed, and only trusted entities are allowed to validate transactions and earn money from doing so.
On the user level, they have stated that all wallets and exchanges must comply with money transmission laws, which immediately excludes the majority of the population who are unable to comply with those laws such as citizens in the US sanctioned Venezuela or the 1.1 billion people without government ID.
So seemingly, they will not be able to provide access to many markets, particularly not the underbanked.
It remains to be seen if they will evolve over time towards a fully open and decentralized network, or if they are simply using these terms to take advantage of regulatory loopholes to run an extractive centralized network.
For now, we will continue keeping ourselves informed on their developments and stay involved with the growing ecosystem emerging around Libra.
We assume that they will be very centralized and conservative in the first few years, which means we will be able to provide access to regions they can not.
Even as a centralized service, they actually provide a few key resources for us to leverage:
- They are directing massive amounts of attention to the cryptocurrency and digital money space which will increase awareness and help legitimize true cryptocurrencies.
- They will build much more seamless fiat on and off ramps in developed markets such as USA and EU. Creating trust-less p2p OTC swaps on Libra is much easier to accomplish since their ledger is open for Ethereum smart contracts to read. This enables instant fiat/crypto settlement.
- They are opening up a massive digital identity system that can be leveraged to seed a decentralized identity protocol and enable decentralized reputation, credit ratings, and cheap unsecured lending.
- They will attract the attention of all regulators worldwide, paving the way for other cryptocurrencies to hide in their wake.
- While we currently think it is unlikely, should they prove to be an ally for a decentralized and equitable future down the road, we can more deeply integrate their currency into the Mosendo ecosystem.
Moving forward
We continue to build on the Ethereum ecosystem and using DAI in partnership with the Maker Foundation.
Ethereum and DAI continue to be the most usable, decentralized, censorship resistant cryptocurrency available today and the best way to deliver on the mission of Mosendo.
We are discussing with other Ethereum teams different ways of building Libra to DAI bridges or swaps, and since the testnet of Libra is available today, the technology to bring Libra liquidity to the DAI ecosystem should be ready whenever Libra goes live in 2020.
The next 6 months are critical for the Ethereum and decentralized technologies ecosystem as we simply must get the user experience problem solved in order to stay a step ahead of Libra.
We are looking forward to releasing Mosendo this summer with a seamless experience which allows people to send money as easily as they can send emails.
Thank you for your ongoing support in the coming battle for the people’s money.
Sincerely,
The Mosendo Team
PS. If you’d like to share your thoughts on this letter, we’d love to hear them. Please email us at rossco@mosendo.com & tom@mosendo.com this might just be one of the most important discussions of our time.
PPS. Want to get involved with Mosendo?
