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CoinTalk™️ is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at email@example.com)
Aaron Lammer: Hello and welcome to CoinTalk, the semi-official podcast of Libra, formerly known as GlobalCoin, formerly known as Facebook Coin.
Speaker 2: This episode of CoinTalk was taped Tuesday, June 18th at 1:00 p.m. Eastern Standard Time. The Bitcoin Price Index was $9,001.
Aaron Lammer: Hello, Jay.
Jay Kang: Hey.
Aaron Lammer: I speak to you on a historic day.
Jay Kang: Yes. Happy Libra Birthday, I guess it would be. Or Happy …
Aaron Lammer: Yeah. Could we call it Liberty Day or is that getting in on the 4th of July’s turf?
Jay Kang: Yeah. Also, I don’t know if they are related. They do sound alike though.
Aaron Lammer: Well could we talk about that?
Jay Kang: I think we can just say that it is the birthday of Libra. That is what it is. Libra was born today.
Aaron Lammer: I feel like we spent our last episode somewhat hilariously talking about how the name GlobalCoin was the villain in an ’80s movies with time travel, not realizing that GlobalCoin was not actually really going to be the name of the coin. They actually decided to go with the code name, which was Libra. If we thought last week it was GlobalCoin, just give me a quick review of Libra as the title.
Jay Kang: Okay, there’s two takes that I have about this. The first is that I saw somebody speculating on Twitter and I had the same though, which was that, “Hey, Libra. It’s a astrological symbol.” Do you know what else is an astrological symbol? Gemini.
Aaron Lammer: Facebook? Oh, Gemini.
Jay Kang: There is some speculation about whether or not Zuck called it Libra just to troll the Winklevoss one more time.
Aaron Lammer: I like it.
Jay Kang: I don’t know if that is true. I hope that he’s not that petty, although I imagine he is. If it is that, then I like it, obviously because I’m a hater and I enjoy things that are hate filled. But in terms of normal names, listen, I am generally of the thought having worked at a place that had a name that everybody was like, “What the fuck is that?” This being Grantland. Then within two months, everybody forgot about it and all the implications with Grantland [inaudible 00:02:41] the old sportswriter fell away and then it was really just a name that meant nothing.
Jay Kang: I thought that that was good because some of the other names that we were kicking around that people seemed to like, like the Goat or some other names that I won’t even say right now because they were bad, they carry with it a little too much baggage. I think for something like Libra, if you want it to be big, you want it to be expansive, you want people around the world to be able to say, then yeah, it’s totally fine and means nothing. That’s the best type of name for it.
Aaron Lammer: This is going to be the point where you and I, I think I revealed, as overall Libra mega bulls. I guess that’s not a shock for anyone who’s been listening, but I almost feel like Libra is a rebrand of Facebook itself. The name Facebook sounds so 2010, like MySpace competitor, like have you ever heard of Friendster kind of vibes? It’s just so locked into this very dated, college identity book idea. Libra, especially the money symbol, the three waves, which looks like it’s something that’s on a weird avant-garde card game that you see people playing with different shapes and colors, it’s so neutral.
Jay Kang: Yeah, yeah, yeah. I actually know exactly what you’re talking about. It looks like …
Aaron Lammer: Yeah, what is that game?
Jay Kang: Like Illuminati, New World Order. Are you talking about that card game?
Aaron Lammer: Yeah, yeah. I think we’re on the same trail there.
Jay Kang: That game was great, by the way. We don’t have to talk about it. But man, I loved it.
Aaron Lammer: It’s just totally neutral. It’s almost like you don’t even need to say Libra. Eventually you would just be able to paste that symbol or that. It reminds me of the dollar sign and how it’s emoji like in its ubiquity. It just speaks so much with so little. Libra, I guess, has different connotations in different cultures. You’ve got it’s a little close to book in Spanish, it’s a little close to liberty in English, it’s an astrological sign which people all over the world are about. I feel like people love astrology.
Jay Kang: People love astrology. This is not investment advice.
Aaron Lammer: It’s almost like if you imagine Zuckerberg. You know how there’s those me versus how I see myself, I feel like we were onto something with the whole Marktoshi Zuckermoto thing. I don’t think Zuckerberg likes to think of himself as a CEO of a publicly traded company now. I think he likes to seem himself more as a grand thinker in a slipstream of time. Libra is like a grand coming out of what if I did something that wasn’t Facebook? What if it’s not even a company at all. It’s just a consortium of credit card processors and Uber.
Jay Kang: I totally agree with you. I think of the DNA of it as the same as Zuckerberg’s other projects, in that he will just copy something or he’ll just acquire it. The big question for the past five years, in terms of the tech market here in the United States is that you go to China and you see that people don’t carry cash around. Then you go to a city like Shanghai. There isn’t a single person who is paying with cash except for foreigners and tourists. They all pay with their phone, and they all pay through WeChat or some messaging app’s payment layer.
Jay Kang: On that level, look, the most simple explanation is that Zuckerberg wanted that, and this was his way of fixing it and trying to fit within U.S. regulations, and be like, “Okay, we’re going to have this coin that you can use and it’s going to be like WeChat payment.” But I think that the way that this thing was rolled out is not that. It is rolled out in this grand international way, talking about freedom, talking about accessibility, talking about like in the video, there’s this phrase like, “What if everyone in the world had the same access to the same economic opportunities.” That’s a huge statement and it’s the type of statement that Bitcoin permeable is like, and [inaudible 00:06:55], or even Roger Ver have been saying for 10 years.
Aaron Lammer: True prophets. Pre white paper evangelists.
Jay Kang: Exactly.
Aaron Lammer: Firework salesman by day, future predictor by night.
Jay Kang: I do think that it reflects how Zuckerberg sees himself now, which I agree with you, it is not as a CEO of a big company that is trying to “keep the world connected through updates”. It is an entire new way of living in the economy that he thinks that Facebook can do through its connectivity.
Aaron Lammer: Okay, so I want to … Let’s recap for people who are listening who don’t do things like waste their time reading about Libra. Libra is going to be run by Calibra, which is some kind of a nonprofit foundation based in Switzerland, hold your laughter, that is some ways representative of both Facebook and the 27 launch partners who are all coming together. I guess, I don’t know if you have to be a node buyer to be among those 27, I would think you probably do. So those people are in for at least 10 million. They’re all going to come together and form Voltron in the same Swiss valley where Tezos got defrauded.
Jay Kang: Wait, are they in that valley? Do you know?
Aaron Lammer: I don’t know. I shouldn’t say, they’re not in that valley. They’re just somewhere in Switzerland. But look, when a nonprofit bases itself in Switzerland, you can write the rest of this movie, you know where this is going. Facebook is not based in Switzerland. This is a classic responsibility dodge by Facebook. It’s just like [inaudible 00:08:41] like, “Hey, we became the new media, but it’s not our problem what gets published on here.” I think they want to be the bank, the payment processor for the world, but they don’t want all of the headaches that come with it. They don’t want to be blamed when people use Libra for money laundering, and crime, and all kinds of stuff which people are totally going to do if Libra succeeds.
Jay Kang: You think so? You think that they would feel comfortable connecting their definitely identity with their photo and everything like that to …
Aaron Lammer: People do that shit on Venmo. I think so. Maybe not on the scale of Monero, but I think Facebook is so international. All the things you see, the problems Facebook has, it’s because Facebook is everywhere. When there’s a person stoned to death in some place in the world because of a rumor that started on Facebook, this is because Facebook is everywhere and it’s the primary conduit for information in many places in the world. I believe if it becomes a primary conduit of money, it can’t help but suck some real dark shit along with it.
Jay Kang: I don’t disagree with that, but I don’t think that’s why they’re in Switzerland. I think they’re in Switzerland because there’s no financial regulations that are going to be placed upon them as a autonomous body in Switzerland.
Aaron Lammer: I agree with you there. I don’t mean that Switzerland is the solution to that problem, I mean in general, making Libra not part of Facebook is the solution to that problem.
Jay Kang: Okay, so let me recap a little more of what happened today, because I think they released a lot of things at once. First, there was this video that you and I talked about already. It is a lot of international faces. I guess I’ll put it that way, people from all around the world. The messaging is not about you can buy a coffee at your coffee shop. With Libra, it’s more like the unbanked can become banked, which is something that anybody who is interested in Bitcoin is very familiar with.
Jay Kang: They also put out this White Paper, which you and I speculated about at least, a lot last week. Did you read the White Paper, Aaron?
Aaron Lammer: I skimmed it. I skimmed it.
Jay Kang: I’m going to read you a little part of that from it and I want you to respond to it. The first is the mission statement, “Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people. This document … “ blah, blah, blah, blah, blah. Okay.
Jay Kang: Then this is their problem statement, “The advent on the internet and mobile broadband has empowered billions of people globally to have access to the world’s knowledge and information, high fidelity communications, and a wide range of lower-cost, more convenient services. These services are now accessible using a $40 smartphone from almost anywhere in the world. This connectivity has driven economic empowerment by enabling more people to access the financial ecosystem. Working together, technology companies and financial institutions have also found solutions to help increase economic empowerment around the world. Despite this progress, large swaths of the world’s population are still left behind, 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access.”
Jay Kang: That’s the first thing that the White Paper says. Those are the first words outside of, “Hey, this is a White Paper about Libra.”
Aaron Lammer: It’s like they’ve been listening to CoinTalk.
Jay Kang: What is this? What do you think the significance of that is?
Aaron Lammer: Well this is what we’ve been talking about on the show for the last year and a half, that the actual part of the world where crypto or let’s not even call it crypto, let’s just call it fake internet money, the place where fake internet …
Aaron Lammer: We started out wanting to do this show because we were interested in fake internet money. The part of the world that will be most profoundly affected by fake internet money are the people who do not currently have a bank account. Every single criticism I’ve seen of Libra is like, “Well how does it really compare to Venmo though?” It’s like, “You can’t get a Venmo account without a bank account. You can’t get a PayPal account without a bank account.” There is half of the world that’s still in an addressable market. If there’s one thing Facebook has proven, it’s that they’re trying to convert every person on earth.
Jay Kang: Yeah, and every economic system on earth now because it used to just be like … The last wave of fear monger … Edit, not fear mongering but legitimate fear about Facebook .
Aaron Lammer: Jay, where should I send your Libra payment to?
Jay Kang: You mean where should Facebook send their Libra payment to me?
Aaron Lammer: Yeah, yeah, yeah.
Jay Kang: I will say …
Aaron Lammer: The last time people were dropping Facebook [inaudible 00:13:24].
Jay Kang: It was over the fact that Facebook was the ISP provider, being redundant, but being the internet service provider for entire countries, emerging economy countries. The argument was essentially that Facebook has too much power because it is the internet in these countries, it is the information infrastructure, and they can do whatever they want with the internet in those countries.
Jay Kang: This is the next level of that. It is basically not only will we control the internet in these countries, we’ll also control the entire economy and we’ll be the banking system. That is a really ambitious statement and I think it is a right one for them to come forward with. How do you feel?
Aaron Lammer: Okay, beyond … I feel like we put a giant asterisk on all Austrian school economics that come up on this show. I’m not sure I think this is a good thing. But if let’s say I was a Facebook shareholder who wanted to see Facebook make money, yeah I think this is a great strategy. This is what Facebook has always wanted. They were basically giving away Android phones in the developing world, and they were just Facebook phones, and the minutes are all through Facebook. Facebook has basically been trying to convince you to do everything on your phone through Facebook and by proxy your entire life for five years. It’s possible that Bitcoin actually was the killer idea for them to clone.
Jay Kang: Yeah, I agree. I think that this is something that somebody told me who I trust quite a bit about a year ago when Bitcoin was crashing, and I was like, “Well what do you think is going to happen next with it?” He was like, “Look, it’s going to bottom out and then somebody else in Silicon Valley is going to come up with a version of it that’s better, and that will be close to everybody,” not in terms of the currency will be close to everyone, but the speculation will be nonexistent. The people who will make money off it is that company and their shareholders.
Jay Kang: I think this is the first step in that, the first real step in that, much moreso than Coinbase or venture capital places that are invested in blockchain projects. I think we saw this past week that IBM basically laid off their entire blockchain division, which some people had speculated with was going to be the first real foray of a big corporate tech and any getting into this. This is it, this is the big vision, this is the big swing, and this is the thing that if you are weary of Facebook, this is the thing, I think more than any other thing they’ve done maybe in their history that you should be afraid of.
Jay Kang: I personally, as somebody who is weary of Facebook, am terrified of this, and it’s just going to work, I think. That’s why I’m scared of it.
Aaron Lammer: Yeah, I think it also makes Facebook too big to fail in a way that’s very dangerous. We’re basically in the midst of discussing dismantling the big tech entire economy in America. Now I’m not particularly optimistic that’s going to happen, I’m not even positive whether I’d want it to happen, at least in the way that it’s being discussed, but it’s certainly on the table.
Aaron Lammer: You basically have Facebook here striking out as its own nation state. If Facebook connects more people on earth and all of their money, what really is a country? I’d rather just have all that. I’ll take Facebook. They’ve got all the valuable shit and they have also the ability to selectively obey international law, which makes them incredibly powerful.
Aaron Lammer: I was reading about Libra and it’s like, “Well, you’re going to need to send in your driver’s license if you want to process a transaction.” It’s like, “Okay, seems like you guys are playing by the book in the U.S.” But I’m like, “What do you think is going on all over the world?” Most of the world doesn’t have regulations on this stuff. Facebook’s just going to do whatever they want.”Any of the, “Oh, it’s a different company. We have these commitments to privacy,” you can just look at Facebook’s track record. I don’t need to say something negative here, but I just don’t believe that all of this data is not going to get paired up with your Facebook data, which is your location data.
Aaron Lammer: At this point you have basically a device in everyone’s pocket, everywhere they go, every cent they spend. Facebook, it’s going to run out of data to collect about you. They’re going to be like, “We got it. We got all the people and everything they ever did. Our value has now peaked in that there are no more people. We’d have to find another solar system in order to expand our surveillance system.”
Jay Kang: I tweeted about this, this morning, but I was looking through Instagram last night and there was a targeted ad for a gold embossed and signed edition of Fight Club.
Aaron Lammer: I saw this very ad. This is maybe my fourth conversation about this ad, and there’s something clearly profound about it. It’s partially that the man who’s carrying it in the ad is the saddest looking square.
Jay Kang: He looked so sad. Yeah. But I had this on and I was like, “Okay, so how did they arrive at I wanted to read this?” It was like, “Well, it seems like he tweets likes he’s tough, he’s 39 years old, he might be involved in the media industry, he seems to have some expendable income to spend on a $111 book. Here, let’s serve this up to him.” I just was like, “All right, fine. You got me. That is who I am.”
Jay Kang: Now the one thing that you missed on is that I have no interest in buying a gold embossed book, nor do I particularly like the works of Chuck Palahniuk. But there is a version of this that is one degree off that I would have just bought.
Aaron Lammer: See that’s what I’m saying. I’m like it’s easy to be like, “Wow, that AI is extremely dumb. It thought that the author that you were going to go all-in on was Chuck Palahniuk.” But if it offers you the signed first edition, [inaudible 00:19:30], like, “Oh, all right. We’re getting a little closer.”
Jay Kang: It’s not even that far away, it’s literally if they just picked Dennis Johnson who is like … I think Dennis Johnson is a much better writer than Chuck Palahniuk, but they are next to each other on every single shelf. The people who like one genre, they like the other. They just needed to offer me that one and I’d be like, “Sure, $111.”
Aaron Lammer: Look, the algorithm is not perfect yet. But look, if they can have all of your financial transactions, they can get better at this. Jay, just start buying your books on Libra and everything’s going to connect.
Jay Kang: Yeah, I know.
Aaron Lammer: Can I give you a take that it’s probably the hottest take since your Libra is for the people, Bitcoin is for the bourgeois take?
Jay Kang: All right, that take is great. I listened to our show from last week.
Aaron Lammer: [inaudible 00:20:16] aging very well as is our you should buy Facebook stock for its crypto.
Jay Kang: Oh yeah, that one I’m so mad I didn’t listen to our own investment advice. It went up 4.4% yesterday.
Aaron Lammer: We had to sell the Facebook bottom so others could succeed where we failed. It’s okay. We’re prophets, literal prophets.
Aaron Lammer: Here’s my take. The thing that Libra most resembles to me is a airline rewards point scheme. You have this graphic that shows the launch partners and it’s like, “Visa, Mastercard, Uber, Spotify,” and then going on down, it’s like all giant companies. Your first knee-jerky crypto [inaudible 00:21:03] thing is like, “Wow, I’m sure glad that Visa and Mastercard are securing this blockchain for me.” It’s ridiculous. It’s the theater of the centralized.
Aaron Lammer: Okay, once you get beyond that and you think practically, stop thinking like a crypto person, just think about a person who does things in America and spends money like a normal person. A lot of these services like Spotify, Uber, you might just go like, “Okay, I’m putting a few hundred bucks a year into each of these. I just know I do.” Much like the Amazon credit card, which gives you a 5% discount on anything at Amazon or Whole Foods, what I …
Jay Kang: You showed this card eight times on our show, by the way.
Aaron Lammer: You know where to send … Amazon and Facebook, you both owe me a check. This is truly the show of big tech. We are the only pro big tech show in the entire [inaudible 00:22:00].
Aaron Lammer: I guess what sells me is the discounts. That’s what hooks you into the whole credit card system is airline points, loyalty, all this stuff. If Libra is a way that I can get more money back than when using a credit, and I am that kind of person who looks on blogs about maximizing airline points and that stuff, that’s a powerful lure and I could see Libra becoming mainstreamed in America basically as a discount loyalty scheme where these companies are on Libra, you pay Libra there and you get back a lot on Libra. They can do it at zero margins.
Jay Kang: I don’t know. Does it really even have to be that complicated? Can it literally just be like, “I don’t want to go into the ATM and so I’m just going to pay with Libra instead,” as a substitute for cash?
Aaron Lammer: Can it be? I could feel like it can be all of the above.
Jay Kang: It can be both.
Aaron Lammer: Just like credit cards are all of the above. Credit cards are convenience, but they’re also great for e-commerce, but they’re also great if you don’t any money and are borrowing money. They’re not great, that’s actually a terrible idea, but it’s great for the credit card companies. I guess they’re like, “Hey, as long as you’re doing business with us, great. But I think the way to … “
Aaron Lammer: The way to convert the world is the video we saw. It’s the remittances, it’s zero fees, international transfers. That’s going to be going over like gangbusters. Facebook doesn’t need to make money on it, so they can do it cheaper than anyone else, except Ripple. Sorry, Ripple, you are the biggest loser of this episode.
Jay Kang: Oh my, yeah. XRP and Facebook.
Aaron Lammer: Sell your XRP, that’s my non-advice.
Jay Kang: Although they bought MoneyGram, so there is this idea that maybe they’ll still compete.
Aaron Lammer: Maybe.
Jay Kang: Especially in countries that don’t have Facebook but whatever. Outside of that, I think I have another nuclear take, although maybe it’s not. Maybe it’s just logical.
Aaron Lammer: It might be just more dirty bomb scaled.
Jay Kang: The thing that I’m very … The thing that interests me the most was while reading all of this, and watching the video, and reading a lot of peoples’ reactions this morning, which I think were pretty good. I think people did … Most of the reactions I read I thought were pretty smart, except for people who were just like, “Ha ha, LOL. Crypto.” Nobody who tweeted that really seriously thought about it very much. I don’t blame people for hasty takes because I spit them out all the time.
Jay Kang: But I was just thinking about it in terms of Facebook’s power, if you think of Facebook as a country. Think of it as a sovereign government and you have a big amount of a population of a developing country that is relying on Libra, and a lot of their money is in Libra, the way that they take payments is on Libra, their tourism economy is dependent on Libra, the way in which they handle remittances of people who go abroad and work is dependent on Libra.
Aaron Lammer: Their political bribes are paid in Libra.
Jay Kang: Yeah, yeah. How much power does Facebook have over that country. It’s crazy.
Aaron Lammer: Too much.
Jay Kang: Way too much. Imagine there’s an election and there’s a party that says, “Libra has too much power,” or there’s a push to get rid of it. There’s no way they’re going to be able to get rid of it, there’s no way that Facebook isn’t going to be able to exercise immense political power. Just saying, you’re going [inaudible 00:25:27]. Fine, then we’ll just leave and you’re going to screw over every single person in your country that has any sort of investment in Libra. It makes it an intractable part of the economy with massive political power. That’s really scary.
Jay Kang: Look, zero dollar remittances or zero dollar percent fee remittances is all you basically have to do to make that a big deal in a lot of countries, but then when it’s matched with all this banking stuff that could possibly happen or countries that have unstable currency systems, oh my god, the amount of rich people, especially in those countries, they’ll be dependent on Libra to try and have a financial stability outside of their own currency is going to be massive.
Aaron Lammer: I think when you started into that, “Imagine this scenario,” both of us were thinking of a continent that is not North America. We were thinking about countries with more unstable economies and more unstable political situations.
Aaron Lammer: However, the more you go in on that analogy, that country is America. We are currently trying to break up Libra Voltron in this country. If you just call it Facebook Coin, which is what it is, I don’t think we should necessarily give them the benefit of the doubt and being like, “It’s totally independent, run by a very well run Swiss foundation.” No, it’s Facebook Coin.
Jay Kang: It’s Facebook Coin. All right.
Aaron Lammer: Facebook Coin is trying to needle its way into the American economy at the same historical moment where the American and political class is trying to regulate Facebook. That is not a dystopian future, it’s 2020. This stuff is going to come to ahead and I agree, I think it’s pretty disturbing, and it’s definitely something I hope fails, although the gambler in me is like, “I kind of like how they played that hand.”
Jay Kang: Yeah. Look, I think that this is their best idea. I think it’s their most powerful idea maybe ever. I really want it to fail. I just think the idea of having one person who is essentially the world dictator of all these small countries, and has all this political influence, and controls their economy and can spread whatever he wants through their internet, that’s terrible. It is a terrible vision of the world.
Jay Kang: Even if I liked Mark Zuckerberg, which I don’t, I would be terrified of one person really holding that much power. I just don’t know what can be done about it at this point. I don’t know how you stop it.
Jay Kang: Now there is a news item we wanted to talk about, which is that France has already announced that they’re going to regulate the shit out of this.
Aaron Lammer: J’accuse!
Jay Kang: Yeah. Which it was heartening in some sort of way. I think when you and I were talking about it on Telegram, we were both like, “Oh my god, at least there is an immediate response to this thing where people do see the threat of it.” But I guess from again, just putting on my poker hat when people respond very strongly, it means they are very afraid. I think that France’s immediate incredibly strong statement against it shows that it doesn’t matter. All these people can scream all they want, it’s still going to work.
Aaron Lammer: I’m going to just say as a market speculator that [foreign language 00:28:54] was a bullish sign to be. I was like, “Great.” Yeah, I was like, “Oh … “
Aaron Lammer: Beyond the joke, some of the stuff I actually think relates to what some of the stuff I’ve read about the regulation of tech in America, which is that it has the potential to backfire. By creating a lot of regulations around technology, we may entrench the current big players like Facebook because no one else is going to be able to do the due diligence and actually comply with all these different international legal frameworks around it. I assumed that if Facebook somehow loses in France, they’re going to have eight other wins to counterbalance it. I think it’s a little like Uber where it’s not in a few places, but it’s in most places.
Aaron Lammer: I don’t know how to stop it. I don’t necessarily think that heavy regulation in the U.S. is the best idea, in so far as I think in a regulated market Libra probably passes the test and something like Bitcoin doesn’t because Facebook knows how to comply, and to lobby, and to get their way in Washington. They have a proven track record of skirting their way around the law and basically facing no consequences. I don’t see why Libra is going to be any different than anything else that Facebook has done in the last five years.
Jay Kang: You and I talked about this before, both in private and also on the show, but the beating that Facebook takes from a lot of our colleagues in the press, I guess my colleagues. I’m back to identifying as a journalist. Aaron, I think you should know that. But all these dog and pony shows where congress brings Mark Zuckerberg and Sheryl Sandberg in front of the weird microphone table thing that they always do, and they have to answer a bunch of questions. I don’t know what those things are called, congressional hearings? Instead of the weird microphone and table thing.
Aaron Lammer: It’s some kind of a house of congress talkie talkie session. An IRL, AMA with Mark Zuckerberg and Congress asking him all the questions, something like that.
Jay Kang: There’s a table and there’s some waters. I don’t know what they’re called. It just seems so quaint and stupid now because two months later, Facebook is announcing, “Hey, we’re just going to be the world’s bank,” and there’s literally nothing that anyone can do about it. I think they’re just going to succeed. They’re going to have to fight some regulation I’m sure, they’re going to have to fight a lot of alarmist. Although honestly, this is …
Jay Kang: Okay. I don’t want to start qualifying my takes, but this is another take that I had that I was going to tweet, but I saved for the show. I actually think the fact that this is a crypto currency helps it go under the radar with a lot of people in the press because they are so skeptical and they think all crypto currency projects are dumb that they aren’t taking this seriously.
Jay Kang: If any of my compatriots in the press are listening to this, I would just be like, “Look, you can’t think of it as a crypto currency project. It is technically one, but it’s the crypto currency project you should worry about instead of worrying about Bitcoin taking over the world and people like Saifedean Ammous getting large amounts of political power. That’s not going to happen, but this is probably going to happen and you should worry about it.
Aaron Lammer: Can I reframe your take slightly and say I think the two things you should care about are Bitcoin and Libra. What you probably don’t need to care about is Ethereum and the 9,000 derivative altcoins we’ve talked about on this show. Can we just retire them now? They all just got bodied by Libra. Libra is the number two topic of the show. We’re still the show of Bitcoin crashes, but we’re also the show of surprisingly bullish Libra takes. I just think it’s that big. I think it’s the only thing that you could justifiably say is on that scale.
Aaron Lammer: Now I’m interested in your take on this. I think Facebook learns from its mistakes. I think Facebook looks at becoming the world’s newspaper/media sharing feed as a mistake. When they look at what their mistake was, I think they’re like, “Yeah, we should have not taken control of that because people want us to kick Nazis off and keep beheadings out of feeds. It’s a lot of work.”
Jay Kang: Yeah and there’s also not that much money in it.
Aaron Lammer: There’s not that much money in it. It’s a drag. Got Congress on our ass. They’re like, “Okay, how do we do this better next time?” They’re like, “Well let’s go after an actually profitable industry like banking and finance.” Okay, great. We could eat that. They’re like, “Let’s not take responsibility of it. Let’s just put it into the world, move fast and break things, and it will only work with Facebook, and it’ll be nestled inside Facebook in a way where we get all the advantages, but we don’t have to say it’s ours.”
Aaron Lammer: If somehow Libra leads to a genocide it’s going to be like, “Please address all questions to the Calibra Foundation in Switzerland.” Their spokesperson will address them. Facebook’s not going to sit in front of Congress and have to answer for Libra in the same they have had to answer for their election stuff.
Jay Kang: Yeah. Yeah. It is a world that is … Everybody can look at Trump, and look at some Facebook post that they saw, and draw a line that I honestly don’t think is very fair. Everybody can yell about fake news and fake stories planted by Russian bots. It’s a compelling conspiracy. This stuff by comparison is boring, banking in Third World countries and remittance economies.
Jay Kang: Now in the scope of things, it is far more real and far more important. But yeah, I agree. I don’t think it’s the type of thing that if somebody’s going to … Elizabeth Warren is not going to … Actually, she might because she’s very smart and actually doesn’t really mind getting wonky, but none of the Democratic candidates are going to be like, “Libra is really the threat that we need to regulate this thing because of X, Y and Z answers.” They’re just not going to talk about it. It’s not sexy in that way.
Aaron Lammer: It won’t be a big deal for a couple years, also. It’ll be too big to stop it by the time anyone even knows what it is.
Jay Kang: Yeah, yeah. I wonder though. Now that I say it, I bet Elizabeth Warren is interested in it.
Aaron Lammer: Wow, Jay. You’ve been shilling these Warren fact.
Jay Kang: The Warren fact is the fact that I think I’ve shilled the most consistently throughout the …
Aaron Lammer: Are you a paid representative of the Warren campaign? Do really think Elizabeth Warren knows what Libra Coin is?
Jay Kang: Do you know how many times I’ve been accused of that? I’ve been accused of that a lot. I think the most consistent response to the article I wrote for the magazine about Pete Buttigieg was disguised as just a secret Warren campaign mole.
Aaron Lammer: I’m here for Jay is actually a Warren plant conspiracy. For me, if you were like, “Aaron, how much do you think any person in the entire American political establishment,” so that includes presidential candidates, congressmen, senators, “who knows the most about Libra right now?” I would be like, “Most people don’t know it exists. Anyone who knows it exists is just like, “Yeah, that’s the Facebook Coin thing.”” Doesn’t know anything more about it.
Aaron Lammer: It’s not that Bitcoin was impenetrable, it was a new idea. This is actually a more familiar idea. For that reason, people really don’t feel a need to know about it. It’s like asking someone like, “So how does Venmo work? Is there an international wire transfer for it?” It’s like, “No, it’s an app on my phone. Libra’s an app on your phone. It’s the new Facebook app. It’s a new thing that you could get from Facebook.” It’s going to take so long before people are like, “Oh wow, actually there’s so much money in Libra. It’s the 27th biggest economy in the world.”
Jay Kang: Yeah, it does seem like it’s going to take a long time. News wise then, what actually was launched today? Was it just the announcement and the White Paper?
Aaron Lammer: I think they explained the partnerships and how the trusted nodes would work. That’s another issue we haven’t really gotten into, which is if you really look at what was Satoshi’s big beef, it was basically PayPal seized my shit, or something like that. Or some sort of a weird online transfer not going through. Everything about the way that the credit card system is reversible is just as true about Libra. It’s just a different set of people controlling it.
Aaron Lammer: The fact that Visa and Mastercard are partners, someone hacks a bunch of money on Libra or really does anything that the Libra or the Calibra consortium doesn’t like, they’re just going to change the rules, or just take the money, or wheel the chain back or whatever it is they need to do to control the situation.
Jay Kang: Yeah. I agree with that and that gives them a lot of power. It means that they’re not just a world bank, they’re also the world’s regulators then because what they decide is good policy becomes the policy, internally. As much as you can enforce it within the United States, you can’t enforce a independent autonomous body in Switzerland on how they enforce payment transfers between the Philippines and Hong Kong. You just can’t do it.
Jay Kang: I don’t know. I guess in some ways, I think that Bitcoiners are very mad about this, but I think that if we put on our maximalist hats, and we both think in the most apocalyptic terms possible, I think this is actually good for Bitcoin because …
Aaron Lammer: Totally agree.
Jay Kang: … I think that it puts into stark contrast why you need decentralization, it puts into stark contrast why you need censorship proof money, and it puts into stark contrast why centralized power in this way could be potentially catastrophic.
Jay Kang: It also does things like of course in my own way, I was thinking like, “All right, well would I take Libra and put it on a gray zone gambling site?” I was like, “No, I don’t think I would because I’d be afraid that it was tracking.” Now would I take Bitcoin and put it in on a gray zone gambling site? Yes, I do it all the time and I never think twice about it. In fact, I appreciate both the ease and the relative, “Well, who’s really going to track this part of it?” I imagine that will increase as Libra gains more power if we are thinking in the most maximalist terms possible.
Aaron Lammer: This is … We’ve now framed the showdown. One of them is great for international remittances, one of the is great for gambling.
Aaron Lammer: Now I guess it’s a bearish take a little bit that I feel like in some ways, Libra is better at some of the things than Bitcoin does, but I still think that it exposes the essential things that Bitcoin does differently than Libra. I also think there’s a little bit …
Aaron Lammer: You know when an NBA team sells and the whole market goes up. If any NBA team sells and it’s a new high, it’s like, “Oh shit, all these teams are worth more now.” To me, having Facebook as a competitor, having Facebook look at the terrain and be like, “You know what we’d like to own, that whole Bitcoiny thing.” That’s what Facebook should be like. That’s a huge, huge nod that Bitcoin is onto something. I haven’t always felt that way.
Aaron Lammer: Maybe even Ripple feels this way. Maybe Ripple feels validated by it too. But I just feel like they looked at the whole landscape of contemporary things you can do on an app on your phone, and decided the one that they wanted to go right up against is Bitcoin, which is also ironic because this is just Zuckerberg versus the Gemini twins again. Talk about I would not believe it in fiction.
Jay Kang: Some of it, I think you feel like, “Oh, well that can’t be true.” But then I don’t know, I will say that in my career in journalism that I’ve come in contact with a smaller number of extremely powerful people, both in the industry and outside of the industry. What drives them is a lot of spite, and they think about things that happened to them 20 years ago that they’re still mad about, and they use it to …
Aaron Lammer: You’re talking about your interview with Jordan Peterson, right now?
Jay Kang: [inaudible 00:41:52] Jordan Peterson is.
Aaron Lammer: [inaudible 00:41:52].
Jay Kang: I actually don’t think Jordan Peterson is one of those people. I will not name any of the people who are like that, but there are certainly people who I am thinking of right now who are driven almost entirely by spite from 15, 20 years ago, who have an amazing recall for things that happened to them that people who are nobodies now did to them. I would not put it past Zuckerberg to still be mad about this.
Jay Kang: I’m going to read you one more part from the White Paper, which is the conclusion I think we should respond to.
Aaron Lammer: Please.
Jay Kang: “This is the goal for Libra, a stable currency built on a secure and stable open-source blockchain backed by a reserve of real assets and governed by an independent association. Our hope is to create more access to better, cheaper and open financial services, no matter who you are, where you live, what you do or how much you have. We recognize that the road to delivering this will be long, arduous and won’t be achieved in isolation. It will take coming together and forming a real movement around this pursuit. We hope you will join us and help turn this dream into reality for billions of people around the world.” That is the conclusion to the paper.
Aaron Lammer: Wow, that could also end with the same, the tagline I’ve been trying to sell to Ripple the whole time, “Are you passionate about international banking transfers?” Because that’s basically what they’re saying like, “Let’s all come together and revolutionize remittances.”
Jay Kang: Yeah, the two words that I was most struck by in this conclusion are stable and that seems to be a real …
Aaron Lammer: That’s a nag on Bitcoin.
Jay Kang: It’s a nag on Bitcoin. It’s just like, “Do you want your remittance that you worked hard for to go to zero. Well Libra is the way for you.”
Aaron Lammer: Which is sending your parents money so they could get food in their village and Bitcoin crashed. Wow, tragic.
Jay Kang: Yeah, yeah. That sucks.
Aaron Lammer: Very sad what happened.
Jay Kang: You know what, that’s true. It’s a true concern, it’s a real concern.
Aaron Lammer: It’s a real concern. We have to say it’s valid.
Jay Kang: The other thing I thought was interesting was that this is an open-source project. It is a open-source blockchain. One thing I wonder, and this is something that you know much more about than I do, how do you think Facebook manages an open-source project?
Aaron Lammer: My understanding is that this is all a project of the Calibra Foundation which I think is modeled after … I think it’s modeled less after Bitcoin Core and more after the Zcash Foundation. I think that their funding is in some way secured by the consortium.
Aaron Lammer: Here is the thing, we know that Libra is pegged to the dollar, but that doesn’t mean that the people running Libra can’t manipulate the economics of Libra to their purposes. I brought up the idea of airline miles. They can discount within it, they can issue more Libra, they can really do anything a Tether can do.
Aaron Lammer: I know you’re thinking, “Oh, but Facebook would never do that.” Yes they would. It’s an economy. What people do when they get control of an economy is they use it to their advantage. I don’t really think … Even though it’s pegged, I still see it as something that’s a tool and a weapon that Facebook can deploy selectively in order to achieve whatever their interests are.
Aaron Lammer: Now it’s a question now, what are Facebook’s interests at this point? When I hear that White Paper, what I hear is them reframing. Remember, they used to say, “We’re going to connect everyone and then the world would be a better place.” Now they’re like, “We’re going to bank everyone and then the world will be a better place because people will have more economic opportunities.” It’s like a rewrite of their original tagline.
Jay Kang: Yeah. It’s in some ways more compelling because the general pitch that they’re making is that this will save you money, whether in term of value loss, or currency deflation, or currency disaster, or through fees paid for things that you shouldn’t have to pay fees for, like, “Let’s get rid of all the things that sit atop your international transfer,” or even just transfers and let’s just all share in this other coin that’s stable.
Jay Kang: I don’t know. I don’t think that people even need that much messaging to accept this. I think that if Facebook is smart, that they will tone down the messaging as time goes on. Just the fact that would you rather have a dollar? Would you rather have 80 cents? That’s all the messaging they need. Would you rather have the full dollar or do you want to give 20 cents to Western Union? That’s it. That will be where they succeed.
Jay Kang: I will say that, and I don’t like doing this because I feel like it’s a lot of strawmanning and when other podcasts do it, I just roll my eyes, but I’m going to do it anyway. I found that most of the coverage of it in big places this morning was pretty fair, but everybody was conceptualizing it as being a PayPal.
Aaron Lammer: Yeah, that’s because we’re Americans. We just see ourselves in everything.
Jay Kang: Yeah, and I don’t think that … I don’t know. Obviously I think that Facebook cares about the American market, but I think that if you told Mark Zuckerberg, and Sheryl Sandberg and whoever right now that, “Look, in the U.S. it’s going to be illegal and it’s going to exist in every other country,” that they would take that right now, that they would be happy and that they would see that as a good outcome.
Aaron Lammer: Well just like if we always say that if Bitcoin was banned in America, it would be overall bullish for the price of Bitcoin. If people started banning Libra, people are going to be like, “Holy shit. What is this Libra thing and how can I get some?”
Jay Kang: What’s [inaudible 00:47:21] Libra, Facebook … Yeah.
Aaron Lammer: Remember when Spotify came out and you had to have a Facebook account to sign up?
Jay Kang: Yeah.
Aaron Lammer: I feel like Zuckerberg has intentionally reversed his whole strategy on this stuff. Now, you actually can use Libra without a Facebook account. Libra is going to be its own app that you can just download and be a Libra customer.
Aaron Lammer: Remember when Instagram was bought, we were like, “Oh, it’s just going to be like pictures for Facebook.” At this point, Instagram is probably a better brand than Facebook itself. At a certain point, Facebook may be trying to disappear into the ether and rebrand itself as a three billion persons payments network, or all of these other, a WhatsApp with payment layer. All these are basically identities that it could take on when it sheds this one, and I find that to be a compelling take on our original what is fake internet money question.
Jay Kang: Also, what is the future of connectivity in the world. I’m sorry, the future of connectivity in the world is not your Facebook profile with its photos and people looking at people you used to date in high school.
Aaron Lammer: That’s for people of our generation, a.k.a. the oldies.
Jay Kang: Yeah, future of connectivity is basically, as you said, it’s WhatsApp with a payment layer. They own both of those now. They own WhatsApp and they own the payment layer. For both of those and people took Zuckerberg’s announcement that his most important thing was going to be security. Both those things require a lot of encryption and a lot of security. I think that that’s his vision. I’d take that vision seriously, even if I do no think he should be the one. I think the world would be worst if he does carry out that vision, but I don’t think he’s wrong. I don’t think that the future is Pinterest, or I don’t think it’s Snapchat or Instagram. I think it’s just people communicating via text and sending money to each other.
Aaron Lammer: Well when we started this show and I was like, “Jay, do you want to do a podcast about fake internet money?” You weren’t like, “Oh, well isn’t there already fake internet money, PayPal?” No. We knew that fake internet money was something essentially different, and we’ve been trying to figure out what it is.
Aaron Lammer: While I don’t really think Libra is a crypto currency, I don’t think it’s decentralized, I don’t think it’s safe, I don’t think it’s a good idea, I think it does check the fake internet money box. That’s an awful idea in America, but in Asia, as I understand, that this is not going to be an easy fight. There’s a lot of entrenched players who are basically already doing what Facebook is trying to do here.
Aaron Lammer: Another way to describe this, maybe just Zuckerberg is finally cloning Asia instead of America.
Jay Kang: Yeah. There are a lot of countries that don’t have Facebook. One big one in particular.
Aaron Lammer: The largest one, say. What if somehow Libra is allowed in China but not Facebook? That would be crazy.
Jay Kang: That would be insane. Then I would just call Zuckerberg king of the world at that point.
Aaron Lammer: You just resign.
Jay Kang: I’d be like, “You win, Mark.” Yeah, I think that there’s South America, Southeast Asia, Africa and part of Europe, I think those are probably his real targets here. I don’t think it’s the United States or Canada, or Western Europe. I think that we should just take his mission statement here seriously, and we should take it sincerely, and not read too much into it, and recognize that that mission statement in itself is a threat. We don’t have to read much past, “Hey, let’s bank everybody with this thing,” to being like, “Oh no. That’s a bad idea.”
Aaron Lammer: Let me ask you one final bomb drop question.
Jay Kang: Oh, great. Okay.
Aaron Lammer: Do you think it’s possible that when I fast forward the movie, there is eventually no Facebook but Libra outlives Facebook, and in fact people forget the college social network elements, and it’s like, “Oh yeah, that’s weird.” You know the way it will be like, “Oh, it’s weird. They were making shoes but then they got into the trading card business and it became a video game company in the ‘80s.”
Jay Kang: He was selling used books on the internet. Yeah.
Aaron Lammer: It’s like Libra is an international bank, basically. It’s like, “It used to be a weird gimmicky website that was very popular.”
Jay Kang: Caused a lot of fights between peoples’ families.
Aaron Lammer: People were very worked up about it at one point. Congress was actually having a bunch of hearings about them. They were pretty weird.
Jay Kang: I can see that for sure. I think that everything that Zuckerberg has been doing over the last five years is facing the eventuality that Facebook is not going to really last much longer in its current iteration of News Feed and Messenger. Maybe Messenger will, if they do combine it with that.
Aaron Lammer: Yeah, I think this is part of Messenger.
Jay Kang: But then if Messenger just becomes combined with WhatsApp, then it’s the same thing. It’s not like there’s not much difference between it.
Jay Kang: Yeah, but I think that the Wall and the News Feed, I think that’s all on its way out. I think that at some point we’ll think of Facebook just as the text message layer. I don’t think that … Yeah, maybe there will be a time when it won’t even exist as the name anymore, especially if they have too many negative connotations around it, which is certainly possible.
Aaron Lammer: We talked last week about GlobalCoin and I think we compared it to what is it in T2? Skynet.
Jay Kang: Skynet. Yeah.
Aaron Lammer: Right? Yeah the company that releases the virus that becomes the Terminator. If we look at what’s going on right now with Facebook, the word protocol has been used repeatedly. The guy who came up with it, I think his name is David Marcus maybe, he is the former Head of Messenger and he was the Head of Libra. He says, “I couldn’t believe there wasn’t a protocol for money on the internet. We looked into whether any of the existing stuff could work and we decided it didn’t.”
Aaron Lammer: We already have him framing as it’s a protocol, it’s open-source, and it’s managed by a nonprofit foundation. Does this sound like a … This is how a virus gets unleashed on the world. Someone is like, “It’s not my thing, it exists, it’s in a weird research lab in Switzerland, it probably won’t get loose.”
Jay Kang: I think this is actually Outbreak, right?
Aaron Lammer: Yeah. This is what I’m saying about forgetting about it being Facebook at a certain point. I think this is Zuckerberg’s ultimate I do what I want, move fast and break things. Which is basically to take something he knows is a profound idea, something he’s cloned from existing thought viruses, but perfected in the lab, and that he has the scale to distribute the virus internationally, and he is dropping it on the world and saying like, “I’ll wash my hands of it. Let’s see what happens.”
Jay Kang: Yeah, I agree. Although I do think he will be very involved in it, even though he says he is not.
Aaron Lammer: When the final wars, the Bitcointopia versus the Librastan war has happened, which side will you fight on?
Jay Kang: Oh my god. Is Saifedean Ammous still around?
Aaron Lammer: It’s going to be a hard choice for you because I know that you want to criticize both sides, but this is the American Civil War. There is no room for pacifism here. You’ve got to pick a side.
Jay Kang: Well if I didn’t have a child, I think I would be on the Bitcointopia side, but having other responsibilities and wanting some stability in the world, I think makes me on the Libra side. How about you?
Aaron Lammer: Wow. I never thought I’d hear you say that you would march in [inaudible 00:55:34]’s army. I think I would take the Bitcoin side because I actually think Bitcoin is in the right, ultimately. If we do unleash the crypto virus on the world, it actually has to just be totally brainless.
Aaron Lammer: I would rather let no one run it than Zuckerberg run it, and we’ve always come around to the important idea of Bitcoin, is that no one runs it, they have no marketing department, no one is behind it.
Jay Kang: Okay, but would you rather have Saifedean Ammous be like, “It’s 15 times richer than Jeff Bezos in control”? Like a large, large portion of the world through financial power?
Aaron Lammer: Yeah. You know what I’m going to say, I think Zuckerberg’s a more formidable adversary than Saifedean Ammous. I think a lot of these Bitcoin guys talk a big game on Twitter and are like, “The media is lying to you. Steak is great. Climate science is not real.” Those are all real Saifedean Ammous views. Zuckerberg is quietly retooling his operating system in the shop, and I think the guy has a track record of shipping, being criticized, being mocked, and seizing as much power as possible. I feel like I would want to fight on the underdog side.
Jay Kang: But aren’t you on the losing side at that point? That’s the other thing I think about.
Aaron Lammer: Yeah, but I think if I’m going to come down to the final crypto wars, I want to fight for my conscience not for my survival.
Jay Kang: Okay, so you’re okay being executed as a heretic in the trials.
Aaron Lammer: Yeah, I’m okay running out. Yeah, I’m okay with like, “I don’t want to live in that world, so I’ll fight on the Bitcoin side.”
Aaron Lammer: Now you could very easily say, “Aaron, you don’t want to live in the Bitcoin world either,” but I would assume that in a Bitcoin world, I’d probably just get murdered really quickly anyway. Basically, all of this leads to death, which is of course the ultimate exit scam.
Jay Kang: If both of them lead to your untimely death, then you might as well die with your morals intact and your integrity intact. I buy that. I think I would still be on the side where I’m just like, “I’d like to live.”
Aaron Lammer: Yeah. Yeah. I understand your position and I could respect that. I might be the guy who’s like, “I thought I would have done a little fighting on both sides. I also was in a Monero cult for a while. Ask me anything.”
Jay Kang: Yeah. Yeah. You hear the Glenn Beck of the crypto wars.
Jay Kang: All right, do you have anything else?
Aaron Lammer: No, I just want to ultimately congratulate us because I think we called that this was a big story and we took it seriously. I think it’s paying dividends in so far as not that we have any great insights about it, but we’ve gotten to build up the silly movie that we’re writing in our heads for a really long time. I feel like it came to fruition today.
Aaron Lammer: I did a few interviews on the topic. Check those out on other podcasts, if they come out, I don’t really know. But I don’t think we’re going to have to think of things to talk about on this show as much as we have in the last few months. I think that the engine is starting to rev and you’re going to see some weird shit happening.
Jay Kang: Yeah, and it could be just mass, mass dropping the hammer of regulations, which would be interesting too.
Aaron Lammer: That would be interesting. Libra could be interesting. I think Libra, we’re going to have to wait for it.
Jay Kang: Yeah, it’s going to be a couple years at least, right? Until they build this blockchain and everything like that, and then it’s launched into the world.
Aaron Lammer: Yeah. I wouldn’t be surprised if it’s like we do this show and there’s not a single discussion of Libra for a year, actually. But it also could fizzle out and we never hear about it again. That does happen. It could be the Google Wave of crypto currency.
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