What future for currencies after Libra?

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Facebook's announcement of Libra in June 2019 sparked an outcry from governments and central banks, accompanied by a media uproar. Why ? What will be the consequences?

From the outset, the cybermurrency movement 1 explicitly aimed to shut down banks , including central banks and therefore States. The Bitcoin White Paper (November 2008) describes the goal as

allow on line payments to be sent directly from one party to another without going through a financial institution.

allow online payments to be sent directly from one party to another without going through a financial institution.

The threats to governments and to the banking system have long been identified:

  • loss of control of transactions, and therefore of the means of taxation, the fight against fraud and control of capital movements;

  • loss of the monetary monopoly, exclusion of central banks and therefore end of Keynesian policies of manipulation of the money supply , currently camouflaged in the gas factory of the international monetary system.

But to date, the nearly 5,000 systems and currencies listed on coinmarketcap.com are drastically underused .


Their total value represents less than 1% of the world's money supply, and their actual use has stagnated at ridiculously low levels of use compared to their ambitions and potential. Bitcoin caps at its capacity limit around 700,000 payment transactions per day, which is probably less than 0.1% of payment transactions made in developed countries 2 .

Indeed, as a means of payment, cyber currencies have few practical advantages for users compared to existing means such as cash, credit cards and newcomers like Paypal or Apple Pay , except for specific populations in specific use cases.

The adoption of cyber currencies will in any case be very slow and it is even certain that none will ever replace the sovereign currencies.

States reacted in dispersed order, ranging from benevolent indifference as in Switzerland to a total ban in China. Before Libra's announcement, the most common opinion was that despite the reality of the threats, the tiny volume of transactions did not justify emergency measures, and that there was time to agree globally. on appropriate defense measures, while immediately focusing on the control of foreign exchange transactions between sovereign currencies and cyber currencies.


Libra abruptly puts an end to this wait-and-see policy. This is the first time that an Internet giant has associated its name with a cyber currency, which could motivate many users to enter the world of private currencies, as well as other greats in e-commerce and services. financial.

Libra has revealed to states the reality of the threats they would face from widespread adoption of cryptocurrencies. And the sulphurous image of Facebook, of which many voices are asking, rightly or wrongly, the “dismantling”, does not help matters. They therefore declared war on Libra, considering its outright ban, and in any case planning to subject it to severe regulation.

The backlash quickly prompted the defection of six out of 28 founding members of Libra, including Mastercard, Paypal, Visa and Ebay, fearing retaliation would hit their other businesses.

Through the voices of Mark Zuckerberg and others on the project, Facebook has tried to calm things down by promising that

Facebook will not launch the Libra app anywhere in the world without the approval of US regulators.

He also assured to consider pegging libra to the dollar alone and not to a basket of hard currencies and strong assets.


Three forecasts are possible.

The war declared by the states is total and final

The money monopoly is an instrument of power too great for governments to renounce it.

Under the usual and convenient pretext of protecting citizens, governments will demand two things:

  • pegging to their sovereign currency, which reduces a cybermoney to a simple payment system using this currency. It does not matter whether its author is a private company or the State itself. The announced emergence of national currencies is an epiphenomenon of no more strategic importance than the launch of a new credit card.

  • payment systems will have to apply the process of verifying the identity of users (“ Know Your Customer  ”), which is contrary to the very principles of cybermoney where the relationship between an account and its holder is known only to the latter. this.

These measures, which are currently targeting Libra, will spread by contagion to all cyber currencies. Already Telegram's Gram project has been postponed from October 2019 to April 2020 due to an intervention by the Securities and Exchange Commission .

The world of cybersecurity will remain alive 

The offer will always be abundant, because it is disconnected from the demand. The scheme inaugurated by Bitcoin will occur on a recurring basis: initially, a handful of visionary individuals publish their ideas in a White Paper; then, if this project is attractive, tens or even hundreds of developers across the world can mobilize to develop the corresponding software.

The vast majority of existing systems are thus the fruit of the efforts of passionate volunteers, who are only linked by cooperation sites on the Internet, and not formalized organizations that could serve as targets for the repression of the powers. public.

In this area, almost all developers have adopted the principles of free software , which require the source code of software to be published free of charge, and allow anyone to copy all or part of it, modify it and publish new software. By allowing everyone to reuse sections of code developed by others and to focus most of their effort on the most innovative sections, this practice facilitates the development of new systems and accelerates technological progress by pooling R&D.

We can therefore bet that all technical problems identified, especially those raised by government requirements, will be taken care of and generally resolved.

The evolutionary mechanisms inherent in the cyber currency ecosystem, which we have seen at work since 2017, will continue to function. Disagreements between competing proposals, all the more likely as the players and users are numerous, will often be resolved, as for Bitcoin and Ethereum, by a split and therefore the appearance of a new system and therefore a new currency. .

Finally, once implemented and open to the public, these systems become ultra robust because they are executed by thousands of networked computers managing thousands of copies of the same database across the world . It is possible to regulate or ban e-currencies, but it is not possible to prevent them from functioning, except by completely shutting down the Internet.

Cyber ​​currencies will split into two camps

On the one hand the conformists, who will endeavor to respect the regulations and will put forward conformity and respectability, and on the other hand the rebels, who will remain faithful to the initial objectives of Satoshi Nakamoto and will enter into resistance by developing instruments. increasingly sophisticated protection systems in line with those that exist in several systems: transaction encryption, mixing, “onion 3 ” routing , etc.

This opposition will undoubtedly dominate the news of cyber currencies in the coming months and shape their future acceptance.

It is likely that Libra itself will experience this split.

Its development and implementation are already well advanced. Without being totally original, the solutions proposed by the White Paper are attractive enough for those who are committed to its realization to pursue it. The original functions and technologies of Libra will in any case be implemented, by the same authors or by others, with or without Facebook , in a concentrated form in a system which will be called Libra or which will bear another name, or in the form diffuses in other systems.

But the development of such an ambitious system will raise many problems, each one likely to receive several solutions, in particular as regards the answers to be given to the governmental requirements.

However, in the ecosystem of cyber currencies, these differences of opinion are not resolved through any voting system that would choose one of these solutions while excluding all the others, but by leaving the different groups free to propose systems that put in place. implement their preferred solution, which each user can choose from. A typically liberal process!

In addition to the usual technological alternatives concerning in particular the format of the Register, the consensus protocol and the management of the network, the differentiating factors affect two areas of conflict with States which have a dimension not only technical, but political or even ideological: confidentiality transactions and securing the unit of account.


On the first point, Libra offers the same system of "pseudonymity" as Bitcoin: the Register does not contain any indication of the identity of the parties to a transaction, but there are "re-identification" processes allowing it to be established in many cases. case, thus revealing the complete history of the transactions of the unmasked users. It is certain that the concealment methods already used by Monero, Dash or Zcash among others, will be made available to Libra users wishing to protect their anonymity.

On the second point, the current project plans to tie the Libra cybermurrency to "a reserve of real assets of low volatility in currencies from stable and reputable central banks" administered by the Libra association. This project in itself poses serious implementation problems which may give rise to competing solutions. In addition, it puts the Libra association in a position to conduct a form of independent monetary policy that is limited, but nonetheless unacceptable to states that will require pegging to their own currency. Again, different attitudes to these issues will give rise to different systems.

Remember that the Libra system is essentially a platform where each currency, including Libra itself, is defined by a “  smart contract  ” written in the adhoc language Move. On the same platform (Libra or a variant), different currencies can therefore coexist, with different creation and peg rules.

All in all, the many differences of opinion between teams as to the devices to be implemented will be resolved, as was the case for Bitcoin, by the offer of alternative systems which will be as many “Libra bis” under other names. , like Dogecoin, Litecoin, Zcash, Bitcoin Cash or Bitcoin SV.

Any fear of seeing a monopoly set up is therefore unfounded, the only risk in this area being that the States will succeed in retaining their monopoly.

The current Libra association therefore risks exploding into at least three camps:

  • those who will remain faithful to the initial project and reluctant to take measures to break anonymity;

  • those who will accept compromises on confidentiality but will remain committed to pegging to a basket of assets (the current position of Mark Zuckerberg);

  • those who will comply with all the requests of the States, including the stowage with sovereign currencies.

It is not impossible that, failing to reach an agreement with the government, Facebook will withdraw from the project, as mentioned by Mark Zuckerberg, if only to avoid a conflict where Facebook has a lot to lose, and to retain their freedom to adopt an existing cyber currency later.

Such a withdrawal would not change the offer much. Within the strict framework of the development process, Facebook's position is irrelevant. Either way, there are already dozens of payment systems capable of delivering the services Libra promises at comparable levels of usability and performance, and about ten new currencies appear every week. The world does not need a 5,000th cyber currency, even if it is called Libra.

The real game will be played during the adoption phase, where the position of the major merchant sites, Facebook of course, but also Amazon, Google, Alibaba, Ebay and others, will be decisive.

After the Facebook / Libra episode, it would be surprising if they embarked on the development of a new system and the definition of a new currency. The most logical thing would be for them to decide to accept several of the existing currencies, starting with the most used ones rather than a new one, without openly favoring any. Again, the users will decide.

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