The Infinite Scene

Infinite Games, Networks to Start & Join "Scenes", and Finite Lives

“There are at least two kinds of games...One could be called finite; the other infinite.” Finite games are the fixed and familiar contests of everyday life; they are played in order to be won, which is when they end. The end of a race. Nothing more.

What if, however, there was a better and bigger game, an “infinite game”, an ever evolving one - a never-ending marathon?

What if this was the "real" game we should play - one that never truly ends AND where everyone is connected by an almost limitless network?

(image credits for the 2 “game” graphics from Visualize Value)

The global economy and social hierarchy has changed a great deal within a very short period of time, and the results have included enormous prosperity for a few and poverty for many. The leading industrial and economic sectors, and various social contracts of the post World War 2 era in both the East and West have eroded, and society has not completely adapted to these changes. The nature of work is changing.

A future trend of work may be found in the ideal of individuals who are network natives - departing from the current social and economic abstractions of the late 20th Century “Organization Man” of corporations and the 18/19th Century Citizen of Westphalian Nation States. Such individuals would exist and work within “scenes” - associations of people who were connected by both specific common interests and various networks.

All of these “Scenes” are subcultures, long-tail social groups and societies connected by specific common interests and niches, and they are enabled and magnified by the most prevalent current network - the Internet.

Within each of these various “Scenes” Network Native Individuals would have the potential to build self-sufficient economic and creative lives as creators or builders - Artists or Artisans - with viable and vibrant audiences, markets and economic models.

The inspiration for “Scene”, Scenius (as described by Brian Koppelman and Marc Andressen)

Brian Koppelman had a fascinating conversation with Marc Andreesen in a 2 part “crossover” talk, with each a guest of the other’s podcast. One of the focal points in the talk was about work, specifically creative work, and how such workers find visibility, recognition and economic success. A few tidbits from this great talk include:

"As an artist, aim to get yourself into the scene/mix”
The scene is the collision space
”Things HAPPEN when you’re in the scene"

This echoes the sentiment of the phrase "90% of life is showing up". This is not straightforward or easy but being plugged in has been and will remain important.

One way to understand this is the ritual of mating and marriage. Until recently, most of humanity spent the entirety of their lives in one place but with the rise of various networks, involving trade, transport and telecommunications, many today are physically and virtually mobile. Before the rise of these networks, most people who wanted something new or different would have had to leave the post-industrial, rural or isolated communities they grew up in to search for new economic and social opportunities. The rise of information networks and “scenes” is the latest change.

We can find and join “scenes”, the collision space of like-minded interests and curiosity, with others. The rise of the internet and the fall in tech costs is the catalyst.

By finding and connecting to “scenes” of like-minded explorers, we can be making friendships, attracting fans and building financial relationships. And that is just the beginning. This “work” happens in the open - in collaboration with others.

Creativity as a Collaborative Exercise

“Creativity is a collaborative exercise between the creator and the audience”

"You can create an excellent work of art (in your mind), but if the audience doesn’t creatively see eye to eye with you, they won’t appreciate it"

“The entrepreneur who expects the market to automatically appreciate their product….it’s the classic, ‘If I build a better mouse trap the world will beat a path to my door,’ – no, they won’t.”

“The world is BUSY…You have to inject yourself into the world."

So where are we “injecting” ourselves?


”A finite game is played for the purpose of winning. An infinite game for the purpose of continuing the play.” — James P. Carse

The phrase “Infinite Game”, similar to the phrase “long game”, was coined by James Carse. Its underlying philosophy is to go beyond a zero sum, linear and scarcity mindset of “finite games”.

Finite games are optimization games played with a specific and objective-oriented outcome as if it was a sprinting trophy. Get that score, get the grade, get those “likes”.
And once “won”, the game ends. There is nothing more.

But what if there was something more, in a bigger game that everyone can play?

The Infinite Scene is that bigger and better “game” that we can all play. It’s where infinite games meets with near-infinite potential of information networks.

The next features of future communities, networks, and next layers of the 'Stack to Come' could be built on an "infinite game" protocol of an “Infinite Scene”.

What are some of the new rules of an “Infinite Scene” for the Network Native Individual, the Artist / Artisan, ready to play?

Andreesen, relating it to the venture capital world, the following ideas:

Most of Your Ideas are Wrong

People treat their ideas like their children

“50,000 years ago, there weren’t really ideas, there were just children”

"People protected their children by all means. Now this has sort of shifted to ideas"

“Most of your ideas ARE WRONG” – especially in the VC world.

Way back, many smart VCs turned down Google because the idea seemed very wrong at the time

"“How much can you actually know?….I would take it so far as to say I don’t know that there actually are VCs who can predict if any given thing is going to succeed or fail, period, full stop, including us. I’m not sure that’s even part of the value we provide."

“Maybe we’re actually in the people business, as opposed to the idea business”

This makes finite games even riskier to play. Imagine your entire game was founded on the success of getting, protecting and focusing on just one idea like it was a child. And you had no guarantee that this idea was “the one”. If you can embrace being wrong on ideas and on connecting with more players in the game, the “people business”, then you may be better off.

ADVICE for those ready to play:


“The best entrepreneurs really do live in the future” – So in a sense, they’re living in two realities at the same time.

“The difference between a vision an hallucination is that other people can see the vision."

"The follow your passion thing is an incredibly destructive meme that flows out of the hippie movement of the 60s...Instead of following your passion, focus on the area in which you can make a contribution. It’s not about you, it’s about other people"

Perhaps you have identified a contribution, you’re so good at, that you can make, that’s about other people, where you can see a vision of things to come but now you need a shared vision. That shared vision is found within a “Scene” of like-minded players with interests in common with you. BUT, how do you enter a “Scene” and share your contribution that you’re so good at? You may need to find someone to bring you in.

“The Test” – All You Need is ONE Introduction

Kopplemann won’t read any scripts sent to him randomly online ... BUT if there’s a warm referral – he will jump on it.

“The Test to get to us… is can you get ONE warm introduction…just ONE”

"The true pain of entrepreneurship lies in trying to get people to say yes to you – to your product, to work for you etc."

The true pleasure of success in the game of the Infinite Scene could be all the stages you must pass through: create, contribute, collaborate and be co-opted into a Scene.

(NOTE: This will be updated, in keeping with playing this game.)

An authority on “Infinite Games” is Simon Sinek. One of the most interesting thoughts Sinek shared in a talk with Cal Fussman was a vision that his work would live on after him, making it as close to “infinite” as we could get for our finite lifespans.

Subject matter of overlapping interest to consider:

James Carse and the “Infinite Game”

Brian Koppelman’s talk with Marc Andreesen on “Scenius”

Lambda School-type trade education and income risk-sharing as a growing trend. This could become the way individuals add to their “stacks” and upgrade their “scenes”.

Amazon and Berkshire Hathaway’s (post Amazon investment) - The origins of Amazon and Berkshire Hathaway, their funding, the long game time-frames which both Bezos and Buffett have, how these two leaders continually revised their thinking which is a part of their respective infinite games and infinite scenes.

To repeat about FINITE GAMES.

Let’s pass on finite games and consider creating or joining a “Infinite Scene”.

(NOTE: This piece will be updated - this will never be truly “finished”.)

Moonshots and Markets

On Spaceflight, & the Virgin Galactic / Social Capital Hedosophia merger

On July 20, 1969, the first manned mission to land on the moon, Apollo 11, marked a dividing line between the era of when humanity was confined to one world and when it began its first steps as a space faring civilization. It was also the end of a technological race between the world’s two largest nuclear powers’ space programs (which was the catalyst for the mission). That race, a footnote in history, is happening again - except between global scale corporations.

Investors can soon trade where no shareholder has gone before: the world’s first publicly traded space-tourism and commercial space-craft maker company - Virgin Galactic Holdings, Inc.

Social Capital Hedosophia Holdings, ticker symbol “IPOA”, founded by venture capitalist Chamath Palihaptiya, will merge with Richard Branson’s Virgin Galactic (est. 2004) to create a publicly traded $1.5B USD spacecraft maker and space-tourism company.

The public debut of the company, to be called “Virgin Galactic Holdings, Inc.”, involves Hedosophia’s acquisition of 49 percent of Virgin Galactic, which includes ship builder Spaceship Co. - Palihapitiya will invest $100M USD of his own funds. 

It’s comparable to the early days of a now essential transportation technology which was risky and expensive during its first few decades but has been around since the early 19th century: trains and railroads.

Back in 1828, when everyone traveled on foot, by horse, by boat, or by canal (which required enormous effort and expense to create) one of the first railroad companies, the Baltimore & Ohio (“B&O”), was funded, sparking a revolution in transportation. The last surviving signer of the Declaration of Independence, Senator Charles Carroll of Maryland, then 91 years old, presided over the B&O’s shovel opening ceremony on July 4, 1828. A then gigantic sum of $4 million dollars was raised for this venture, barely more than a year old, in just 12 days - one of the first transportation and tech investment deals of its kind in the U.S.

(Sen. Charles Carroll (Md.), last surviving signer of the Declaration of Independence)

(Image of “The Tom Thumb”, the B&O Railroad’s first train)

Today, trains continue to be provide reliable low cost long haul freight transport, and produces returns for investors including Warren Buffett’s Berkshire Hathaway. The investment runway for spaceflight as an industry could mature eventually and produce reliable & mundane returns for 23rd century investors. Now however we are still in the risky early days stage of spaceflight.

The two key figures in this story are Chamath Palihapitiya and Richard Branson.

Palihaptiya, after a career in tech (at AOL & Facebook), became a venture capitalist and founder of Social Capital. Hedosophia went public in September 2017, raising $600 million dollars, to help private startups bypass undertaking the IPO process with the pitch of “IPO 2.0”.

Hedosophia’s financial structure has been around for a few decades, colloquially known as a “blank check” company. The structure is also known as a special purpose acquisition company (“SPAC”), a company whose purpose is to look for and buy businesses. Shareholders would become investors in any business bought by it. An important detail is that a SPAC has 2 years to buy a business or else it must return its funds to its shareholders.

In this case time has run short for Hedosophia and almost two years have passed since its IPO.

One more caveat, via Techcrunch’s 2017 coverage of Hedosophia’s IPO to keep in mind:

In the Hedosophia prospectus, under the innocuous caption “Founder Shares,” we learn that the sponsors of the SPAC have granted themselves 20 percent of the equity of the company. At the time of the deal, that was worth $120 million. You read that correctly. For the investors who capitalized the SPAC, that is a pretty substantial haircut to net asset value, and for a target company seeking a route to the public markets and for the investors who bank-rolled it, the SPAC sponsors will charge it a nine-figure toll to get there.

With the deal clock’s time running out, and the opportunity for IPOA’s sponsors to get “20 percent of the equity of the company”, it’s no wonder this deal is happening.

Palihapitiya who will invest $100M USD in the Virgin deal will become the Chairman.

Branson presiding over a business empire of 60 companies with 35,000 employees and $21B USD in annual revenue, famed for his founding of Virgin Records and Virgin Airlines, started Virgin Galactic in 2004 with a prototype built to win the Ansari Space X prize.

Virgin Galactic is just the first of what could be many commercial spaceflight companies for us to invest in. The most famous of these competitors include SpaceX and Blue Origin, founded by Elon Musk and Jeff Bezos. Virgin Galactic may be the first publicly traded Space flight startup, it is likely to have company soon enough.

While investors can invest in rocket and spaceflight technology via defense companies such as Boeing and Lockheed Martin, among others, Virgin/Hedosophia will be a focused non-defense spacecraft builder space-tourism business.

Palihapitya has described Virgin as the space industry’s version of “Tesla” and we can see the analogy. This is a business that, like Tesla, could transform what was an expensive and uncommon product into a mainstream product and service, and forcing competitors to catch-up. Tesla began with a sport-car and Virgin Galactic will begin with rich astronauts. The use-cases will expand and then extend into new markets and users.

The strategy is to drive costs down with reusable spacecraft and promoting luxury tourism as the first use-case. In the language of the startup world we begin with a “toy”, a plaything of the rich, as the technology is made more affordable and commonplace, as the products move up the “utility curve” - as toys evolve into a work tools.

At this time there have been only 571 humans in total who have traveled into space (508 men, 63 women) since the dawn of the Space Age, and most were due to national space exploration programs. Virgin Galactic’s initial focus on millionaire astronauts may double that number soon enough since about 600 reservations, totaling at $80M USD, have already been made so far.

What will the flights look like? The recent filing explains that they will be launched at a company owned facility, “Spaceport America”, based in New Mexico, to commence during H1 2020. The spacecraft will take off and land like a plane, capable of reaching suborbital heights, for a 90 minute flight.

And what is the flight path for revenue? Take it with a grain of salt since it is truly early days.

This is one of the first publicly available investments rooted in The Big Stack theme “Children of Daedalus”, which traced the history of flight to its roots in mythology. The Daedelus myth is also a cautionary lesson about the risk of hubris. Daedelus was a genius who would have fit in today’s startup world but he was imprisoned in a prison tower and forced to be build for a tyrant. He invented an escape however: wings.  Icarus, Daedelus’ son, while escaping with his father from the tower prison, flew too close to the sun. The sun’s rays melted Icarus’ wings, and he fell to his death, with Daedelus watching helplessly.

Sadly, Virgin Galactic also experienced real and similar tragedy when a 2014 test flight went wrong, killing 1 of the 2 pilots (compelling Virgin to assume in-house control of spacecraft construction). Since then, however, Virgin recovered and was able to reach suborbital space in Dec. 2018 with the first crewed space vehicle for commercial service - which was also the first human crewed spaceflight to launch from U.S. soil since 2011.

The history of railroads included accident and death, especially during its early decades, but rail usage and infrastructure continued to grow. Looking ahead we must brace for both tragedy and triumph in private space flight, as it grows in size and importance within the global economy.  Hacking Finance reported that “analysts at Morgan Stanley think space commerce, a $350 billion industry, will triple by 2040” and noted that during the first half of 2018,  “private launches attract the most VC funding within space infrastructure—62 percent”.

Great risk and adventure, and an investment horizon that could run for centuries is a long distance and long term story.

Links include:

Jony Ive's Long Goodbye

A Brief Note on Apple

Long-time Apple design head Jony Ive’s departure is another milestone marking the passing of the Steve Jobs era.

Ive was ready to leave a distressed Apple Computer in 1997 but changed course after Steve Jobs (back as CEO after a 12 year exile) visited the design lab and was encouraged by what he saw -  a historic design partnership was born. Ground-breaking products included the iMac computer, the iPod music player, cutting edge thin laptops like the “Air”, and the iconic iPhone.

News of Ive’s departure was not unexpected however. Ben Thompson of Stratechery said it best: “it is less that Jony Ive is leaving Apple, and more that Apple, for better or worse, and also by necessity, has left Jony Ive and the entire era that he represented.”

It's a sign of the times for Apple in terms of “The Big Stack” - the infrastructure and software which connects everyone to a global network economy and society, and that includes our smartphones.

Apple grew into a cash-rich global giant when it installed a physical layer of iPhones and devices, all tied to Apple’s software, throughout the world by selling to millions of customers. And it was Ive’s designs which helped make that possible. But times have changed.

Users are not upgrading to new phones as quickly as they used to but they will continue to use and consume digital services and software.

It's no longer the exciting Steve Jobs/Jony Ives era of "sexy" designer hardware. Everyone has hardware now. The focus now is about services and experiences. Apple reinvents itself periodically, ever since its hobby computer origins in the 1970s. Ive's departure is just another chapter.

Millions of Apple customers will continue to spend on digital services with shifting desires (which includes privacy, a subject for future coverage). This is enabled by software. Apple customers who came for the great product designs will stick around for the services.

Services and software overshadows sexy design (until the company changes again).

New Apple, Old Apple, New Apple again.

Hello, Goodbye, Hello again.

Additional reads:
Jony Ive 2015 profile in The New Yorker.

John Gruber’s The Daring Fireball’s coverage and podcast of Jony Ive’s departure from Apple.

Ben Thompson’s Stratechery’s coverage of the Jony Ive story with his usual big picture context.

(Wikipedia: The iMac G3, introduced in 1998.)

Season Finales

Network Shows and Networks A Free Association Riff on What's Next

Just how many entertainment franchises have ended or are about to end this year?

this is a bit more of a pop-culture riff, that will rapidly lose all meaning with enough time and be completely nonexistent or sources of digital dumpster-diving for hipster nostalgia for some (hello Gen Zs).

Big Bang Theory
The Walking Dead
Game of Thrones
Avengers (sort of)
Star Wars (well the current story cycle)

They were all conceived in the tail end of the last boom and bust, and were sustained by character-based stories. The main characters changed over time. In the meantime, Netflix rose to power and platforms and modes of entertainment changed. Twitch, formerly “Justin TV” is now the nursery for a whole new form of sports entertainment. Time shifts and “on demand” media dominate viewing and sleeping habits.

And a long running show in the investment world moves onto its final season:

A decade of unicorn startups that raised pots of money,

busy spinning up cloud instances of aggregation and modularity (h/t Ben Thompson),

steering toy-like apps up utility and asymptotic curves into tools (h/t Ben Dixon at a16z, and Eugene Wei),

and turn in their hoodies (or is that fleece vests) for public company pants.

In past cycles, the guts of The Big Stack were still being pulled out thin air and silicon and turned into pipes, fiber, chips, transmitters, receivers, and switches and more for hardware, and then services and software to keep these atoms glued together so that electrons and photons could do their laps on the ever growing race-tracks, to provide data, delights and decision-making for humans.

The current cycle has now built another layer on top of all the accumulated tech hardware and software strata. It’s all getting ever closer back to us. First it was far away, all the backbone, the data-centers, the HQs, the tax havens, and then it got into our daily lives, all amped on network effects.

”Backbone” to Backbone it comes this way, from silicon to right underneath our skin.

Now it’s right up against us, whispering 24/7 in our ears “on demand”, “subscription”, “engagement”. Right into the last mile, in our homes, in our pockets and in our hands. Next up it gets even closer, right under the skin, down to the bone, our nervous systems, our ganglia, our code - but that’s for the next cycle.

By then both Mr. Market and Mankind will have renewed for another season and a new story arc. Networks and chill.

Libra: Coin Of The Realm

First Notes On Facebook & Libra

The word “Libra” comes from the Latin word for weights & balances - related to the mythology of Libra and a Greek “Titan” named Themis, a Greek goddess of justice, and is an inspiration for the “Lady Justice” image we may recognize from courthouses.

It’s also the name for Facebook’s digital currency and inspired a lot of “hot takes”.

Here’s my one line oversimplified take:

Libra is not bitcoin and looks more like a futuristic traveler’s checks network based in Switzerland.

Let’s move step-by-step through the details.

Libra is being developed by a team headed by a former executive of Facebook Messenger and Coinbase board member, David Marcus. The New York Times reported on February 28, 2018 that Facebook’s move was prompted in part by rival Telegram raising $1.7B USD to build its own cryptocurrency. But Facebook’s ambitions may be less about crypto and more about cash.

First a few details regarding Libra.

From the Libra whitepaper:

The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people. Libra is made up of three parts that will work together to create a more inclusive financial system:

  1. It is built on a secure, scalable, and reliable blockchain;

  2. It is backed by a reserve of assets designed to give it intrinsic value;

  3. It is governed by the independent Libra Association tasked with evolving the ecosystem.

Libra’s 3 Parts: The Blockchain, the Reserve and the Association

The Blockchain:

The blockchain is described in the technical paper’s abstract as:

The Libra Blockchain is a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world.

We present a proposal for the Libra protocol, which implements the Libra Blockchain and aims to create a financial infrastructure that can foster innovation, lower barriers to entry, and improve access to financial services.

To validate the design of the Libra protocol, we have built an open-source prototype implementation — Libra Core — in anticipation of a global collaborative effort to advance this new ecosystem.

The Reserve:

Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra. The real assets would be “bank deposits and short-term government securities in currencies from stable and reputable central banks”.

The Association:

The Reserve would be controlled by the “Libra Association”, an independent, non-profit membership organization, based in Geneva, Switzerland. It’s effectively a cooperatively owned international private bank governed by a “Libra Association Council” whose major decisions would require a super-majority two-thirds vote.

Libra is not “mined” like Bitcoin:

The Libra coin itself would not be mined like bitcoin. It would be created and “burned” though the deposit and withdrawal of real assets. “Coins are only minted when authorized resellers have purchased those coins from the association with fiat assets to fully back the new coins. Coins are only burned when the authorized resellers sell Libra coin to the association in exchange for the underlying assets. The Libra Reserve acts as a “buyer of last resort.”

What Some Experts Think of Libra:

Various experts have shared first reactions to Libra and at the moment it all feels like they are all in a pitch black room with a giant beast. One person has the tail, another the trunk and others the legs and so on. Assembling their initial reactions to Libra has been very helpful.

For Facebook’s official P.O.V., we can look to David Marcus’ twitter account to help us understand Facebook’s, and the Libra Association’s, intentions. Additional views, including Scott Galloway, Brian Roemmele, Jameson Lopp, and Muneeb Ali have been shared in part below.

Marcus’ description of Libra’s mission and main components:

Libra's mission is to enable a simple global currency and financial infrastructure that empowers billions of people.

It's time to try something new for the 1.7 billion people who are still unbanked 30 years after the invention of the web.

Libra has 3 distinct components:

1) a BFT-based (LibraBFT) permissioned (to start) scalable blockchain;

2) a reserve-backed cryptocurrency designed to be a medium of exchange;

3) a new programming language (Move).

From Jameson Lopp’s review of Libra:

Libra is a generic crypto asset protocol and the first asset will be a stablecoin.

…in order for the stablecoin peg / basket to be maintained, some set of entities must keep a bridge open to the traditional financial system. This will be a persistent point of centralized control via the Libra Association.

From a data structure perspective, Libra is more like Ethereum or Ripple than Bitcoin… Facebook is unlikely to be concerned with privacy while it does sound interested in smart contracts.

Sounds like Facebook has not solved any of the massive problems that Ethereum has been working on for years.

[I]t sounds like the Libra coins are actually the native unit of the protocol much like ETH is the native unit of Ethereum. Which leads to more questions about the pseudonymous nature of Libra; can you acquire coins without AML/KYC? If not, then it seems like you wouldn’t be able to use any of the system’s functionality anonymously.

From reading about the Calibra wallet, it will require AML/KYC, thus I wonder if there will eventually be on-ramps into the system that aren’t tightly controlled.

The Libra Blockchain” is not actually a blockchain. It’s really weird that this protocol seems to be very well designed and yet they keep calling it a blockchain when the data structure of the ledger history is a set of signed ledger states. Validators are making commitments for each ledger state, and all of the historical ledger states are also committed to in Merkle trees, but I have yet to actually see any backlinked lists of data that form a chain, much less a chain of blocks.

Muneeb Ali’s line-by-line review of the whitepaper overlapped with Jameson Lopp’s notes. Ali is the CEO of decentralized computing venture Blockstack:

Fairly positive mission

It’s the “global currency”part that might raise flags with entities that don’t want Big Tech to move into the business of printing money

“transition to permissionless - this is the hard challenge” with the “biggest question mark”

A part of Libra capturing many experts’ attention including Ali
The Libra Reserve: This is potentially more interesting than the blockchain tech.

A digital currency that can have stable value outside gov[ernment].

Overall a pretty solid approach. This is not some clueless bank jumping on the “hype train”

In my view the biggest challenges will be: (a) switch to permissionless (b) earning trust of developers(c) any potential conflicts with FB business model

Both Jameson Lopp’s and Muneeb Ali’s notes have two overlapping observations:

First, Libra’s technical design may be sound but it is not strictly speaking “blockchain” and

Second, the objective of Libra making a “transition from permissioned to permissionless state” - of delivering the promise of a truly decentralized service for billions of users in just five years - will be a challenge worthy of the Greek gods.

The immediate concern about Facebook’s involvement: Privacy

David Marcus noted that while Facebook may have helped to start Libra’s development it is trying to allay concerns about the company’s intentions:

Facebook has created a subsidiary, Calibra, …that will build services on top of the Libra network and currency, starting with a wallet (one of many that will launch on Libra).

One of the reasons … was to have a dedicated, regulated entity that will make strong privacy commitments to its customers as we've heard loud and clear that you don't want social and financial data commingled. We understand we will have to earn your trust.

While Facebook / Calibra will continue to contribute and work on this project, we will not have any special rights or privilege with the Libra Association and the network by the time it launches. In other words, we will have the same governance rights as any other member.

Building Libra itself may prove far easier than trusting Facebook. But the Libra whitepaper’s story about on-boarding the Great Unbanked of 1.7 billion people is a desirable dream.

Scott Galloway shared both the dream & the reality about Libra serving the Unbanked:

The Libra coin is simply brilliant. Other than education and healthcare, the industry most ripe for disruption is financial services. It’s figured out a way to avoid 1.7 billion people — a quarter of the planet — whom we refer to as "unbanked." Yet two-thirds of them own a mobile phone that could help them access financial services. Within financial services, the remittance industry (wires, sending money home) is a $500 billion industry where the unbanked (the poor) are molested with 7% fees.

A stablecoin that facilitates inexpensive transfers of funds across borders could be the largest tax cut for the poor since vaccinations. In addition, hundreds of millions of banked people are vulnerable to poor governance and unstable currencies that result in vaporization of their savings (Argentina) or eating trash to survive (Venezuela).

Galloway, however, has also described the reality which looms over the dream.

Nobody was going to place a smart camera in their home from a guy who puts tape over his computer camera. And no elected official will let an organization with the culture of Uber, the negligence of Facebook, and the centralization of Visa replace their central bank.

Again, my one-line take is:

Libra is not bitcoin and looks more like a futuristic traveler’s checks network based in Switzerland.

Imagine what can happen when you don’t have to exchange money or move it between services, to buy anything, and the unit of value for your digital currency doesn’t take a roller-coaster ride every other hour? And you had the equivalent of one-third of the world’s population using one app for cheap and instantaneous financial transactions?

The building of a payments layer, with a new global medium of exchange, on top of a social network - accessible to 2.7 billion users of WhatsApp and Messenger - reflects an intention to create a global alternative to payment apps constrained domestically such as Tencent Holdings’ WeChat Pay and Alibaba’s Alipay.

Recently, Zuckerberg announced that the heads of the company’s four app families - Facebook, Instagram, Messenger and WhatsApp - would report to him directly. This was meant to be in keeping with a pivot to a “privacy-focused vision” of one-to-one messaging with end-to-end encryption. At the same time one of the biggest roll-outs in the history of money may be unfolding and these managers could become key players.

There were many hot takes after the Libra announcement because Facebook is the same company struggling with concerns about user privacy and employee working conditions. It’s drawn opposition from politicians, investment and tech professionals.
Should we worry that a very centralized finger has been pressed on the scales? Some in Congress aren’t waiting to find out. Libra’s development meets its first roadblock.

The U.S. Congress would not be the only governmental entity for Libra to work with. The Financial Times reported that Bank of England Governor Mark Carney would keep an “open mind” about Libra but that it would not have an “open door” with regulators. Carney noted that strict regulation would be used to address money laundering, hacking, and user privacy. Other parties include the G7, the Bank of International Settlements (BIS), the Financial Stability Board and the International Monetary Fund.

France, which heads the Group of 7 (“G7”), has already appointed a former ECB board member to lead a task force to examine central banks’ role to ensure how cryptocurrencies would be “governed by regulations ranging from money-laundering laws to consumer-protection rules”.

The BIS has released commentary within its annual report relevant for Libra. While the Bank recognizes that it’s early days, for what could be a huge new opportunity for tech giants and for the Unbanked, it also cautioned “big techs have the potential to loom large very quickly as systemically relevant financial institutions”, and that their “entry presents new and complex trade-offs between financial stability, competition and data protection”. Too Big To Fail, Part 2 may be the scenario the BIS fears.

Cameron Winklevoss, of Facebook and Gemini (another crypto horoscope name) predicted that every FAANG company will have its own coin within 24 months. I wonder if they will all follow this same global non-profit association model but they will most certainly face the same scrutiny as Facebook and Libra.

Carney’s stance is understandable.

Last year about $1.7B USD in cryptocurrencies was stolen in 2018 according to CipherTrace Cryptocurrency Intelligence. Setting aside fears of Facebook there are other bad actors ready to defraud and steal from billions of Unbanked people who would be ripe targets.

As a permissioned blockchain, at least for the next few years, Libra would have both the vulnerability of censorship by those who govern Libra (since despite the Council’s “2/3 supermajority” rule there are bound to be politics) and more significantly potential vulnerability to outside attacks.

Facebook will not be the only company involved in this process.

It’s early days for Libra, likely filled with many meetings with public officials, with long road ahead to serve billions of people by 2020 and then somehow go “permissionless” by about 2025. Who else besides Facebook will be in the mix?

The Block analyzed the formation of the Libra Association - which will eventually have 100 members. The first members appear to be natural candidates, including on-demand Cos. and fintechs.

From Frank Chapparo’s report on the Libra Association:

Facebook charged each member $10 million to manage their own node, which allows members to access and view the network. Originally the company had ambitions to get Wall Street involved, but found a lack of interest among institutional giants like Goldman Sachs and JPMorgan.

It is still looking to have 100 members in the governing association…

This funding from the consortium members will back the coin, which will be pegged to a basket of currencies. If successful, Facebook could net $1 billion from the 100 companies it hopes to include in the project.

Each of these nodes will also reportedly get a seat in the Libra Association as node operators, sending a representative to the consortium.

Reports of a Facebook cryptocurrency began circulating in May of 2018, when Cheddar reported the social media giant had begun looking into blockchain nearly a year prior. Facebook then announced David Marcus, vice president of its Messenger app and once-member of Coinbase’s board, would lead its blockchain efforts. Prior to Marcus’s appointment, Morgan Beller, a member of Facebook’s corporate development team, was the only employee studying blockchain.

Since then, Facebook expanded the project and talk of a stablecoin increased with each step the company took into the blockchain world.

In May of this year, Facebook registered Libra Networks LLC in Geneva, Switzerland, where it is working on blockchain developments, according to its register. BBC later reported that the company is looking towards a Q1 2020 launch of the coin, and has plans to begin testing it later this year before launching in a “dozen” countries.

What are Libra Association members getting out of being involved?

Brian Roemmele, an expert and commentator on voice and payment technologies, shared relevant thoughts about what Libra is relative to money and crypto:

You know Libra has great parents, the Money Order and the Travelers Check dressed in a great crypto wardrobe. The internet needs Libra but it is not really Crypto or Bitcoin it is a currency arbitrage system that will make the 100 owners wealthy.

Libra is needed for the Internet to move forward. Libra will never replace Bitcoin. Bitcoin will be bolstered by Libra as it moves to 6 digits. There will be many more coins to come.

You know from my perspective Libra is like any other proxy currency. More an American Express Travelers Check or Postal Money Order then it is Bitcoin. It just happens to borrow some minor aspects of Bitcoin. So Libra come with all these features.

There needs to be a way to instantly transact anyplace in the world. Cross border transactions today are fractured. The potential to embed a payment protocol into the Internet stack is vital. Nano and micro payments are needed to pay for content.

And Tyler Cowen’s observations on Libra included a similar perspective:

Imagine a private payment company issuing SDRs, or some other similar basket, based on 100% backing. They would offer you new transactions technologies for greater convenience (WhatsApp?), in return receiving access to your transactions data and sharing some of the float and spread all around, to merchants and customers too.

I mentioned WeChat Pay earlier. Chinese mobile payments in aggregate, with 90% of it via Alipay and WeChat Pay, was over 277+ trillion yuan ($40+ T USD) in 2018.

A global version, built on multiple currencies, could dwarf that volume. That’s part of the allure for Facebook, Calibra, and the Libra Association’s members and so $10M USD a piece for an opening gambit seems like a small price for each member to pay.

Ben Thompson of Stratechery has described the potential endgame for Facebook:

the implication that digital currencies will do for money what the Internet did for information is that the very long-term trend will be towards centralization around Aggregators.

When there is no friction, control shifts from gatekeepers controlling supply to Aggregators controlling demand.

To that end, by pioneering Libra, building what will almost certainly be the first wallet for the currency, and bringing to bear its unmatched network for facilitating payments,

Facebook is betting it will offer the best experience for digital currency flows, giving it power not by controlling Libra but rather by controlling the most users of Libra.

Before anyone panics over a “Bank of Facebook”, we should be reminded that there will be hurdles to overcome before a Libra coin goes live. The hurdles, in summary, from the New York Times article How Libra, Facebook’s Cryptocurrency Would Work For You include:

The Swiss association governing Libra will first have to agree on the final design of the cryptocurrency. Then the association will have to find banks willing to hold the money that will back up the currency. Financial regulators, many of whom have been hesitant about cryptocurrencies, will need to sign off on the design.

Much to do in Geneva and everywhere else.
The dream for billions and Libra Association members is big (and slightly boring).
Goodbye Gnomes of Switzerland.
Hello to the new Kings and Queens of Crypto Cantons.

(Wikipedia from Romy Biner-Hauser)

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