[Cryptography] Our leader opines on cryptocurrencies

[Phillip Hallam-Baker]

On Sat, Jul 20, 2019 at 2:24 AM John Levine <johnl at iecc.com> wrote:

> In article <
> CAKco+gzZYuhQbLmPCWteVbhYjw_FyfiMZ4gwPcKrLzr+nq3oMQ at mail.gmail.com> you
> write:
> >So, Libra is indeed a massive threat to USD as the dominant currency of
> the
> >world. Right now, USD is the easiest currency to move around the world,
> >accepted almost anywhere at face value with the best exchange rates. Libra
> >is a massive threat to this status, and also remember that it is backed
> not
> >just by USD but a combination of currencies, which gives it even more
> >transactional power.
>
> I fear that some people may be a little weak on scale issues.  There is
> about $1.7 trillion
> in US cash in circulation, and about $14 trillion in bank deposits.  I
> will eat my hat if
> Libra ever has a total cap of $10 billion, which would be 0.08% of US bank
> deposits.
>
> Master Card can process 38,000 transactions per second, and Visa about
> the same.  Good luck doing that with a blockchain, even a closed
> non-PoW one.
>
> I can imagine a variety of reaons that Libra is a bad idea, but wholesale
> replacement
> of the USD is not one of them.
>

Putting the amount at $10 billion might well put you into hat-eating
territory. You would probably be safe at $50 billion though.

There are 4 billion Web users. FB gets 10% of them on Libre, an average
float of $20 puts them at $8 billion. But that really isn't a lot of money
at Internet scale.

It is entirely possible that Libre becomes a reserve currency in its own
right but it won't happen overnight and if it does happen it will be simply
because it turns out to be convenient for international companies to use
for settlements reducing the currency risk on both sides. And if that did
happen it would likely be through some EFT like structure that is actually
separate from the exchange system.

I can see Libre becoming a $400 billion company in its own right because
that is what Visa corp is today. But it will take quite a while getting
there.

What Libre won't do is to replace the dollar or euro or the like.
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