[Cryptography] Our leader opines on cryptocurrencies

[Osman Kuzucu]

> Date: Sat, 20 Jul 2019 20:41:40 -0400
> From: Phillip Hallam-Baker <phill at hallambaker.com>
> To: John Levine <johnl at iecc.com>
> Cc: Cryptography Mailing List <cryptography at metzdowd.com>,
> 	peymanr at gmail.com
> Subject: Re: [Cryptography] Our leader opines on cryptocurrencies
> Message-ID:
> 	<CAMm+Lwi72G3vZ9yTGn05JtdvM_7sGZFRzPX7+amzS1QCJ-S1vA at mail.gmail.com>
> Content-Type: text/plain; charset="utf-8"
>
> 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.


I am no expert on the development aspect of the Libra itself, but just 
by looking at what we already know, I can say that Libra can easily 
exceed $10 Billion market cap. Just look at XRP, a company from ground 
zero, just because of the Blockchain technology, it attracted a lot of 
people and now has around $14 Billion market cap. Now if a company like 
Facebook, who is well known by almost everyone, comes up with such 
product, of course it will attract a lot of people and I am expecting a 
market cap over $100 Billion in couple years. Heck, it could even exceed 
that easily.

When you think about it, Facebook already has a built in marketplace 
script, all they have to do is to make Libra official currency there, 
and make some agreements with the banks around the world (mostly EU 
banks due to regulations in US), they can easily hold a powerful place 
in the finance industry. If people bought Ripple with almost no 
advertising, many people will buy Libra too. And if Ripple could be used 
by banks (I am from Turkey and even we have a bank that allows you to 
send GBP to some banks in UK via Ripple network. Literally I can login 
to their online bank and see the name "Ripple" under transfer options) 
so can Libra.

As for the scalability, I don't know much about the technology they are 
going to use, but it doesn't have to be a public blockchain application. 
And if Facebook's/Instagram's servers can handle the content traffic, 
then they can easily handle the transactions, and all they have to do 
could be wrap up all the transactions in any given minute and record it 
to the blockchain. We don't know if they are going to make it a 
distributed blockchain or not. So maybe, they can just use the 
technology's name, keep the records in chain, and do all the other stuff 
in regular servers. And if they really want a blockchain app, I am 
pretty sure they can handle 30K+ transactions per second.

And for the idea of it, it doesn't have to replace the USD or any other 
currency in one day, but it sure will be around in the future.