Can Facebook Be The iPhone Of The Crypto Ecosystem?
A couple of months ago, I wrote about the importance of ease of use in accelerating the adoption of blockchain technology.
As impact investors, we care about the adoption of blockchain technology because we are excited about its potential to deliver more “open and inclusive economic infrastructure.” That’s a meaty phrase, and there are a number of ways to unpack or explore this potential. A favorite of mine is to focus simply on how blockchain based networks transform the core motives of economic activity. In short, the traditional firm exists to maximize shareholders’ value. Blockchian based networks, conversely, have no shareholders. Instead, they consist of a federation of builders, users, and speculators whose best interests are all aligned with maximizing the utility of the network.
This is a powerful idea, but it has for the most part been just that; an aspirational and wildly profitable (or unprofitable) idea.
The point of the original blog was that before this technology can mature to make life better for consumers around the globe, it must be easier to use. The blog draws on the adoption arc of the mobile web, which was first made commercially accessible by Nokia in 1996 but was largely an afterthought until, in 2007, the introduction of the iPhone made the aspirational but unwieldy technology easy and intuitive.
“Blockchain based networks transform the core motives of economic activity.”
The blog further asserts that mobile web usage was originally driven by “low friction” applications–such as connecting with and staying in touch with friends–and progressively matured to enable more complex and higher friction usage as users’ comfort with and trust in the mobile web increased. The conclusion of the blog is that “In order to realize important promises like the democratization of the tools of modern finance, crypto needs its [its version of the] iPhone and crypto needs its [version of] Facebook.”
Well, as it turns out, Facebook wants to be crypto’s facebook. And Facebook wants to be crypto’s iphone.
In June, Facebook–in partnership with a number of leading tech companies and a handful of nonprofits–unveiled plans to launch Libra, a blockchain based payments platform. This an exciting development. It carries the potential to both introduce a “low-friction” introduction to cryptocurrencies for billions of consumers across the world, and to serve as the easy and intuitive front end through which consumers engage with a variety of third party and more complex blockchain based applications.
This latter potential, however, hinges on Libra’s ability to live up to a promise to transition to an open and permissionless blockchain network. As I wrote last week, it seems incongruent that one of the largest corporations in the world would relinquish the keys to an initiative that is (or could be) strategically important to the firm. Doing so will not only be a compelling endorsement of this open and inclusive new form of economic organization, it will give third party developers the access and peace of mind to take advantage of facebook’s user reach, making Libra a powerful catalyst for a range of blockchain applications of varying complexity.
But even if Libra ultimately doesn’t live up to this promise, a successful rollout of their platform is poised to be a relatively low friction introduction to cryptocurrency for billions of mainstream consumers.