For anyone who hasn’t been following the story, Libra is a very big deal in the world of fintech and digital currencies – so potentially a very big deal for all of us. It’s also a fascinating saga for anyone interested in the architecture of ecosystems.
Facebook has proposed a new payment ecosystem based on a private currency pegged to a blended portfolio of fiat currencies (ie dollars, euro, sterling etc.). Facebook assembled a dream team of big players in the payments world, and others and has funded and sponsored the development of a blueprint for an independent platform to govern the new currency.
The platform is conceived as a non-profit governed collectively by stakeholders, with its financial surplus applied to social impact projects. Once its up and running, Facebook stands back from the platform, but takes a very strong position in the ecosystem around it.
One of the things that fascinates me about this process, is how Facebook have used the independence of the platform to rise above the detail. Their power and financial muscle makes the project a serious proposition. But the first details of the structure were essentially a strawman sketch; tell us what you don’t like and we will work with you to change it. Nothing will happen until you, the regulators, are happy. The technology will start with what’s proven today, which has it’s issues – but that’s OK because we will give the platform the wherewithal to stay at the leading edge, and the freedom to change to do so. The practical task of delivering all of this will not be for Facebook – it will be for the new body brought into being through the process it has convened.
The feedback is in. A growl from US regulators, and a hurried backward step by the the big payment processors. But this is what the process is designed to accommodate. The flexing and moulding begins.
A sharp-eyed lawyer spotted that the Articles of Association 2.0 have now been filed. There’s a mellowing of the language about building social impact – now framed around collaboration with the existing institutions – a friendly funder of the status quo not a threatening disruptor. The ties with the members of the central association are looser. A bit more fleshing out of the internal institutional structure. Nothing that changes much for Facebook.
There will be more to come. Probably a lot more. Will Libra come to pass? Too early to say. But change will come, as the strength of the dollar payment system begins to fade in a multipolar and digital world. And somehow, from nowhere, Facebook has put itself at the heart of the conversation, perfectly positioned to play a leading role in that change.
And all with what’s basically a thought experiment.