The Libra and why Cryptocurrency is not ready to succeed
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In June 2019, Facebook announced that it was focusing on investing in Calibra e-wallet and Libra cryptocurrency. Calibra is another Facebook investment focused on personal financial services. Calibra’s goal is to make the best use of the cryptocurrency circulated by Facebook itself, based on blockchain, called Libra. In 2020, Calibra will focus on its e-wallet service. Facebook’s announcement has created a variety of different reactions in crypto circles in particular and in general communication.
Despite receiving many different opinions, they all concluded that Facebook is preparing to promote blockchain technology globalization in its upcoming projects. The reason behind this motivation is mainly from the huge number of users of this social network. There are more than 30% of the population, equivalent to 2.38 billion Facebook users so far. So the question is: What is Libra coin? And does Facebook succeed with its next move?
Exhibit 1: Libra and its ecosystem
What is Libra?
Libra, above all, is a cryptocurrency unit that allows people to use and participate in a network called the Libra Network. Users in the network will be allowed to trade this fiat currency with other currencies and use it to make online payments.
Virtual currencies will basically function similar to the currencies that governments are currently issuing such as USD, EUR or SGD. However, unlike the stability of current legal currencies, Bitcoin or Ethereum and some other popular cryptocurrencies, are very volatile in pricing. Facebook saw this opportunity and set a goal to make cryptocurrency, including Libra, more stable to encourage users to use them to pay for online services today.
Traditionally, to make a financial transaction, a person must go to a bank or a service provider that allows online money transfers like PayPal, Transferwise, etc. But similar to other cryptocurrencies, Libra will allow users to transfer and receive money directly to participants’ e-wallets without going through a third party, using a kind of technology, called blockchain. This helps Libra bypass traditional physical barriers, current technology limitations and move towards global unity in a larger and more comprehensive network.
But will Libra achieve its goals and success?
Why can’t Libra coin be successful?
There is an undeniable fact: Most of us do not believe that cryptocurrency will be pragmatic in the near future. Even a game based on cryptocurrency trading like CryptoKitties with simple rules also fails to entice large amounts of bitcoin and other currencies to focus on a place where current technology can catch up and help change the perception of people and the future of the world in general. For one thing, the crypto coin is still too far away from a place called “adjacent possible”. The adjacent possible is a concept that first appeared in Where Good Ideas Come From, written by Steven Johnson. According to Johnson, the adjacent possible is an extremely narrow and “marvelous” are – a place where countless creations change the world, and also the place between two other spaces. The first space is an area of creativity that has the support of current technology, the remaining space, which is seemingly far-fetched and impossible (until now). The adjacent possible is where creativity is not yet possible, but it is about to be feasible with the pace of technological progress of today.
The adjacent possible, when illustrated on the chart, will be a downward curve. One axis represents the level of technology development today, the other will indicate the level of readiness that society will accept and use that type of technology. The curve connecting the two points will, therefore, be further away from the two axes because technology is getting better and the society is readier to absorb new breakthroughs. The internal side of the curve is a technological innovation that already exists and is accepted. TVs, smartphones, aviation are innovations in this area. Outside of the curves, there are technologies that are not yet feasible or society is not ready to learn. Holographic entertainment, augmented reality glasses and space travel services are what lies outside the region. The magic happens at the intersection of these two regions – also known as the adjacent possible.
Exhibit 2: Illustration of “adjacent possible”
Johnson argues that all the great creations that change humankind are within the adjacent possible, and this is the appropriate drop for solutions to support ready-made technological innovations and increase creativity at a new level, motivating people to go further. The Wright brothers’ first takeoff in 1903 is an example. At this point, the idea of the flying machine was supported by the necessary mechanics and hypotheses – piston engine and aerodynamics existed a few years earlier.
On the other hand, for virtual currencies, if this theory is applied, we can see that cryptocurrency is not ready to succeed. Humans are not really ready for cryptocurrency. The blockchain technology and platform has allowed Bitcoin to be available 10 years ago, and there are dozens of other cryptocurrency units that have been appearing, probably more than supermarket brands outside the supermarket. However, all these coins are outside the adjacent possible. Only 5% of the US population today actually owns several Bitcoin coins. And Bitcoin is much more popular than other currencies.
Exhibit 3: CryptoKitties and efforts to bring balance to cryptocurrency
In 2018, the CryptoKitties game can almost help people know and use different types of virtual currencies, helping to bring cryptocurrency closer to the adjacent possible. By relying on the basic amount of Ethereum, the application allows users to buy, breed and sell virtual cats. Initially, the game attracted a great deal of media attention and users created more than 1.5 million virtual cats. However, the popularity of the game is decreasing and so far, data from DappRadar shows that only about 200 to 400 play this game every day.
The Libra currency and the Calibra e-wallet are an attempt by Facebook to try to stabilize this lucrative cryptocurrency market. However, considering the adjacent possible set by Steven Johnson, it is clear that users are not really interested in and using cryptocurrency in general, despite the moves of the cryptocurrency community. like the CryptoKitties game released in 2018. Facebook really needs to have strong moves and impacts to change users’ perceptions, especially when Facebook is currently the main use of 2.38 billion users worldwide.
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