1/ I’ve seen some talk of how Libra is Facebook’s ultimate “WeChat move”, so let’s dive into some similarities and differences between the two projects.— Avery Segal (@avesegal) June 24, 2019
(But first…) please note that none of the following should be taken as investment advice. See http://a16z.com/disclosures for more info.
Similarity: WeChat and Libra both have the goal of payment accessibility. WeChat Pay spearheaded China’s transformation to a cashless digital society w/ 900M+ MAU, many underserved by traditional banks. Libra aims to bring price-stable money via crypto wallets to 2B+ people.
Ubiquitous mobile wallets is big for fintech and greater financial opportunity. While USD is relatively stable, other countries like Venezuela lack stable ways to preserve wealth. It also unlocks new business models, as seen in this post w/
Huge difference: currency/reach. WeChat Pay can be used in 49+ countries but the platform itself is limited to local fiat balances in China or Malaysia. By being a cryptocurrency not pegged to a single currency like RMB, Libra’s aim is to be used globally.
Huge difference: centralization. Libra will launch with 100 nodes (1 by Facebook). Developers and other ecosystem participants have less deplatforming risk than exists with WeChat (although it’s still more centralized than other cryptocurrencies like Bitcoin).
Kevin Werbach’s take on the importance of blockchain-enabled trust: “The benefits from re-establishing the trust it has lost would dwarf what it could squeeze out of mining the data.”
8/ That being said, centralization is not all bad for adopting new tech! WeChat incentivized online-to-offline payment adoption with $150M+ in subsidies in 2018 (Alipay spent $300M+)! But it also means they control the ecosystem.
Difference: Open-source. Unlike WeChat (and other fiat-based monetary platforms), the code that powers it is completely available for anyone to improve. In the event people are deplatformed, they can fork the code and create their own Libra alternative.
Similarity: Lack of anonymity. Libra is pseudonymous like Bitcoin and can be audited by third-parties or law enforcement, in contrast to completely anonymous products like Monero or Zcash (with shielded transactions).
So is Libra actually about emulating WeChat? There are clear differences, but the shared vision, with the potential of giving crypto wallets to the masses, may only be imaginable thanks to WeChat’s success in China.
In response to the Libra news, Tencent Chairman Pony Ma wrote, “The technology is mature, it’s really not difficult. It only depends on whether regulators allow it.” Going global ≠ open financial system, but there’s a lot to learn from studying their respective approaches.
The Real Reason for Facebook’s New Cryptocurrency — op ed by Kevin Werbach
Libra lessons from WeChat and QQ — podcast by Matt Brennan and John Artman
Can Libra replicate WeChat Pay’s digital payment dominance? — article by Nicole Jao