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Tweetstorm: Libra and WeChat Compared


(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/ @conniechan

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.

Suggested reads:

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

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Ant Financial: Impact of China’s 2016 Clearinghouse Regulation

This is the second part of a two part series on Ant Financial. Click here to read the first part on Ant Financial’s history, ecosystem, and growth.

In a 2017 interview, Jack Ma stated very emphatically, “We have to step ahead of the regulators; we have to. Otherwise, we go nowhere.”1 This game of leapfrog between third party payment applications and regulators has helped served the Chinese market by letting the market decide the future of finance. Chinese fintech has clearly benefited from the boldness of companies such as Ant Financial and Tencent setting bold paths ahead of regulators, but now that regulators are getting involved, it is beneficial for the future of competition, mobile payments, and Chinese financial markets. In this blog post, will shift my focus to the implementation and effects of the 2016 clearinghouse regulation.

Continue reading “Ant Financial: Impact of China’s 2016 Clearinghouse Regulation”

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Understanding Ant Financial: History, Ecosystem, and Growth

Alibaba founder Jack Ma famously professed that should the government desire, he would deliver Alipay to the state.1 He also said that because the state banks would not change on their own, Alipay would change them. What connects these two statements is the power that Ant Financial has accumulated by becoming an indispensable part of over 500 million citizens’ lives. It’s not beyond Jack Ma’s imagination that the overwhelming power of his private company would cause integration with the state to be inevitable.

Continue reading “Understanding Ant Financial: History, Ecosystem, and Growth”

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Beijing: First Month Highlights

For the past month I’ve been living in Beijing. My hostel is in a hutong, the narrow alleyways of traditional Beijing. These have been now made increasingly busy (and potentially dangerous) with the popularization of cars, motorcycles, and all kinds of electric vehicles and carts. I spend most of my time  taking language classes, learning to cook Chinese food, and exploring the city.

beijing hutong street

Last week I went on a tour of Maliandao tea market. This market practically takes up an entire street, but is centered on a massive 3 story wholesale tea shopping mall. It was an eye-opener to try so many different teas – from the lightest of green teas to the darkest of blacks. Each tea has a variety of health benefits, and traditionally has no sweeteners or milk added.

beijing maliandao tea market loose leaf teas

Good quality tea does not come cheap in China, as the entire process is done by hand. The tea was sold in a variety of forms – from loose leaf, bags, and blocks to the massive sculpture below.

beijing maliandao tea market store

One of my favorite spots has become Houhai, a popular restaurant/bar area located on a series of massive manmade lakes. I love standing alongside the water, watching the boats go by and waving at everyone inside.

beijing houhai park duck boats

On a completely random note, as I was heading home one night I discovered the bathroom at the subway line 10 had a full-fledged band playing. While it was slightly awkward to walk past them (and even more awkward to photograph), I have to admit that they were pretty good!

beijing subway bathroom guitar player

One night I attempted to watch a Beijing Guoan match. This is Beijing’s professional team in the Chinese Super League, and this year they are doing exceptionally well. I had read online that tickets should cost just about $7-14 from scalpers by the entrance. However, because they were playing the best team in the league for the number one position, tickets were over $60. Realizing that price was the cost of 40 lunches, I decided to head back to my hutong and watch the match on tv.

Nonetheless, I bought an absurd amount of Beijing Guoan apparel on the street. I might be their #1 fan in China who has never been to a match!

beijing guoan soccer match souvenirsFinally, Trey Ratcliff of Stuck In Customs, a popular travel photography blog, came to Beijing and hosted a photo walk. He brought with him a remote controlled drone with a GoPro camera attached – which was loads of fun to watch him fly.

beijing photo walk trey ratcliff flying quadcopter

Trey invited his modeling friend, Ms. Leona Xu over during the photo walk. The photo Trey deemed most interesting would get to keep his camera, so everyone went nuts over photographing her.

beijing photo walk leona xu factoryI found the paparazzi-like crowd and blatantly sponsored baby formula to be quite amusing, while at the same time realized how aggravating it could be to be famous.

beijing photo walk train tracksOther highlights include hiking on the Great Wall and general hutong life, which will have their own posts soon enough. Until then, thanks for reading and 再见!