Welcome to tex Stuff, a production from I Heart Radio. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with iHeart Radio. And how the tech are Yeah, well, let's get to it. In the summer of twenty nineteen, Facebook, the company, you know, the one that's now known as Meta. I keep forgetting to call it that anyway, Facebook announced a project called Libra, and it was to be a new cryptocurrency sort of more on that in a second. In fact, I think it might be more fair to just call it a digital currency. But it was meant to be a currency that would allow folks to send money around the globe with a minimum of fuss, including stuff like transaction fees and you know, currency convert Asian fees and all the stuff that mounts up as you try to move money from one region in the world to a different region. And it was going to work all through various applications such as Facebook Messenger or WhatsApp, both of which obviously are Facebook slash Meta properties. Now that alone would have been a huge benefit to millions, perhaps as many as a billion people. There are so many folks who leave their families behind in order to travel to some other part of the world where they can get work, and a lot of them want to send money back home to their loved ones. You know, maybe they're able to earn a decent wage whereas back home they couldn't, and they still want to be able to support their family. But international money transfers are, to put it lightly, somewhat clunky, and various fees often eat away significantly at any money you actually send back, so the amount that your family receives might be a fraction of what you actually sent. A digital currency that could streamline that process and work natively within apps that billions of people are already using seemed like a no brainer. But we recently learned that silver Gate Capital, which is a bank located in California, has paid two hundred million dollars for the assets of what was once called Libra. So today I thought we would talk about what Libra was, how Facebook was involved, the changes that the currency went through, and how we got to where we are now with the project essentially disbanded. So let's start at the very beginning, which is a very good place to start. According to CNBC, the natural starting point is with a woman named Morgan Beller who joined Facebook in ten. She joined as part of the company's corporate development department. Now, in case you're not down with business speak, corporate development is usually the part of a company that's always looking for the next deal, you know, whether it's a merger or an acquisition, divestiture, a partnership, anything like that. When you get down to it, it's really the part of big companies that's always looking for ways to grow the company further and to restructure it so that it works more efficiently. Um Typically, when I think of efficiently in these terms, it's really how can we do more but with fewer resources and with better revenue. So, in other words, what are we doing now? Can we do more of that? And can we do more of that without spending so much? It's really how how it boils down in Beller began reaching out to crypto experts with the question, Hey, if you had access to a couple of billion people through a platform you had built, how would you integrate cryptocurrency into that platform and you know, use that to the benefit of both yourself and your users. The implication being that Facebook, the company, which again would not be called meta until late had this enormous user base more than a billion people, and a digital currency that was native to Facebook could be an incredible source of revenue as well as potentially help countless people out. CNBC reports that Beller was the sole employee in the company working on blockchain initiatives in those early days in seventeen. In January eighteen, Mark Zuckerberg himself posted on Facebook that he wanted to delve further into technologies like encryption and cryptocurrency due to their potential to create decentralized assets that quote take power from centralized systems and put it back into people's hands end quote. Yes, Mark Zuckerberg, man of the people. I'm sure when you think who represents the average Joe, Mark Zuckerberg leaps to mind. Uh. It wasn't an outright admission that Facebook the company was getting into cryptocurrency or even blockchain, but it was an early sign. Also, I do want to say that while the model is conceptually decentralized as and you don't have like a centralized bank or financial authority at the center of most cryptocurrencies, the Internet itself conceptually is decentralized, but in practice we tend to see a few very powerful players take center stage in various domains, if you will, of those technologies, and effectively at least parts of the system become centralized. Those those companies become the centralized authority within the system. So you can have something that you know in theory is decentralized and still in reality it can change into more of a centralisis to him, a great example of that is UH cloud hosting, like various you know, applications and things of that nature. Amazon has essentially a lockdown on that, effectively a lockdown. If you talk about Internet search, Google has a lockdown on that, and what is in theory decentralized in practice becomes very centralized. A lot of people have argued cryptocurrency falls into that same category, but that's a discussion for another time now. It wouldn't be until the spring of when Beller's work started convincing folks higher up on the corporate chain, which ironically is not a blockchain, that she was onto something and that more people should pay attention. In May, David Marcus posted on his Facebook account that he was taking the lead on a blockchain working group in Facebook. He also said the group was building everything from scratch and maybe I missed it, but it seemed like he didn't acknowledge Beller's work at all. Like, from what I can tell, the reason that Libra even got started is because Beller was hard at work trying to figure out ways to incorporate blockchain and cryptocurrency technologies into Facebook products UH, and so I thought it was a little odd that there was no acknowledgement here, although from all accounts, Beller was an integral component in the creation of UH the Libra initiative. Anyway, David Marcus had previously led the Facebook Messenger division within the company for nearly three years um or maybe it was like almost four years, and before that he was president of PayPal, So this was someone familiar with both financial organizations and communications organizations, and of course that was the crux of Facebook's value proposition. When the company was actually ready to talk about this currency project, in the meantime, Marcus and Beller began building out a team to draft out ideas for a digital currency that could work with Facebook, as well as a digital wallet that would interoperate with Facebook services. And the wallet is the part of the system that the end user UH interfaces with right The wallet is where the user accesses their funds or they purchase more crypto units, uh, and its stores the crypto units that they own. It has their account on it. Essentially, it's called a wallet because it acts like a real world wallet would and UH, it would be a delicate thing to talk about this moving forward because Facebook was trying very very hard to position itself as we are really focusing on the wallet side of this. And yes, we're involved in drafting out what the currency will be, but that's that's not our thing. Know, it's not Facebook's currency, but we are going to create a wallet. However, it'll just be one of many wallets that could be created for this currency. So Facebook in the very early days was still trying to create a narrative that gave a little bit of separation between the company and the currency. Now occasionally the tech media would remind everyone that Facebook was working on something in the cryptocurrency realm, and by May twenty nineteen, journalists had pretty much confirmed a Facebook cryptocurrency like service was coming. At the time, people were referencing this as Facebook Coin or sometimes as global Coin, but for the most part, you know, it was it was pretty quiet news outside the company. You know, you didn't hear about it very much until June of two thousand nineteen. That's when the website for what was then called the Libra Association launched. There's gonna be a lot of then called because all the stuff I'm gonna talk about has changed names. Facebook changed its name, the Libra Association changed its name, The Libra unit of currency changed its name. Calibra, the digital wallet that Facebook was gonna make changed its name. Everything changed its name. It's almost like everyone wanted to try and assume a brand new identity and wipe the slate clean. That's foreshadowing, um. But anyway, in June two thousand nineteen, that's also when someone and I'm not sure who, published a piece in Facebook's newsroom section. There was no attribution as to who wrote it, but this was announcing Calibra. Now, that was the digital wallet service specifically crafted to work with the Libra unit of currency. Okay, let's do a quick overview again, like a quick rundown. We have the Libra Association. That's an organization that would oversee the development of this digital currency. The currency itself was called Libra, and Facebook digital wallet was called CA, Libra c A, l I, B R A. All Right, Now, folks in the currency division have been hard at work forming relationships with numerous companies to create a sort of alliance, the Libra Alliance that would or a Libra Association that would collectively be the force behind the Libra digital currency um I figure. They realized pretty early on that if Facebook tried to do this all on its own, people would bring up a whole bunch of tough questions, which they did anyway. Plus Facebook just didn't have the deep background of expertise in the financial world to be able to, you know, authoritatively, come forward and take the reins on everything. Now, initially the Libra Association had twenty seven partners in it besides Facebook, and there were some really big companies in this association like Visa and MasterCard. Now these are financial institutions with a very long history of processing transactions. There was also a PayPal, David Marcus, his old stomping grounds uh. Spotify was on there too, way before the company would become mired down in a mess of battling ideologies and misinformation campaigns. Then you had Uber and Lift that were also on that list, as well as coin Base, and lots of others. Now, the digital currency being proposed was in some ways similar to cryptocurrencies and in other ways very different, and a lot of outlets would refer to Libra just as a cryptocurrency as sort of shorthand, but some were a little more nuanced in their description. For example, Elizabeth Lapato, who's an editor at The Verge, wrote a phenomenal piece about Libra back in June of two thousand nineteen. It was titled simply Libra Explained. Now, first, miss Lapato, you are far too modest. Not only did you explain Libra thoroughly, I mean seriously, it is an excellent article. You should read it. But Lapato also did in a way that was really entertaining as it was informative. Also, just side note to miss Lapato, I also have a habit of capitalizing words for comedic effect, and I don't care if I'm the only person who finds it funny. Anyway, Lapato's piece points out how the proposed currency has laid out in a white paper compares to a cryptocurrency like bitcoin. Uh So, with bitcoin, you have a finite number of bitcoin that will ever be in circulation, and once they are all in circulation. That's it. That's all that will ever be in circulation. They will continue to circulate, but you won't generate more. You can't print more, you can't mind more. That's it. Now. In the beginning, most of the bitcoin were locked away essentially, and the process of mining would liberate a certain number of bitcoin every ten minutes or so. That number released would diminish over time, so every four years it reduces by half. Originally, if you were on the ground floor of bitcoin when it first launched, those first four years, if you were the one to mind a block, you know, to essentially verify a block of transactions in the blockchain of bitcoin, well you would be awarded fifty bitcoin for your efforts. Four years after that, it was down to twenty five bitcoin per block. Four years after that twelve and a half bitcoin. Then you get to where we are right now. If you were to mine a bitcoin successfully, if you were to you know, verify a block of transactions in the bitcoin chain, you wouldn't at six point to five bitcoin per block. That's gonna jump down to three point one to five bitcoin per block. This, by the way, is one of the elements that might actually stabilize bitcoins value over time. Uh and and also have lots of other effects, like we might see a huge decline in massive operations that have huge electricity consumption needs. But again that's a topic for a different episode. And then there's the block chain itself. You can think of bitcoins blockchain as a record of all transactions going back to the very beginning of bitcoin. It would be a little bit different with liebra I'll explain more, but first let's take a quick break. Okay, let's talk about blockchain. So it is a chain of blocks, right, and each block, new block that joins the chain has information in it that relates back to the previous blocks in the chain. It's it's got a value that's tied to the previous blocks, and then the subsequent block, the next new block, will have information of all the links back to all the blocks that came before it. The benefit of this approach, or one benefit of this approach, is that should somebody, some nefarious ne'er do well, decide they to make a change in the history of all those transactions. Maybe they spent their bitcoin back, you know, ten years ago, and they used it to buy a pizza, and they had thousands of bitcoin, and they're just ruining the day that they did that because now the bitcoin are worth so much more than they were way back then. So what they want to do is go back and change a couple of numbers in that list of transactions that suggests they never spent that money in the first place. All those thousands of bitcoins are still There's that would instantly make the millionaires. Well, because of the way that the chain forms, if you make a change in a block, every block that follows it is going to also change because they're all tied to this value that's associated with the block, and that means that if you try to alter the system, everybody knows it, everybody can see that you did it, and they can invalidate the changes you make, go back to the stable blockchain, and your attempt to hoist money through the blockchain would be thwarted. There are other ways to hist cryptocurrency, but this is one that the blockchains design itself is uh is going to combat well. Libra would not use a block chain system. It would use kind of a unified ledger, just an unbroken ledger of transactions, not a not a a series of blocks. Also, bitcoin is what we call a permissionless system. That is, to participate in bitcoin mining, you just have to join the bitcoin ecosystem and boom, you're part of it. You don't have to secure permission from any entity, you don't have to do anything special, just join the system and there you go. Now, just because you join doesn't mean you're gonna raake in any bitcoin, because mining is such a computationally intensive activity, because bitcoin is a proof of work cryptocurrency, and you've got other group that report literally millions of dollars into computer resources, massive computer systems, all just so to get the jump on everybody else in the ecosystem. It means you don't stand a chance if you just like have your laptop hooked into it, but you are technically allowed to participate. It's just you're not gonna You're not gonna mind anything. Uh. Libra, in contrast, was to be a permissioned system, at least initially. The entities that could ment coins would be limited to the partners in the Libra Association. Each partner would contribute a certain amount of money dedicated to the system. For the major partners, this was said to be around ten million dollars each and individual users would then buy into the ecosystem, but wouldn't be able to participate in any kind of mining. So you and I, if we wanted to use Libra, well, we could use whatever our native currency was to purchase Libra units of currency, but we couldn't mind Libra. In fact, the original idea kind of went like this. You decide you want to purchase some units of Libra so that you can send some money to your dear sweet auntie who lives in a different country, and you spend whatever your local currency happens to be. Let's say it's in euros, so you spend ten euros to purchase libra. Your money would then enter into the Libra reserve that would be this big pool of resources. That pool of resources backs the value of every Libra unit of currency, and you would receive an amount of libra equivalent to the ten euros you paid, right, So whatever the Libra equivalent of ten euros was, that's what goes into your your digital wallet. Then you send the digital Libra to your auntie. And let's say your auntie lives in Canada and she wants to cash out, and she wants to trade the Libra in for Canadian dollars, so the Libra association covers the cashing out of the process. So the reserve like ten whatever the the equivalent in Canadian dollars is, gets chucked out. At your auntie, she gets her money, and then the Libra that she used to trade in to get that cash that got deleted. So Libra units only exists as long as the user has them in a digital wallet. But once you cash out, the Libra would get deleted rather than recirculated. It's a big difference between Libra and other cryptocurrencies. And like I said, not a blockchain, just a long list of all transactions that the partners would be able to see. Um again, not in blocks, just as this this tree like structure that they described. Uh. Then there was the fact that bitcoin is not a commodity backed currency. It's not a fiat currency either. A fiat currency is a government issued currency that is not backed by some other commodity like gold. You know, way in the old back in the old days of the dollar was on what was called the gold standard, where there was a reserve of gold that backed up the value of the dollar. End In theory, you could trade your dollar in for a dollar's worth of gold at any time. But we've long since abandoned the gold standard, and now the US dollar is a fiat currency. It's government issued, but it is not backed by a specific commodity. Bitcoin is not issued by a government, and it is also not backed by a commodity. Like gold, Bitcoin's value comes from a restricted supply and a high demand. So, in other words, bitcoin is valuable because people want it. There's nothing magical about bitcoin that makes it valuable on its own. Hamlet would say it's valuable because thinking makes it so. Then again, you could also apply that same logic to stuff like gold. You could say, like, well, gold is not really valuable on its own, it's valuable because people want it, right, Like, there's nothing intrinsic about gold anyway. If you go down that road long enough, you start to question what is real. I don't recommend you do it. It's pretty tough out there. Already, Libra would not be a fiat currency because it wasn't issued by a government. However, it would be backed by a commodity, and the initial commodity consisted of the money pooled by the various partners in the Libra Association. Now The idea was that Libra's value would be tied to a quote unquote basket of resources of commodities, which would include fiat currencies and low risk investments. Uh. The Association would take this big old poll of cash from the twenty eight partners who were part of the association and then invest that money in various low risk investments and guarantee the value of the Libra currency from that investment pool. And the partners in return would actually earn interests off of those investments, like if they actually made money, Well, that money would go to the partners, it wouldn't get circulated into the Libra ecosystem. Uh. The association, the members of the Association would enjoy those profits uh, and then that would continue to back the initial pool. There would continue to back the value of the Libra currency in circulation. Now. The Association said that this approach would make the Libra currency less volatile than cryptocurrencies, and that has been a real issue with lots of cryptocurrencies, especially recently. If you've heard me talk about crypto before, you know one of my big complaints is that for a lot of cryptocurrencies, the volatility is so great that you can't really rely on crypto to act like a real currency. If I have a unit of currency that can buy five dollars worth of goods or services today, but then tomorrow I could use that same unit of currency to buy twenty dollars worth of goods or services, I would be petrified of spending any cash at all, because I'd be worried I'd be bleeding wealth in the process. I would constantly be thinking this could buy me four times as much tomorrow as it can buy me today, and two days from now I might be able to buy twenty times as much stuff. I would never spend anything because the following day I would think, oh, I just I totally wasted all that buying potential. That's the way I feel about cryptocurrency. So Libra would instead be connected to real world assets that would have, in theory a more predictable value, a more stable value to them, and that would make Libra a bit more stable. In return, Libra would literally be what we call a stable coin. The major partners in the Libra Association would each have a single vote over matters of governance that would include Facebook. Facebook would have one vote, just like all the other partners and that was probably a move to help kind of dilute the perception that Facebook was behind a digital currency, because various governmental officials around the world were already pretty leery of Facebook at this point, and that would be a trend that would intensify over the following years. And you know, it's pretty easy to see why Facebook would want in on this. The company has a long history of integrating products and services that are proven to be successful or at least popular elsewhere. Facebook as a rep for acquiring potential competitors, and if that's not an option for copying competitors and and their products in their services, and an effort to monopolize your time on Facebook's and various platforms. Anything that takes your attention away from Facebook is bad for Facebook, so they always try and find ways to make sure if something else is vying for your attention, Facebook wants to be able to provide that same thing to you so that you don't go away from Facebook. Having a stake in a digital currency that could be used across Facebook services would represent a truly enormous surge and revenue and power for the company. The trouble for Facebook is that a lot of other folks have come to a similar conclusion. By twenty nineteen, there was already inherent distrust in the company, and so regulatory agencies around the world were instantly critical of the Facebook lead initiative. It didn't matter if Facebook was just one member of the twenty eight member Libra Association. Pretty much everyone referenced Libra as a Facebook project that also happened to have some other big companies involved. One of the very big concerns expressed both by government officials and media outlets centered around privacy, obviously, something that is a huge issue at Facebook. I mean, Zuckerberg himself famously declared privacy to be dead years and years ago. He walked that back after a while, but you know, you get the feeling that they pretty much went whole hog with that idea ever since. So an early question was how much of a user's data would the various partners in the Libra Association see, Like they would be able to see the history of transactions. They had to to be able to validate transactions, otherwise there's no control over if someone's actually using, abusing, or lying on the system. So how much of the user data would the Libra Association be pretty d two. And how might they otherwise use that data If they know that someone is using libra to purchase a specific type of thing, could that mean that they could also market directly to that person? And then this would mean there could be an overlap between commerce and banking. Now, that's the kind of thing that regulations tried to protect us against, particularly here in the United States, because there's a pretty clear conflict of interest that can rise here in America. It was described as avoiding a situation in which banks end up competing with their own customers in the marketplace, and considering the amount of money that banks handle, it would give the banks an enormous and unfair advantage in that regard. Now, there was also the case that the Liberal Association seemed to be positioning the digital currency as both a global digital method to move money around without all those nasty entanglements, but also to be compliant with the various complicated regulations around the world at the same time, and a lot of analysts questioned whether that's even possible or if this is just a case of trying to have your cake and eat it too. This idea of you can't be both, you can't be unfettered and be able to send money without all these different UH checks and balances and hurdles in the way, and also be compliant with all the different regulations. It's the regulations that create a lot of those issues in the first place, so you can't be both. There were also concerns about potential scams and hoaxes that could proliferate should Facebook effectively roll out a massive digital currency plan across its billion plus users, or the possibility that criminals would make use of the system in order to move money around and avoid what Obi Wan Kenobi would call imperial entanglements money laundering. In other words, Then there were the various tax authorities around the world. Here in the US, cryptocurrency can be treated like a commodity, So while the purchase of cryptocurrency itself isn't really that big a deal from a tax sage and standpoint, any wealth you gain due to the appreciation of that cryptocurrency's value is a taxation issue. In other words, if I bought ten dollars worth of bitcoin and then tomorrow the amount the amount I bought is now worth one hundred dollars, well, that ninety dollars of wealth that suddenly became mine would also be taxable income. Now, it pretty quickly became clear that there were a lot of challenges ahead for the Libra Association and that the goal of launching Libra in twenty was going to be a long shot. They're all the regulatory hurdles that made ton of news, but there were also technological obstacles, and according to sources like Bloomberg, the approach that the Libra Association was planning to take didn't yet work, so that whole ledger system I was referring to, while the idea existed, the actual execution didn't. All Right, when we come back, I'll talk about the beginning of the end and then hopefully the end of the end of Libra. But first let's take another quick break. Okay, So liber Association, CA, Libra Facebook. They're all under this intense regulatory scrutiny around the world. I mean here in the US it was particularly intense, but we were not the only country to bring up some tough questions, and it scared off a few of the partners in the Libra Association. They decided to peace out in October two thousand nineteen, just a couple of months after the public announcement that the Libra Association was even a thing. PayPal pulled the rip chord on its parachute and got the heck out of there. The company did say it was total rooting for the rest of the association, like we're not gonna be a part of it, but you guys, good luck. And a week later news broke that Visa, Master, car eBay and a couple of others also decided they were going to dip out. Now, this was all in advance of the first official meeting of the Libra Association. They had not even had their first meeting yet, that was to take place on October fourteenth, in two thousand nineteen. David Marcus would subsequently tweet quote, I would caution against reading the fate of Libra into this update. Of course, it's not great news in the short term, but in a way it's liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you're onto something when so much pressure builds up. End quote, which I have to admit, is a heck of a way to spend the fact that a significant number of partners in a fledgling association just bailed on you to say, like, hey, you know you're onto something would people are scared of it seems like, I don't know, I get where he was going, but it just seems comical to me. Anyway, time marched on and Libra continued to wade through a lot of regulatory resistance. By the spring of twenty twenty, just as the world was really going into isolation due to the pandemic, a few big changes began to take place. One was the underpinning for Libra itself. Now represent Libra announced that rather than using this quote unquote basket of assets that was the original plan, remember to kind of anchor Libra's value in this collection of real world assets that the association would invest in. Instead of using that, the currency would switch to a model in which Libra would be backed by single currency stable coins. And this gets a little bit complicated. The original idea for Libra, as I mentioned earlier, had it as sort of a stable coin itself. So a stable coin is a type of digital currency, usually cryptocurrency. The anchors its value to some external thing, such as a fiat currency from a specific country or a specific commodity, you know, like gold. And the original Libra coin did that with that Libra reserve, that pool of assets that was initially created by the Libra Association and then would be fed by the various Libra users cashing into it. But the new model would create stable coins for various fiat currencies. For example, there would be a Libra USD and that would be tied to the United States dollar, or the Libra eu are tied to the euro. In theory, if you were to put one US dollar into Libra, you would get one Libra USD. It would be a one to one exchange, which would make it really simple for any individual within a nation to understand how much money they have in Libra, because it would be equivalent to whatever the fiat currency they were using in their day to day lives happened to be. This is one of the issues I have with digital currencies in general is often it can become difficult to figure out how much wealth you actually have represented in that digital currency. Xbox game Mer's out there. If you've been playing for a while, you might remember back when all purchases were made in Microsoft points and the points did not match up point to dollar, so it became hard to judge how expensive something was because you would be given the cost in points, but you would have to do the conversion in your head of all right, well how much money would it cost me to buy that number of points, and then that will tell me how much this is being sold for. It creates this level obviuse skation. Well, by making stable coins that are tied to specific FIAT currencies, you remove that. It makes it more transparent. That's a bonus. But in the background you would have the Libra coin itself like you have Libra USD for the U. S dollar. Right well above Libra USD is Libra proper, and David Marcus said it would effectively act as quote a smart contract, stitching together fixed nominal weights of underlying stable coins end quote. So another way of looking at it is that the Libra system would come far more complicated. Gone was this idea of a single digital currency that could smoothly operate across the globe. Now you would have different regional Libra currencies that could work pretty smoothly within that region, but there would still have to be conversion issues whenever you wanted to send it to a different region. On May six, the Libra Association announced that Stuart Levy, who had previously served as an under secretary for Terrorism during two different presidential administrations, would become the CEO of the Libra Association. Levy has extensive experience in detecting and fighting money laundering, and the move was seen by some as another attempt to appease regulators around the world. Here is someone who could help make certain that the system that was being built would not be one that criminals could easily use to move money around. Then on May, things are moving really fast now, because we're still just in the spring of Facebook changed the name of its spinoff, Calibra. You know, that was the thing that was to be the digital wallet that would work with Libra. The new name was no v Now. According to a rep from nov Quote, when we announced Libra and Calibra last June, we wanted to demonstrate that Calibra the digital wallet, was closely linked to Libra, the global payment system. Both brands were born out of the same vision to give people more access to the global economy. However, we found that Calibra and Libra sounded too similar and people were getting confused, so we set out to create distinction between the two end quote. Now, maybe that's just the straight up truth. The word no Vi was derived from novis, the Latin word for new and via the Latin word for way, so it was the new way. Personally, I suspect that part of the reason for renaming it was to distance Calibra from the various news stories, most of which we're shining a critical light on the whole project. But I must also add that's just a hunch on my part. I could be wrong about that. I just feel like a lot of the renaming that we're talking about here was an effort to say, like, oh, we got a negative association with this product, let's change the name and hopefully people won't carry that association to the new name. So no more Calibra. Now we have no Vi. And the plan was to incorporate Novi into Messenger and WhatsApp as well as launch a standalone Novie wallet app, and this would be how users would interact with the Libra digital currency okay rolling through and the Libra slash Calibra slash nov All of that kind of faded from public consciousness. The world was dealing with a pandemic. The US was in the midst of a well put lightly a tumultuous election cycle. There were tons of concerns about Facebook, but those concerns mostly had to do with things like misinformation and hate speech and that kind of thing and an election uh interference, that sort of stuff, and announced but not yet launched digital currency really did not merit much attention from the widespread world at that point. In December of the Libra Association rebranded and became d M. As in Carpe d M, the Latin word for day. The unit of currency would also become the d M. The decision had been made to launch the currency potentially as early as twenty one, with a single stable coin tied to the US dollar. So you might ask why did Libra become d M. Well, the official word was that this was an effort to establish an organizational independence of the association from Facebook, which is really in the hot seat at this point for lots of unrelated stuff, you know, like the misinformation sation and election interference stuff. And then we get to oh boy, okay, so if Facebook was in the hot seat in it really felt the heat turn up in one, uh, the in the United States where the infamous riots slash insurrection on January six, and a lot of people are pointing towards social networking platforms as playing a pivotal role in radicalization and facilitating to spread a misinformation, among other things. Then there was this growing movement against big tech companies in general and Facebook in particular, as governments around the world started to question if perhaps these companies might be a little too dominant in their respective markets and if they might not be playing by the rules, if in fact they might represent an effective monopoly. Then we have the incredible volatility of the crypto market in general and the response by regulatory bodies in particular to that to crypto So right now there is an increased amount of activity in the world as governments really come to terms with cryptocurrencies and they start cracking down on various loopholes and contributing to a pretty rough situation in the crypto community. There's lots of talk of regulations around the world, something that you know, the crypto community was really kind of. It was born out of this idea of an unregulated system, and now we have the potential for regulations to come creeping in. Now it would be an oversimplified statement to claim that government scrutiny is what is leading to crypto prices, declining that's way too simple a view of it, but it is a contributing factor. Facebook itself would change its name in late one to Meta, and some of the names associated with the Libra Slash, Calibra Slash, DM slash nov project left the company toward the end of the year, included David Marcus. He left in November of Morgan Beller also left. A third employee who's also referenced as a co founder, Kevin Wile, also left at the end of one, and the project was left without its internal leadership team at Facebook. The regulatory bodies were still a huge hurdle, Crypto in general was is going through a rough patch, and Meta Slash Facebook is still in the critical spotlight for lots of different reasons, so it's not really a surprise that ultimately all the parties decided they needed to just pull the plug on the whole thing, sell off the assets, and try to recapture at least some of the initial investment that was made to create the Libra Association. Now. Not only is this a setback for Meta's plans to incorporate an in system currency program a global payment system within Facebook's products, like Messenger and WhatsApp. It's also a potential enormous blow to the metaverse project under Facebook. UM. I have no doubt that one hope that Zuckerberg had was that this digital currency, which Facebook would benefit from in multiple ways, would be the underlying financial transaction system within the company's version of the metaverse, whatever that might end up being. But I am absolutely certain that the idea was, when we have this metaverse product out there and people are able to engage in commerce virtually within this metaverse, our digital currency is going to be the unit of transaction and we are going to make so much money on every side of these deals. And now that has kind of fallen through. Now, all that being said, Facebook did launch no V the digital wallet, but instead of being centered on d M you know what used to be known as Libra, the wallet actually works with a stable coin called paxss that doesn't have any connection to Facebook, and this is in partnership with coin base also meta slash. Facebook doesn't hold the funds in this case, coin Base does, so it's really just created a digital wallet that works with another entities uh funding for a stable coin. UH. And this was all intended to just be a pilot program to test the various features of the digital wallet before d M got deployed. But now DM is no more, so it's just kind of there. It's a digital wallet. There are lots of different digital wallets out there. I don't know if no viv is a particularly good one or bad one. I don't use it, so I don't know, but uh yeah, it's that's all it is at this point. So this grand vision of this global financial system has now sadly withered away to just a digital wallet. I say sadly not because I wanted Facebook to succeed necessarily, everyone knows my feelings about that company. But rather I do wish there were more streamline methods for people to be able to send transaction around the world without going through all these different, uh you know, loopholes or red tape, or having to find a way to minimize the amount of money that's going to be taken out of what you're sending so that the person who receives it actually gets something that's useful. Like that's frustrating, and for a lot of people, it's a true hardship. Right. You've got people who are picking up stakes and transforming their entire lives in an effort to have a better life for themselves and for their family back home. And it would be great to have systems that facilitated that more effectively, where people were able to have more of the money that was sent to them actually get to them. I would love to see that. Uh. I don't necessarily think that Facebook was a great center point to make that happen, because I have lots of issues with Facebook the company or Meta the company, but I do want to see the effect come about at some point. Anyway, it's all moot now because it is no more. It all got dissolved. The folks who were connected to it have moved on to other projects or are currently on hiatus. I think David Marcus posted that he's he's currently in a hiatus looking for the next thing, um, you know. So, I'm sure they'll all land on their feet and they'll be fine. I'm worry about some of the lower level folks who are working on this. Don't know what happened to them, don't know if they got reassigned to other teams within Facebook, if they were let go. I have no idea all the companies that were part of the Libra association. They're all fine, they're all huge. So if they're not fine, it's not because of Libra association going under. That's something else. So I thought it was an interesting story to cover one That is another example of how this is tough right just there, there's this this thought in tech that if you of the technological capability of doing something, then everything else is easy, when in fact, I would argue the technological part, like making the thing work technologically is the easiest piece, especially when you're talking about stuff that has to do with giant global finance. Everything else is way more complicated than the tech side. It's relatively simple to get the tech to work. It's navigating the incredibly Labrinthian arrangement of financial relationships around the world. That's the hard part. Like, it doesn't matter how good your widget is if if the world is still super complicated, And it's a good lesson to remember just in general, not just for the case of cryptocurrency or digital currency, but generally speaking, like we have this tendency to put a lot of faith in technology to solve problems without fully understanding the scope of the problems we're tackling. And that's always a danger. I hope that you learned something in this episode that you enjoyed it. If you have any topics you would like me to cover in future episodes of tech Stuff, whether it's a technology, a tech company, a trend in tech um, anything like that, reach out to me on Twitter to handle for the show is text Stuff h s W and I'll talk to you again, Really Sick. Text Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows

Welcome to tex Stuff, a production from I Heart Radio. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with iHeart Radio. And how the tech are Yeah, well, let's get to it. In the summer of twenty nineteen, Facebook, the company, you know, the one that's now known as Meta. I keep forgetting to call it that anyway, Facebook announced a project called Libra, and it was to be a new cryptocurrency sort of more on that in a second. In fact, I think it might be more fair to just call it a digital currency. But it was meant to be a currency that would allow folks to send money around the globe with a minimum of fuss, including stuff like transaction fees and you know, currency convert Asian fees and all the stuff that mounts up as you try to move money from one region in the world to a different region. And it was going to work all through various applications such as Facebook Messenger or WhatsApp, both of which obviously are Facebook slash Meta properties. Now that alone would have been a huge benefit to millions, perhaps as many as a billion people. There are so many folks who leave their families behind in order to travel to some other part of the world where they can get work, and a lot of them want to send money back home to their loved ones. You know, maybe they're able to earn a decent wage whereas back home they couldn't, and they still want to be able to support their family. But international money transfers are, to put it lightly, somewhat clunky, and various fees often eat away significantly at any money you actually send back, so the amount that your family receives might be a fraction of what you actually sent. A digital currency that could streamline that process and work natively within apps that billions of people are already using seemed like a no brainer. But we recently learned that silver Gate Capital, which is a bank located in California, has paid two hundred million dollars for the assets of what was once called Libra. So today I thought we would talk about what Libra was, how Facebook was involved, the changes that the currency went through, and how we got to where we are now with the project essentially disbanded. So let's start at the very beginning, which is a very good place to start. According to CNBC, the natural starting point is with a woman named Morgan Beller who joined Facebook in ten. She joined as part of the company's corporate development department. Now, in case you're not down with business speak, corporate development is usually the part of a company that's always looking for the next deal, you know, whether it's a merger or an acquisition, divestiture, a partnership, anything like that. When you get down to it, it's really the part of big companies that's always looking for ways to grow the company further and to restructure it so that it works more efficiently. Um Typically, when I think of efficiently in these terms, it's really how can we do more but with fewer resources and with better revenue. So, in other words, what are we doing now? Can we do more of that? And can we do more of that without spending so much? It's really how how it boils down in Beller began reaching out to crypto experts with the question, Hey, if you had access to a couple of billion people through a platform you had built, how would you integrate cryptocurrency into that platform and you know, use that to the benefit of both yourself and your users. The implication being that Facebook, the company, which again would not be called meta until late had this enormous user base more than a billion people, and a digital currency that was native to Facebook could be an incredible source of revenue as well as potentially help countless people out. CNBC reports that Beller was the sole employee in the company working on blockchain initiatives in those early days in seventeen. In January eighteen, Mark Zuckerberg himself posted on Facebook that he wanted to delve further into technologies like encryption and cryptocurrency due to their potential to create decentralized assets that quote take power from centralized systems and put it back into people's hands end quote. Yes, Mark Zuckerberg, man of the people. I'm sure when you think who represents the average Joe, Mark Zuckerberg leaps to mind. Uh. It wasn't an outright admission that Facebook the company was getting into cryptocurrency or even blockchain, but it was an early sign. Also, I do want to say that while the model is conceptually decentralized as and you don't have like a centralized bank or financial authority at the center of most cryptocurrencies, the Internet itself conceptually is decentralized, but in practice we tend to see a few very powerful players take center stage in various domains, if you will, of those technologies, and effectively at least parts of the system become centralized. Those those companies become the centralized authority within the system. So you can have something that you know in theory is decentralized and still in reality it can change into more of a centralisis to him, a great example of that is UH cloud hosting, like various you know, applications and things of that nature. Amazon has essentially a lockdown on that, effectively a lockdown. If you talk about Internet search, Google has a lockdown on that, and what is in theory decentralized in practice becomes very centralized. A lot of people have argued cryptocurrency falls into that same category, but that's a discussion for another time now. It wouldn't be until the spring of when Beller's work started convincing folks higher up on the corporate chain, which ironically is not a blockchain, that she was onto something and that more people should pay attention. In May, David Marcus posted on his Facebook account that he was taking the lead on a blockchain working group in Facebook. He also said the group was building everything from scratch and maybe I missed it, but it seemed like he didn't acknowledge Beller's work at all. Like, from what I can tell, the reason that Libra even got started is because Beller was hard at work trying to figure out ways to incorporate blockchain and cryptocurrency technologies into Facebook products UH, and so I thought it was a little odd that there was no acknowledgement here, although from all accounts, Beller was an integral component in the creation of UH the Libra initiative. Anyway, David Marcus had previously led the Facebook Messenger division within the company for nearly three years um or maybe it was like almost four years, and before that he was president of PayPal, So this was someone familiar with both financial organizations and communications organizations, and of course that was the crux of Facebook's value proposition. When the company was actually ready to talk about this currency project, in the meantime, Marcus and Beller began building out a team to draft out ideas for a digital currency that could work with Facebook, as well as a digital wallet that would interoperate with Facebook services. And the wallet is the part of the system that the end user UH interfaces with right The wallet is where the user accesses their funds or they purchase more crypto units, uh, and its stores the crypto units that they own. It has their account on it. Essentially, it's called a wallet because it acts like a real world wallet would and UH, it would be a delicate thing to talk about this moving forward because Facebook was trying very very hard to position itself as we are really focusing on the wallet side of this. And yes, we're involved in drafting out what the currency will be, but that's that's not our thing. Know, it's not Facebook's currency, but we are going to create a wallet. However, it'll just be one of many wallets that could be created for this currency. So Facebook in the very early days was still trying to create a narrative that gave a little bit of separation between the company and the currency. Now occasionally the tech media would remind everyone that Facebook was working on something in the cryptocurrency realm, and by May twenty nineteen, journalists had pretty much confirmed a Facebook cryptocurrency like service was coming. At the time, people were referencing this as Facebook Coin or sometimes as global Coin, but for the most part, you know, it was it was pretty quiet news outside the company. You know, you didn't hear about it very much until June of two thousand nineteen. That's when the website for what was then called the Libra Association launched. There's gonna be a lot of then called because all the stuff I'm gonna talk about has changed names. Facebook changed its name, the Libra Association changed its name, The Libra unit of currency changed its name. Calibra, the digital wallet that Facebook was gonna make changed its name. Everything changed its name. It's almost like everyone wanted to try and assume a brand new identity and wipe the slate clean. That's foreshadowing, um. But anyway, in June two thousand nineteen, that's also when someone and I'm not sure who, published a piece in Facebook's newsroom section. There was no attribution as to who wrote it, but this was announcing Calibra. Now, that was the digital wallet service specifically crafted to work with the Libra unit of currency. Okay, let's do a quick overview again, like a quick rundown. We have the Libra Association. That's an organization that would oversee the development of this digital currency. The currency itself was called Libra, and Facebook digital wallet was called CA, Libra c A, l I, B R A. All Right, Now, folks in the currency division have been hard at work forming relationships with numerous companies to create a sort of alliance, the Libra Alliance that would or a Libra Association that would collectively be the force behind the Libra digital currency um I figure. They realized pretty early on that if Facebook tried to do this all on its own, people would bring up a whole bunch of tough questions, which they did anyway. Plus Facebook just didn't have the deep background of expertise in the financial world to be able to, you know, authoritatively, come forward and take the reins on everything. Now, initially the Libra Association had twenty seven partners in it besides Facebook, and there were some really big companies in this association like Visa and MasterCard. Now these are financial institutions with a very long history of processing transactions. There was also a PayPal, David Marcus, his old stomping grounds uh. Spotify was on there too, way before the company would become mired down in a mess of battling ideologies and misinformation campaigns. Then you had Uber and Lift that were also on that list, as well as coin Base, and lots of others. Now, the digital currency being proposed was in some ways similar to cryptocurrencies and in other ways very different, and a lot of outlets would refer to Libra just as a cryptocurrency as sort of shorthand, but some were a little more nuanced in their description. For example, Elizabeth Lapato, who's an editor at The Verge, wrote a phenomenal piece about Libra back in June of two thousand nineteen. It was titled simply Libra Explained. Now, first, miss Lapato, you are far too modest. Not only did you explain Libra thoroughly, I mean seriously, it is an excellent article. You should read it. But Lapato also did in a way that was really entertaining as it was informative. Also, just side note to miss Lapato, I also have a habit of capitalizing words for comedic effect, and I don't care if I'm the only person who finds it funny. Anyway, Lapato's piece points out how the proposed currency has laid out in a white paper compares to a cryptocurrency like bitcoin. Uh So, with bitcoin, you have a finite number of bitcoin that will ever be in circulation, and once they are all in circulation. That's it. That's all that will ever be in circulation. They will continue to circulate, but you won't generate more. You can't print more, you can't mind more. That's it. Now. In the beginning, most of the bitcoin were locked away essentially, and the process of mining would liberate a certain number of bitcoin every ten minutes or so. That number released would diminish over time, so every four years it reduces by half. Originally, if you were on the ground floor of bitcoin when it first launched, those first four years, if you were the one to mind a block, you know, to essentially verify a block of transactions in the blockchain of bitcoin, well you would be awarded fifty bitcoin for your efforts. Four years after that, it was down to twenty five bitcoin per block. Four years after that twelve and a half bitcoin. Then you get to where we are right now. If you were to mine a bitcoin successfully, if you were to you know, verify a block of transactions in the bitcoin chain, you wouldn't at six point to five bitcoin per block. That's gonna jump down to three point one to five bitcoin per block. This, by the way, is one of the elements that might actually stabilize bitcoins value over time. Uh and and also have lots of other effects, like we might see a huge decline in massive operations that have huge electricity consumption needs. But again that's a topic for a different episode. And then there's the block chain itself. You can think of bitcoins blockchain as a record of all transactions going back to the very beginning of bitcoin. It would be a little bit different with liebra I'll explain more, but first let's take a quick break. Okay, let's talk about blockchain. So it is a chain of blocks, right, and each block, new block that joins the chain has information in it that relates back to the previous blocks in the chain. It's it's got a value that's tied to the previous blocks, and then the subsequent block, the next new block, will have information of all the links back to all the blocks that came before it. The benefit of this approach, or one benefit of this approach, is that should somebody, some nefarious ne'er do well, decide they to make a change in the history of all those transactions. Maybe they spent their bitcoin back, you know, ten years ago, and they used it to buy a pizza, and they had thousands of bitcoin, and they're just ruining the day that they did that because now the bitcoin are worth so much more than they were way back then. So what they want to do is go back and change a couple of numbers in that list of transactions that suggests they never spent that money in the first place. All those thousands of bitcoins are still There's that would instantly make the millionaires. Well, because of the way that the chain forms, if you make a change in a block, every block that follows it is going to also change because they're all tied to this value that's associated with the block, and that means that if you try to alter the system, everybody knows it, everybody can see that you did it, and they can invalidate the changes you make, go back to the stable blockchain, and your attempt to hoist money through the blockchain would be thwarted. There are other ways to hist cryptocurrency, but this is one that the blockchains design itself is uh is going to combat well. Libra would not use a block chain system. It would use kind of a unified ledger, just an unbroken ledger of transactions, not a not a a series of blocks. Also, bitcoin is what we call a permissionless system. That is, to participate in bitcoin mining, you just have to join the bitcoin ecosystem and boom, you're part of it. You don't have to secure permission from any entity, you don't have to do anything special, just join the system and there you go. Now, just because you join doesn't mean you're gonna raake in any bitcoin, because mining is such a computationally intensive activity, because bitcoin is a proof of work cryptocurrency, and you've got other group that report literally millions of dollars into computer resources, massive computer systems, all just so to get the jump on everybody else in the ecosystem. It means you don't stand a chance if you just like have your laptop hooked into it, but you are technically allowed to participate. It's just you're not gonna You're not gonna mind anything. Uh. Libra, in contrast, was to be a permissioned system, at least initially. The entities that could ment coins would be limited to the partners in the Libra Association. Each partner would contribute a certain amount of money dedicated to the system. For the major partners, this was said to be around ten million dollars each and individual users would then buy into the ecosystem, but wouldn't be able to participate in any kind of mining. So you and I, if we wanted to use Libra, well, we could use whatever our native currency was to purchase Libra units of currency, but we couldn't mind Libra. In fact, the original idea kind of went like this. You decide you want to purchase some units of Libra so that you can send some money to your dear sweet auntie who lives in a different country, and you spend whatever your local currency happens to be. Let's say it's in euros, so you spend ten euros to purchase libra. Your money would then enter into the Libra reserve that would be this big pool of resources. That pool of resources backs the value of every Libra unit of currency, and you would receive an amount of libra equivalent to the ten euros you paid, right, So whatever the Libra equivalent of ten euros was, that's what goes into your your digital wallet. Then you send the digital Libra to your auntie. And let's say your auntie lives in Canada and she wants to cash out, and she wants to trade the Libra in for Canadian dollars, so the Libra association covers the cashing out of the process. So the reserve like ten whatever the the equivalent in Canadian dollars is, gets chucked out. At your auntie, she gets her money, and then the Libra that she used to trade in to get that cash that got deleted. So Libra units only exists as long as the user has them in a digital wallet. But once you cash out, the Libra would get deleted rather than recirculated. It's a big difference between Libra and other cryptocurrencies. And like I said, not a blockchain, just a long list of all transactions that the partners would be able to see. Um again, not in blocks, just as this this tree like structure that they described. Uh. Then there was the fact that bitcoin is not a commodity backed currency. It's not a fiat currency either. A fiat currency is a government issued currency that is not backed by some other commodity like gold. You know, way in the old back in the old days of the dollar was on what was called the gold standard, where there was a reserve of gold that backed up the value of the dollar. End In theory, you could trade your dollar in for a dollar's worth of gold at any time. But we've long since abandoned the gold standard, and now the US dollar is a fiat currency. It's government issued, but it is not backed by a specific commodity. Bitcoin is not issued by a government, and it is also not backed by a commodity. Like gold, Bitcoin's value comes from a restricted supply and a high demand. So, in other words, bitcoin is valuable because people want it. There's nothing magical about bitcoin that makes it valuable on its own. Hamlet would say it's valuable because thinking makes it so. Then again, you could also apply that same logic to stuff like gold. You could say, like, well, gold is not really valuable on its own, it's valuable because people want it, right, Like, there's nothing intrinsic about gold anyway. If you go down that road long enough, you start to question what is real. I don't recommend you do it. It's pretty tough out there. Already, Libra would not be a fiat currency because it wasn't issued by a government. However, it would be backed by a commodity, and the initial commodity consisted of the money pooled by the various partners in the Libra Association. Now The idea was that Libra's value would be tied to a quote unquote basket of resources of commodities, which would include fiat currencies and low risk investments. Uh. The Association would take this big old poll of cash from the twenty eight partners who were part of the association and then invest that money in various low risk investments and guarantee the value of the Libra currency from that investment pool. And the partners in return would actually earn interests off of those investments, like if they actually made money, Well, that money would go to the partners, it wouldn't get circulated into the Libra ecosystem. Uh. The association, the members of the Association would enjoy those profits uh, and then that would continue to back the initial pool. There would continue to back the value of the Libra currency in circulation. Now. The Association said that this approach would make the Libra currency less volatile than cryptocurrencies, and that has been a real issue with lots of cryptocurrencies, especially recently. If you've heard me talk about crypto before, you know one of my big complaints is that for a lot of cryptocurrencies, the volatility is so great that you can't really rely on crypto to act like a real currency. If I have a unit of currency that can buy five dollars worth of goods or services today, but then tomorrow I could use that same unit of currency to buy twenty dollars worth of goods or services, I would be petrified of spending any cash at all, because I'd be worried I'd be bleeding wealth in the process. I would constantly be thinking this could buy me four times as much tomorrow as it can buy me today, and two days from now I might be able to buy twenty times as much stuff. I would never spend anything because the following day I would think, oh, I just I totally wasted all that buying potential. That's the way I feel about cryptocurrency. So Libra would instead be connected to real world assets that would have, in theory a more predictable value, a more stable value to them, and that would make Libra a bit more stable. In return, Libra would literally be what we call a stable coin. The major partners in the Libra Association would each have a single vote over matters of governance that would include Facebook. Facebook would have one vote, just like all the other partners and that was probably a move to help kind of dilute the perception that Facebook was behind a digital currency, because various governmental officials around the world were already pretty leery of Facebook at this point, and that would be a trend that would intensify over the following years. And you know, it's pretty easy to see why Facebook would want in on this. The company has a long history of integrating products and services that are proven to be successful or at least popular elsewhere. Facebook as a rep for acquiring potential competitors, and if that's not an option for copying competitors and and their products in their services, and an effort to monopolize your time on Facebook's and various platforms. Anything that takes your attention away from Facebook is bad for Facebook, so they always try and find ways to make sure if something else is vying for your attention, Facebook wants to be able to provide that same thing to you so that you don't go away from Facebook. Having a stake in a digital currency that could be used across Facebook services would represent a truly enormous surge and revenue and power for the company. The trouble for Facebook is that a lot of other folks have come to a similar conclusion. By twenty nineteen, there was already inherent distrust in the company, and so regulatory agencies around the world were instantly critical of the Facebook lead initiative. It didn't matter if Facebook was just one member of the twenty eight member Libra Association. Pretty much everyone referenced Libra as a Facebook project that also happened to have some other big companies involved. One of the very big concerns expressed both by government officials and media outlets centered around privacy, obviously, something that is a huge issue at Facebook. I mean, Zuckerberg himself famously declared privacy to be dead years and years ago. He walked that back after a while, but you know, you get the feeling that they pretty much went whole hog with that idea ever since. So an early question was how much of a user's data would the various partners in the Libra Association see, Like they would be able to see the history of transactions. They had to to be able to validate transactions, otherwise there's no control over if someone's actually using, abusing, or lying on the system. So how much of the user data would the Libra Association be pretty d two. And how might they otherwise use that data If they know that someone is using libra to purchase a specific type of thing, could that mean that they could also market directly to that person? And then this would mean there could be an overlap between commerce and banking. Now, that's the kind of thing that regulations tried to protect us against, particularly here in the United States, because there's a pretty clear conflict of interest that can rise here in America. It was described as avoiding a situation in which banks end up competing with their own customers in the marketplace, and considering the amount of money that banks handle, it would give the banks an enormous and unfair advantage in that regard. Now, there was also the case that the Liberal Association seemed to be positioning the digital currency as both a global digital method to move money around without all those nasty entanglements, but also to be compliant with the various complicated regulations around the world at the same time, and a lot of analysts questioned whether that's even possible or if this is just a case of trying to have your cake and eat it too. This idea of you can't be both, you can't be unfettered and be able to send money without all these different UH checks and balances and hurdles in the way, and also be compliant with all the different regulations. It's the regulations that create a lot of those issues in the first place, so you can't be both. There were also concerns about potential scams and hoaxes that could proliferate should Facebook effectively roll out a massive digital currency plan across its billion plus users, or the possibility that criminals would make use of the system in order to move money around and avoid what Obi Wan Kenobi would call imperial entanglements money laundering. In other words, Then there were the various tax authorities around the world. Here in the US, cryptocurrency can be treated like a commodity, So while the purchase of cryptocurrency itself isn't really that big a deal from a tax sage and standpoint, any wealth you gain due to the appreciation of that cryptocurrency's value is a taxation issue. In other words, if I bought ten dollars worth of bitcoin and then tomorrow the amount the amount I bought is now worth one hundred dollars, well, that ninety dollars of wealth that suddenly became mine would also be taxable income. Now, it pretty quickly became clear that there were a lot of challenges ahead for the Libra Association and that the goal of launching Libra in twenty was going to be a long shot. They're all the regulatory hurdles that made ton of news, but there were also technological obstacles, and according to sources like Bloomberg, the approach that the Libra Association was planning to take didn't yet work, so that whole ledger system I was referring to, while the idea existed, the actual execution didn't. All Right, when we come back, I'll talk about the beginning of the end and then hopefully the end of the end of Libra. But first let's take another quick break. Okay, So liber Association, CA, Libra Facebook. They're all under this intense regulatory scrutiny around the world. I mean here in the US it was particularly intense, but we were not the only country to bring up some tough questions, and it scared off a few of the partners in the Libra Association. They decided to peace out in October two thousand nineteen, just a couple of months after the public announcement that the Libra Association was even a thing. PayPal pulled the rip chord on its parachute and got the heck out of there. The company did say it was total rooting for the rest of the association, like we're not gonna be a part of it, but you guys, good luck. And a week later news broke that Visa, Master, car eBay and a couple of others also decided they were going to dip out. Now, this was all in advance of the first official meeting of the Libra Association. They had not even had their first meeting yet, that was to take place on October fourteenth, in two thousand nineteen. David Marcus would subsequently tweet quote, I would caution against reading the fate of Libra into this update. Of course, it's not great news in the short term, but in a way it's liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you're onto something when so much pressure builds up. End quote, which I have to admit, is a heck of a way to spend the fact that a significant number of partners in a fledgling association just bailed on you to say, like, hey, you know you're onto something would people are scared of it seems like, I don't know, I get where he was going, but it just seems comical to me. Anyway, time marched on and Libra continued to wade through a lot of regulatory resistance. By the spring of twenty twenty, just as the world was really going into isolation due to the pandemic, a few big changes began to take place. One was the underpinning for Libra itself. Now represent Libra announced that rather than using this quote unquote basket of assets that was the original plan, remember to kind of anchor Libra's value in this collection of real world assets that the association would invest in. Instead of using that, the currency would switch to a model in which Libra would be backed by single currency stable coins. And this gets a little bit complicated. The original idea for Libra, as I mentioned earlier, had it as sort of a stable coin itself. So a stable coin is a type of digital currency, usually cryptocurrency. The anchors its value to some external thing, such as a fiat currency from a specific country or a specific commodity, you know, like gold. And the original Libra coin did that with that Libra reserve, that pool of assets that was initially created by the Libra Association and then would be fed by the various Libra users cashing into it. But the new model would create stable coins for various fiat currencies. For example, there would be a Libra USD and that would be tied to the United States dollar, or the Libra eu are tied to the euro. In theory, if you were to put one US dollar into Libra, you would get one Libra USD. It would be a one to one exchange, which would make it really simple for any individual within a nation to understand how much money they have in Libra, because it would be equivalent to whatever the fiat currency they were using in their day to day lives happened to be. This is one of the issues I have with digital currencies in general is often it can become difficult to figure out how much wealth you actually have represented in that digital currency. Xbox game Mer's out there. If you've been playing for a while, you might remember back when all purchases were made in Microsoft points and the points did not match up point to dollar, so it became hard to judge how expensive something was because you would be given the cost in points, but you would have to do the conversion in your head of all right, well how much money would it cost me to buy that number of points, and then that will tell me how much this is being sold for. It creates this level obviuse skation. Well, by making stable coins that are tied to specific FIAT currencies, you remove that. It makes it more transparent. That's a bonus. But in the background you would have the Libra coin itself like you have Libra USD for the U. S dollar. Right well above Libra USD is Libra proper, and David Marcus said it would effectively act as quote a smart contract, stitching together fixed nominal weights of underlying stable coins end quote. So another way of looking at it is that the Libra system would come far more complicated. Gone was this idea of a single digital currency that could smoothly operate across the globe. Now you would have different regional Libra currencies that could work pretty smoothly within that region, but there would still have to be conversion issues whenever you wanted to send it to a different region. On May six, the Libra Association announced that Stuart Levy, who had previously served as an under secretary for Terrorism during two different presidential administrations, would become the CEO of the Libra Association. Levy has extensive experience in detecting and fighting money laundering, and the move was seen by some as another attempt to appease regulators around the world. Here is someone who could help make certain that the system that was being built would not be one that criminals could easily use to move money around. Then on May, things are moving really fast now, because we're still just in the spring of Facebook changed the name of its spinoff, Calibra. You know, that was the thing that was to be the digital wallet that would work with Libra. The new name was no v Now. According to a rep from nov Quote, when we announced Libra and Calibra last June, we wanted to demonstrate that Calibra the digital wallet, was closely linked to Libra, the global payment system. Both brands were born out of the same vision to give people more access to the global economy. However, we found that Calibra and Libra sounded too similar and people were getting confused, so we set out to create distinction between the two end quote. Now, maybe that's just the straight up truth. The word no Vi was derived from novis, the Latin word for new and via the Latin word for way, so it was the new way. Personally, I suspect that part of the reason for renaming it was to distance Calibra from the various news stories, most of which we're shining a critical light on the whole project. But I must also add that's just a hunch on my part. I could be wrong about that. I just feel like a lot of the renaming that we're talking about here was an effort to say, like, oh, we got a negative association with this product, let's change the name and hopefully people won't carry that association to the new name. So no more Calibra. Now we have no Vi. And the plan was to incorporate Novi into Messenger and WhatsApp as well as launch a standalone Novie wallet app, and this would be how users would interact with the Libra digital currency okay rolling through and the Libra slash Calibra slash nov All of that kind of faded from public consciousness. The world was dealing with a pandemic. The US was in the midst of a well put lightly a tumultuous election cycle. There were tons of concerns about Facebook, but those concerns mostly had to do with things like misinformation and hate speech and that kind of thing and an election uh interference, that sort of stuff, and announced but not yet launched digital currency really did not merit much attention from the widespread world at that point. In December of the Libra Association rebranded and became d M. As in Carpe d M, the Latin word for day. The unit of currency would also become the d M. The decision had been made to launch the currency potentially as early as twenty one, with a single stable coin tied to the US dollar. So you might ask why did Libra become d M. Well, the official word was that this was an effort to establish an organizational independence of the association from Facebook, which is really in the hot seat at this point for lots of unrelated stuff, you know, like the misinformation sation and election interference stuff. And then we get to oh boy, okay, so if Facebook was in the hot seat in it really felt the heat turn up in one, uh, the in the United States where the infamous riots slash insurrection on January six, and a lot of people are pointing towards social networking platforms as playing a pivotal role in radicalization and facilitating to spread a misinformation, among other things. Then there was this growing movement against big tech companies in general and Facebook in particular, as governments around the world started to question if perhaps these companies might be a little too dominant in their respective markets and if they might not be playing by the rules, if in fact they might represent an effective monopoly. Then we have the incredible volatility of the crypto market in general and the response by regulatory bodies in particular to that to crypto So right now there is an increased amount of activity in the world as governments really come to terms with cryptocurrencies and they start cracking down on various loopholes and contributing to a pretty rough situation in the crypto community. There's lots of talk of regulations around the world, something that you know, the crypto community was really kind of. It was born out of this idea of an unregulated system, and now we have the potential for regulations to come creeping in. Now it would be an oversimplified statement to claim that government scrutiny is what is leading to crypto prices, declining that's way too simple a view of it, but it is a contributing factor. Facebook itself would change its name in late one to Meta, and some of the names associated with the Libra Slash, Calibra Slash, DM slash nov project left the company toward the end of the year, included David Marcus. He left in November of Morgan Beller also left. A third employee who's also referenced as a co founder, Kevin Wile, also left at the end of one, and the project was left without its internal leadership team at Facebook. The regulatory bodies were still a huge hurdle, Crypto in general was is going through a rough patch, and Meta Slash Facebook is still in the critical spotlight for lots of different reasons, so it's not really a surprise that ultimately all the parties decided they needed to just pull the plug on the whole thing, sell off the assets, and try to recapture at least some of the initial investment that was made to create the Libra Association. Now. Not only is this a setback for Meta's plans to incorporate an in system currency program a global payment system within Facebook's products, like Messenger and WhatsApp. It's also a potential enormous blow to the metaverse project under Facebook. UM. I have no doubt that one hope that Zuckerberg had was that this digital currency, which Facebook would benefit from in multiple ways, would be the underlying financial transaction system within the company's version of the metaverse, whatever that might end up being. But I am absolutely certain that the idea was, when we have this metaverse product out there and people are able to engage in commerce virtually within this metaverse, our digital currency is going to be the unit of transaction and we are going to make so much money on every side of these deals. And now that has kind of fallen through. Now, all that being said, Facebook did launch no V the digital wallet, but instead of being centered on d M you know what used to be known as Libra, the wallet actually works with a stable coin called paxss that doesn't have any connection to Facebook, and this is in partnership with coin base also meta slash. Facebook doesn't hold the funds in this case, coin Base does, so it's really just created a digital wallet that works with another entities uh funding for a stable coin. UH. And this was all intended to just be a pilot program to test the various features of the digital wallet before d M got deployed. But now DM is no more, so it's just kind of there. It's a digital wallet. There are lots of different digital wallets out there. I don't know if no viv is a particularly good one or bad one. I don't use it, so I don't know, but uh yeah, it's that's all it is at this point. So this grand vision of this global financial system has now sadly withered away to just a digital wallet. I say sadly not because I wanted Facebook to succeed necessarily, everyone knows my feelings about that company. But rather I do wish there were more streamline methods for people to be able to send transaction around the world without going through all these different, uh you know, loopholes or red tape, or having to find a way to minimize the amount of money that's going to be taken out of what you're sending so that the person who receives it actually gets something that's useful. Like that's frustrating, and for a lot of people, it's a true hardship. Right. You've got people who are picking up stakes and transforming their entire lives in an effort to have a better life for themselves and for their family back home. And it would be great to have systems that facilitated that more effectively, where people were able to have more of the money that was sent to them actually get to them. I would love to see that. Uh. I don't necessarily think that Facebook was a great center point to make that happen, because I have lots of issues with Facebook the company or Meta the company, but I do want to see the effect come about at some point. Anyway, it's all moot now because it is no more. It all got dissolved. The folks who were connected to it have moved on to other projects or are currently on hiatus. I think David Marcus posted that he's he's currently in a hiatus looking for the next thing, um, you know. So, I'm sure they'll all land on their feet and they'll be fine. I'm worry about some of the lower level folks who are working on this. Don't know what happened to them, don't know if they got reassigned to other teams within Facebook, if they were let go. I have no idea all the companies that were part of the Libra association. They're all fine, they're all huge. So if they're not fine, it's not because of Libra association going under. That's something else. So I thought it was an interesting story to cover one That is another example of how this is tough right just there, there's this this thought in tech that if you of the technological capability of doing something, then everything else is easy, when in fact, I would argue the technological part, like making the thing work technologically is the easiest piece, especially when you're talking about stuff that has to do with giant global finance. Everything else is way more complicated than the tech side. It's relatively simple to get the tech to work. It's navigating the incredibly Labrinthian arrangement of financial relationships around the world. That's the hard part. Like, it doesn't matter how good your widget is if if the world is still super complicated, And it's a good lesson to remember just in general, not just for the case of cryptocurrency or digital currency, but generally speaking, like we have this tendency to put a lot of faith in technology to solve problems without fully understanding the scope of the problems we're tackling. And that's always a danger. I hope that you learned something in this episode that you enjoyed it. If you have any topics you would like me to cover in future episodes of tech Stuff, whether it's a technology, a tech company, a trend in tech um, anything like that, reach out to me on Twitter to handle for the show is text Stuff h s W and I'll talk to you again, Really Sick. Text Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows