Facebucks

Automatic TRANSCRIPT

If Facebook were a country, it would have the largest population in the world by a lot nearly double the population of China. It's a Konomi wouldn't be nearly that big, but it would still be considerable Facebook's country economy would be roughly the size of Croatia Costa, Rica and its currency. Well that could actually be a thing that is happening. Facebook has unveiled plans to start its own cryptocurrency cryptocurrency, like bitcoin, it's sort of like big Wayne, but corporate, we think it's a little fuzzy so far. This is the indicator from planet money. I'm Stacey Vanik Smith potty. Hirsch, these book has said it wants this new money, the libra, which it hopes to roll out next year to be the foundation for a whole new financial system, a system that would be largely outside the control of Wall Street and central banks. The details as you say, still pretty fuzzy everyone's trying to figure it. It's all a little confusing in mind bending. So prepare for a crypto headache. No, we will keep it clear. Let's get no headaches, headaches on the indicator today on the show, the libra why Facebook wants to issue a cryptocurrency and what that could mean for the company. Support for the indicator and the following message come from American Express, you want to build your business. They can help build your business with financing solutions for eligible business customers, the powerful backing of American Express, don't do business. Without it terms apply. Visit American Express dot com slash business. Support also comes from fund rise, the future of real estate. Investing access private market real estate projects from high rises in DC to multifamily apartments in LA. Get your first three months of fees waived at fund arise dot com slash indicator. Today's indicator is two point four billion. That is the number of active users Facebook has Mark Mahayni is the managing director of internet research at RBC capital markets. He says that number that two point four billion that is exactly why Facebook, crypto currency could work and could actually be pretty huge. There's like four times as many. Any users of Facebook outside of the US in Asia, and in the rest of the world. So that's Latin America, Middle East Africa cetera. There about three times as many. So this is truly global platform. I think we kind of under appreciate that. And, you know, there's a couple of companies that could do this. But one of the companies is Facebook just given how many damn users, they have, you know, in, in these in these markets, all the damn users all the time users the currencies are usually backed by governments right? The size of the government and people's faith in the government's contribute to the value of the money, but cryptocurrencies generally aren't bites by governments. They're backed by other things by groups of people who believe in them. Yes. The believers and this is why crypto enthusiasts can get so evangelical and hardcore the value of their currency depends on a lot of people agreeing to believe in it, but you don't getting a bunch of people to believe, in, especially to invest in a new currency is hard not to mention getting businesses to accept it. So it's actually useful. Most cryptocurrencies are really tiny and really obscure only a few like bitcoin have really risen above the fray, even mainstream crypto, as we're gonna call. It is pretty obscure. Sure you've heard of bitcoin. But do you know anybody who actually uses it, you know, businesses that take it, but Mark, he says, this is where Facebook's hugeness and international nece give it a massive leg-up. Facebook already has this big ecosystem of users who might see value in being able to buy things inside a Facebook with a Facebook issued currency, for instance, like a virtual cow on farmville or like a special filter on Instagram, literally that face because teamed up with a bunch of big companies like Spotify. Uber EBay, MasterCard and PayPal. They've all pledged to invest at least ten million dollars in the Facebook libra. A lot of people think they will end up partnering with Facebook and start accepting Lieber for their services. Yeah. I mean you could potentially use libra to pay for a car service to work and music streaming service to listen to on your way to work and you know, acute scar. On EBay that you happen to browse across when you're stuck in traffic, just with the companies that have signed on so far, and that could have a lot of people spending a lot of time on Facebook, kind of conducting a lot of their lives through it, it seems like Facebook's trying to become kind of the portal for everything. I mean, would that be or I may looking at this the wrong way? No one thinking about it the right way. Yeah, I haven't used the word portal in in over a decade. But yes. Portal. I stand by portal. I don't even know where to begin what you say portal anymore. No, I don't think I do say poorly more unless I'm talking about, you know, Star Trek. Ouch. Okay. Mark says is another big potential use for the libra which is payments, for example, people can send Facebook libra to relatives or friends of receives or even use it as a place to store their money. If the currency in their own country, was losing value. Also visa MasterCard of signed on, you could potentially pay your credit card Bill with Lieber or your relatives credit card Bill or even take out a loan. And Mark says Wall Street is very excited about all of the money, making possibilities wrapped up in all of this extended, there's commerce at that occurs, on your platform, almost certainly, you'll be able to get some sort of share of that. Whether it's five or ten or fifteen percents of spiff on that. Yeah. That should be enough. If you're if you're standing in between consumers and merchants. Yeah, you should be able to get a cut of that. The power of the portal, be me up. Scotty. Oh my God. Say it's a word people say anyway for all this profit potential. Mark says there could potentially be some big problems. I mean, think about it a new kind of money backed essentially by this giant corporation, that would not be subject to some of the laws that govern regular currency. And also, you know, lots of businesses, partnering together sharing lots of personal information. I mean face because an ocean of data on all of us, and I don't know. I the only one thinking that this is like the beginning of terrible scifi movie that doesn't end. Well, Mark says this is definitely uncharted. Territories in a lotta ways on the regulatory hurdles could be epic could take years, if regulars and central bankers around the world jumped on this as soon as they heard the news they were really fast to say they're going to be looking into this very carefully. Mark says the real issue for Facebook, and it could spend a ton of time and money addressing all of these concerns, only to have the Lieber gets shut down. There is though, one straight up winner in this. Scenario, no matter what happens to the libra, and that is cryptocurrency itself. Monte Greenspan is an analyst at e Toro, a brokerage that helps people invest in cryptocurrency and Monte says the crypto community is psyched. Facebook is essentially bringing massive amount of awareness to the cryptocurrency space bringing it legitimacy. And many people feel it is going to be an on ramp for cryptocurrency. It's a gateway crypto. Yeah. Gateway crypto, exactly. Bitcoins value has more than doubled. In the last few months largely because of Facebook possibly entering. The space mountain says it gives the whole idea of crypto currency, a mainstream legitimacy that it didn't really have before that. Anyone knows exactly how the real Lieber will even work. There's actually a hot debate of whether it's actually a real crypto currency at all yet, it's kind of like this weird hybrid corporate crypto thing, although Facebook has insisted it is not corporate that the libra would be controlled by this independent non. Profit organization that would be governed by the book. In addition to a bunch of the companies investing in the libra like MasterCard yet, but no matter how independent, the Lieber is or might turn out to be Monte. Greenspan says Facebook's ultimate on Beijing is pretty clear. Facebook is trying to do. They're trying to become financial institution. Is it a slam dunk, heck? No. I mean, there's so many things that can go wrong along the way. And it's not just the regulatory hurdles Monte says there could be a problem getting people to actually use the libra after all he says, currency is all about trust and Facebook has a pretty major trust problem right now actually deleted the Facebook app from my phone few months ago, will the hashtag delete Facebook was trending, the privacy stuff that got you the privacy stuff, the data stuff, all of this cryptocurrencies generally are relying on the, the principle of transparency and trust system. So I, I mean, a lot of people don't have a lot of trust in the Facebook rand at the moment. But even if the Facebook libra fails Mountie says the genie's out of the bottle, he says, no adult that the Silicon Valley giants are gathering in boardrooms this week to drool over the profit, possibilities, and the corporate partnerships that could come with. I don't know the Google galleon the Amazon peso the, the net flicks jacket ducats that gets good one, the apple loon. No. I think just the apple just the apple apple if you could just think, apple so big you could just it would just be the the apple. How do you like them? Apples. This episode was produced by Dr is RAFI on edited by paddy Hirsch and fact, checked by Emily laying the indicator is a production of NPR.

Coming up next