The announcement of Libra and Facebook’s planned integration with the cryptocurrency has brought out familiar “make the world a better place” rhetoric. The Libra Association released a six-page worksheet of inspiring quotes from the participants, including from David Marcus, the former president of PayPal who now runs Calibra for Facebook. “Libra holds the potential to provide billions of people around the world with access to a more inclusive, more open financial ecosystem,” he said, adding, “We know the journey is just beginning, but together we can achieve Libra’s mission to create a simple global currency and financial infrastructure that will empower billions of people.” A white paper from the association, in its Problem Statement, spoke of the high fees for transferring money back home, the inefficient requirements of traditional banking, and, most sweepingly, of bringing financial services to the “unbanked” across the far corners of the globe.
The arguments struck me as very familiar. Almost exactly 20 years ago, in the summer of 1999, Silicon Valley startup Confinity introduced PayPal. At first, PayPal was a means to beam payments between Palm Pilots, mobile phones, and pagers, including a stunt transfer of $3 million from a venture capital firm to the Palm Pilot of Confinity’s chief executive, Peter Thiel. The technology was quite limited, but Thiel saw the potential.
He told the relatively small staff—small enough that before he spoke everyone in the room introduced themselves—about what PayPal would eventually achieve. It looks a lot like the potential Libra holds for Facebook, where Thiel has served on the board of directors since 2005. “Everyone in the world needs money—to get paid, to trade, to live,” Thiel told the room, according to Eric M. Jackson, an early employee of Confinity, who wrote >The PayPal Wars. “Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the 21st century, people need a form of money that’s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what we’re calling ‘convenient’ for American users will be revolutionary for the developing world. Many of these countries’ governments play fast and loose with their currencies.”
Thiel ended his talk by describing what this economic transformation would mean for PayPal as a business. “I have no doubt,” he said, “that this company has the chance to become the Microsoft of payments, the financial operating system of the world.”
Being the financial operating system of the world, needless to say, is a good place to be. Thiel told WIRED at the time that PayPal would make money “on the float,” the interest earned by the money as it sits in an account. Later, PayPal would become a Silicon Valley giant by charging for transactions, even if it didn’t ever become a financial operating system of the world. For a time, Bitcoin adopted that mantle. And now Libra is trying.
We are back again in the late 1990s, before Google and Facebook discovered the fortunes to be made from targeted advertising. The people planning to become rich from the internet back then, like Thiel or Jeff Bezos, wanted to get their hands on the money being exchanged online. The logic was clear to David E. Shaw, founder of D.E. Shaw hedge fund and mentor to Jeff Bezos before Bezos left to create his own business. For a 1999 profile of the company still known as Amazon.com, Shaw told >The New York Times: “The idea was always that someone would be allowed to make a profit as an intermediary. The key question is, ‘Who will get to be that middleman?’”
With his operating system comment, Thiel was imagining a company even more powerful than Amazon. Adding users became an obsession in those early days of PayPal. A rectangular popup box measuring PayPal’s usage rate, Jackson recalled, was called the World Domination Index.
Facebook, with its 2 billion-plus users, has finally taken up the challenge. You know what should keep us up at night? What if Facebook actually succeeds?
Source : https://www.wired.com/story/facebooks-libra-reveals-silicon-valleys-naked-ambition/