To Be or Not To Be. Blockchain is Forever.

blockchain crypto Oct 21, 2019
 

Today was one of the days where I felt like throwing in the towel on all things blockchain and crypto.  

Sell everything and never look back.

The price charts don't look like an immediate trend upward.

Bitcoin is barely hanging around $8,000.

An easy drop could put Bitcoin back to $6,000 or $4,000.  Quite a few people are bearish and some are wildly bullish.

Most folks sell near the bottom and buy near the top.  I'm no exception.  

So after a few moments of thinking how hard it would be to sell everything, I just decided to stay in and get laser-focused on the next steps.

Why?  

We are early in the whole blockchain space. I'm always early.  Aren't you?  

Patience is key at this moment.

Despite many industry analysts calling Libra dead last week, I forecast Facebook's Libra will happen in the coming 12-18 months.  As reported by Reuters today, Facebook is proposing to have Libra backed by stable coins pegged to a regional or local currency like the Euro or U.S. Dollar.  This will likely satisfy the cross border and international banking regulations.  Furthermore, Facebook won't be issuing its own currency.  It's 100 percent backed by fiat currencies.

So, for all those people who want to buy Libra because it is going up (because it's Facebook!), that won't happen unless the regional or local currency increase in value too.  

The trend will be the same as holding the actual currency.  It's a stable coin pegged to that currency.

Why would FB go through all this trouble to create a stable coin?

Existing payment gateways are expensive.  I realized this in 1997 when I signed up to own and operate credit card terminals to process payments.

I realized this again in 2013 when I tried to setup a payment gateway for a website.  

How expensive are these payment gateways?

Tyler Durden of Zerohedge writes (text emphasis copied): 

The difference in economics can’t be over stated. Legacy payment rails charge a percentage of the amount being sent to earn income. Stablecoins cost a flat fee to secure the network. A $50,000 payment on Ethereum costs the same as a $5 one, just a few cents. A fifty thousand dollar payment on PayPal cost’s a month’s rent. One of the greatest impacts of the stablecoin movement on the payments industry will be the migration from percentage fees based on payment amount to flat fees based on network congestion.

Legacy payment providers (and those who invested in them) deserve a lot of credit for the rails they’ve built. But there’s a reason we call them payment gateways. Gateways are restrictive and expensive for users, which is why they are so profitable for owners — until they get disrupted by new technology. There was a time when communication gateways (also known as telephone companies) were among the most profitable companies around, because they charged per minute (and later, per text) fees. That all went away, because the internet. Per dollar fees for payments will eventually go the same route, because blockchain.

Do you now see why Visa, Mastercard, and PayPal dropped out of the Libra project?  Those companies own and operate the existing payment gateways.

They saw the writing on the wall.

It's over.  

It's like Blockbuster about to buy Netflix, and then deciding Netflix doesn't have a chance of survival.  Case in point is Libra vs. the existing incumbents.

Zerohedge's article title definitely caught the eye.  

The Speculative Case For $1000 ETH (If Ethereum Is Valued As A Fiat Payment & FinTech Platform)

Ethereum at $1,000 is about 5X from where it is today.  Despite the tech upgrade (Ethereum 2.0) and user adoption struggles, Durden indicates stable coins and the low transaction fees are a game changer.  

Developers keep developing (See Devcon 5)

Yes, there are alternatives to Ethereum.  Token Daily's Mohamed Fouda discusses the other options: Dare to DeFi Away from Ethereum.  EOS, Cosmos, and Tezos are mentioned.  No mention of Stellar, however.  That's odd.

Overall, crypto is all about lowering the cost of payment gateways.  If we can't work within the current payment gateways, we will design our own that are faster, more efficient, and less costlier.

To be or not to be.  Blockchain is forever.

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