Here's How People Are Using Cryptocurrency in Venezuela

Joe Weisenthal (0:12)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:17)

And I'm Tracy Alloway.

Joe Weisenthal (0:19)

Tracy, I think that recently we may have seen one of the most pivotal events in the history of money.

Tracy Alloway (0:27)

That is a large claim, but I think I know what you're talking about. Facebook's announcement about starting its own cryptocurrency called Libra.

Joe Weisenthal (0:36)

Right, like I don't necessarily think it's definitely going to be, or that it's going to work, or that it's going to take off. And in fact, I'm kind of skeptical that it'll ever get launched at all because of all the regulatory and political scrutiny that Facebook is under, but I...

Tracy Alloway (0:51)

This is quite a walk back from what you just said.

Joe Weisenthal (0:54)

I know it sounds like a walk back, but I think that with all existing caveats, it just seems like a really big deal to me that one of the biggest companies in the world is trying to launch its own global currency. Like I think we kind of have to just step back for a second and be like, wow, this is like pretty wild futuristic sci-fi stuff here.

Tracy Alloway (1:16)

So I will say I am sort of bullish on the idea of a global company sort of nibbling at the edges of traditional sovereignty. And I don't know if you ever read the Margaret Atwood book, but she talks about how in the future, companies basically control the world and people live in corporate compounds.

I can see that aspect of it, but I got to say I'm a little bit more skeptical about exactly what Facebook is proposing here.

Joe Weisenthal (1:45)

Again, don't get me wrong. I have plenty of skepticism on all kinds of fronts. I just think that it's pretty wild and has the potential in at least one version of the future to be pretty enormous.

That's all I'm saying. Maybe I oversold it.

Tracy Alloway (2:02)

Right.

Joe Weisenthal (2:03)

So one of the things that was really interesting is in their launch material where they promoted Libra, their new cryptocurrency. They made a really big focus on serving the underbanked around the world, people largely in emerging markets who don't have access to traditional financial services, whose home currencies may be unstable, who don't easily get access to bank accounts.

And it's one of these things which that does seem like a big opportunity. But on the other hand, it's a very happy sheen to put on, here's this company that's worth like a half a trillion dollars. And of course, it's very feel good to say, oh, we're going to serve all these people that the rest of the, that all these other financial institutions have failed so far.

Tracy Alloway (2:49)

Right. So two things there. First of all, I'm very upset that they've chosen Libra to be the name of this cryptocurrency because it's my horoscope sign. And now I feel what all the people called Alexa felt like when Amazon launched that thing.

But secondly, I totally agree with you on the underbanked point. And I think one interesting point of comparison is that cryptocurrencies like Bitcoin have been saying similar things for a very, very long time. So it's worth asking, what is Facebook going to do in that space that Bitcoin and other crypto coins don't already do?

Joe Weisenthal (3:25)

Right, the advocates and a lot of the developers and even a lot of the speculators in this space, a lot of them have gotten very rich and they try to come up with a story about how they're doing something very good for the world. And they usually say, oh, you in America, you don't understand the importance of all this stuff because you have a stable currency and easy to access banks. But this is all we're doing something very important for the world.

And obviously a lot of that has just been and also it's just a lot more complicated than that because the truth of the matter is there really aren't that many people yet. And even in the near future in the developing world, actually using any of these cryptocurrencies that people are touting as a benefit to them.

Tracy Alloway (4:08)

Right. And it kind of gets back to a really important theme, which is the problem of having the underbanked out there or the problem of having an unstable sovereign currency or a currency that people don't trust. Is that actually a technological problem or is that a political problem?

Joe Weisenthal (4:28)

Right. And another big problem is that at root, a lot of this is just about poverty rather than anything having to do with financial institutions. That being said, there is perhaps an opportunity for some new crypto based currency, whether it's a decentralized one like Bitcoin or something, or maybe something like Libra, to make a dent. And so today's guest, I'm really looking forward to it, is someone who's actually done the work, someone who doesn't just sit on Twitter and say, oh, this is going to be really good for the underbanked, but someone who has actually talked to people in unstable markets about how money works and what it would take, in theory, to introduce a new, more stable cryptocurrency that actually benefited their lives.