Facebook’s efforts to create a global cryptocurrency are falling apart before our eyes. Bloomberg reports several members of the Libra Association have joined a rival effort they call the Celo Alliance for Prosperity.
To explain, the Libra Association is the organization Facebook (NASDAQ: FB) organized to promote a global cryptocurrency they call Libra. I think the Libra Association resembles a global central bank.
To explain, Libra could theoretically create money and manage the economy as central banks do. For example, the US Federal Reserve System issues money (dollars) and manages the economy by setting America’s interest rates.
Libra was originally a cryptocurrency but the Libra Association now plans to make the Libra Token into a stablecoin, The Verge claims. A stableoin is a cryptocurrency that dispenses payment in fiat currencies such as the Euro. The Libra Association hopes to deflect political opposition by offering payment in fiat currency, The Verge speculates.
Is Celo a Plan for a Global Central Bank?
Tellingly, Celo arrogantly boasts “Our mission is to build a financial system that creates the conditions for prosperity—for everyone.”
Apparently, Celo’s goal is to create a new economic system and use a cryptocurrency to promote that system. They will call the cryptocurrency the Celo Dollar.
The Celo Dollar will be a stablecoin they will peg to the U.S. Dollar, Bloomberg claims. Celo could back the Celo Dollar with a reserve of other currencies and use the token to disperse money and philanthropy to developing countries.
Additionally, Celo could develop its own payments platform and mobile app to compete with solutions such as PayPal (NASDAQ: PYPL). Hence, Celo is a fintech company that is developing a payment app.
C Labs plans Mobile Wallet for Celo
Interestingly, C Labs; the company developing Celo, is planning a mobile payment solution for areas with limited smartphone service, Celo’s Medium claims.
Accordingly, Celo is developing an app that could connect smartphones to the blockchain. The app will form the basis of a Celo wallet that you could use on any smartphone.
C Labs Plans Celo Wallet
C Labs claims the Celo Wallet will work like Venmo. Venmo is the popular peer-to-peer (P2P) app owned by PayPal. Thus, Celo is an R&D effort trying to create consumer products that a central bank could use.
One way a Central Bank could use the Celo Wallet is to disperse cash or basic income to ordinary people. In other words, you could use Celo to distribute “helicopter money.”
To explain, helicopter money is stimulus funds a Central Bank distributes straight to individuals. For example, the U.S. Treasury or the Federal Reserve could use the Celo Wallet to disperse the $1,200 a month stimulus payments to all Americans. To explain, Congress is trying to prevent a Coronavirus depression by dispersing $1,200 in cash to most Americans.
In particular, Celo is trying to make Charles Eisenstein’s ideas about money a reality. To explain, Eisenstein promotes what he calls the “gift economy” as an alternative to capitalism.
I guess the gift economy is an attempt to implement a basic income and make money available to everybody. Eisenstein promotes these ideas in a book he calls Sacred Economics.
Interestingly, Celo is trying to work with the banking system and central banks. “We have met with governments around the globe as well as central banks, we are continually engaging with governments in the many countries which we hope to serve,” Alliance for Prosperity head Chuck Kimble told Bloomberg.
Coinbase Supports Celo Dollar
I suspect Celo is a plan to create a global central bank based on Eisenstein’s ideas. However, we need to take Celo seriously because it has some big-time support.
Bloomberg claims Coinbase Ventures and the venture capital firm Andreessen Horowitz are members of the Celo Association. Hence, Coinbase could accept the Celo Dollar and Andreessen Horowitz could fund business with the Celo Dollar.
Importantly Coinbase is the most popular crytpcourrency wallet. Coinbase claimed to have over 30 million users who traded over $150 billion worth of cryptocurrency in April 2020.
Celo Plans Stablecoin
Notably, Coinbase offers its own stablecoin they call the USD Coin (USDC). Hence, the Celo Dollar could be a variation of the USD Coin. To elaborate a stablecoin is a cryptocurrency that makes payments in fiat currency via a digital robot.
Current members of the Celo Alliance include the World Food Program, C Labs, Moon, Cryptobuery, Labortoria, the Grameen Foundation, and ledger.com. Importantly Moon is a digital wallet that allows Bitcoin (BTC) shopping via the Lightning Network and Coinbase accounts.
Hence, I think Celo appears to be another effort to create a global central bank on the blockchain and bring stablecoins to the masses. The difference is that it does not involve the big bad Facebook (NASDAQ: FB). Additionally, Celo wants to enhance fiat currencies, not supplant them.
Who is Behind Celo?
One possibility is that Celo is a stalking horse for Libra and Facebook. Another possibility is that Celo is a second project being run by whoever is behind Libra. To explain, I think there is a possibility that somebody besides Facebook is behind Libra.
Another possibility is that a central bank or a consortium of central banks behind Libra and Celo. However, I do not know which Central Bank is behind those organizations.
Large central banks could be interested in cryptocurrency because it could allow those entities to interfere in the economies of other nations. For instance, the U.S. Federal Reserve could use the Celo Dollar and wallets to send US dollars to citizens of Latin American countries.
Will Political Opposition Kill Libra?
Notably support is shifting from Libra to Celo because of a popular and political reaction against Libra. For example, U.S. Representative Maxine Waters (D-California) asked Facebook to halt its Libra plans in June 2019, The Verge reports.
Waters, the chairwoman of the House Financial Services Committee, wants Libra halted until Congress can review it. The top Republican on the Committee Patrick McHenry (R-North Carolina echoed Waters’ concerns.
Negative press coverage generated by the political backlash forced several companies; including PayPal (NASDAQ: PYPL), to drop out of Libra last year. However, Celo shows some of those companies are still interested in crypto and are looking for a less controversial alternative to Libra.
In the final analysis, plans for a global central bank issuing a global cryptocurrency is far from dead. It is obvious some deep pocketed entities are pushing these notions. Therefore, get ready because the global cryptocurrency is coming and it could disrupt everything.