The internet has changed nearly every aspect of our lives, connecting us in ways that would have been hard to imagine even a decade ago. Today, we collaborate with colleagues, stay connected with friends and family, educate ourselves on new topics, and even order food and cars on demand – all just by tapping on our phones or computers.
Despite all of this progress, the development of the internet is still at an early stage. While the internet of information has succeeded, we don’t yet have the internet of value. The internet of value describes a world in which actual money – not just promises of money – can be sent instantly across the world, securely, safely, and at minimal cost. In other words, we should be able to send money across the internet as quickly and easily as we send photos and email.
In the day and age of online everything, transferring value simply and easily is increasingly a basic human need. People who want to participate in the global economy shouldn’t be held back by outdated financial systems. Digital payment apps are common in the developed world, but have relatively high fees and fraud rates, and limited cross-border functionality. People in the developing world are often stuck with much slower and costlier solutions. Over two billion people are unbanked, and the existing financial system seems to have no proposed solution for bringing them into the modern economy, despite the fact that most of the unbanked have internet-connected smartphones.
We believe that blockchains are the key to upgrading the internet to make money part of its core fabric. Blockchains make digital money a bearer instrument, meaning that the recipient can verify that she received the money without having to trust the sender, or a third party like a bank. Blockchains also allow developers to freely build on top of them, the way Facebook and Google freely built on top of the original internet protocols. Because blockchains are decentralized and open-source, you only need to trust the code and not the people and organizations behind the code. In the blockchain world, internet services can be rapidly combined, forked, and remixed, unlocking new creative possibilities for developers. This is one reason we created the a16z crypto fund, and have made significant investments in existing blockchains like Bitcoin and Ethereum, as well as upcoming blockchains like Dfinity and Celo. Given the early stage of crypto innovation, we are investing in a variety of different approaches.
It’s also why we are joining the Libra Association as a Founding Member. The Libra Association is a membership organization behind Libra, a new global currency and financial infrastructure built on blockchain technology. Libra brings together a world-class group of partners, including:
- Technology companies that know how to create global-scale networks and infrastructure, like Stripe and Facebook.
- Financial services companies, like PayPal and Visa, that have deep experience in global payments.
- Platforms, including Spotify, Lyft, and Uber, who know how to build user-friendly and popular applications with millions of users.
- Crypto-first companies, like Coinbase and Anchorage, that have deep subject matter expertise.
- NGOs, like Kiva, Mercy Corps and Women’s World Banking, that understand the needs and habits of a wide variety of populations across the globe.
These organizations can help Libra reach a critical mass of users, businesses and developers, with the goal of mainstreaming crypto adoption. The focus on developers is particularly important. The Libra network is already open source and in the future will be permissionless, which will allow developers and entrepreneurs to freely build on top of it, helping to accelerate the mainstream adoption of user-friendly crypto applications.
Today marks the first day in the Libra story. Given the project’s scale and ambition there are a still a number of open questions about how it will work – some technical, some financial, and some governance-related. Over the coming months we plan to take part in discussions within the Libra Association to help answer these questions. We hope to contribute in a way that both stays true to the original crypto ethos and also makes the technology accessible to mainstream users, such that crypto is ultimately in the hands of billions around the world.
We are excited to join Libra and help make the internet of value a reality.
The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
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