When figures around Libra are too big to be meaningful. At least for my limited brain…

Reading recently a short article about a new survey, I realized that all figures around fiat money and crypto-currencies were so big that they became meaningless…

Indeed the article was about the survey done by the consumer insight CivicScience in July this year: from the polled 1799 US adults, only 2% would trust Facebook and Libra to proceed a transaction. Its conclusion being that with such poor trust result, Libra is dead before life.

Even if the writer should have better read the survey results (https://civicscience.com/americans-have-trust-issues-with-facebooks-cryptocurrency/) as it should be 5% rather than 2%, I wondered what was the real impact when we are talking about billions of users, trillions of USD… too big figures tilting my limited brain capacities.

Is 2% of trusting people really negligible?

Let’s start with the number of monthly active Facebook users: 2.4 billion (Q2 2019).

As the total population on earth is around 7.7 billion, at least one-third of the human kind (we should exclude children under 5) has a Facebook account.

Now, we can consider this 2% trusting Facebook and Libra. If we apply this ratio to the number of Facebook users, we still have 48 millions of persons willing to trust Libra: equivalent in size to one-sixth of the US total population (or a tenth of the European population).

So “just” 2% remains a lot… especially if we keep in mind that:

• It should be more 5% accordingly to the survey result, resulting in one-fourth of US population (or one-sixth of European population)
• Such ratio could be higher in many countries, especially the ones having unbanked population issue

Sizing the USD for reference

Let us now have a look to the USD: in July 2019, there are 1.7 trillion (1,700,000,000,000) circulating USD, the total dollar money in bank notes and coins (including the Federal Reserve notes).

Such number is difficult to grasp. To ease, if that amount was equally shared across the USA population, each of them would have $5,200 in their pocket. Or if we consider the world adult population (5 billion), each living adult in the world would have $340 in his pocket.

To be equivalent to the total circulating USD, each of the 2.4 billion Facebook users should have Libras in their wallet equivalent to $708. Such amount seems not excessive if we consider that it would be used for more and more online shopping through Facebook.

Sizing Libra adoption

Nevertheless, if we do the same calculation based on the 2% ratio, each of the 48 million trusting people should have in their wallet Libras equivalent to $35,400. This is less realistic compared to the $61,372 average US household annual income in 2017 (figure from US Census, USA being ranked #9 of the highest incomes).

In order for the Libra to become equivalent to the USD, its users should have in their Libra wallet an equivalent between $700 and $35,000, depending on the effective number of Libra users.

We can feel and understand here why Libra announcement has raised such a storm of questions, outcry, enthusiasm, anxiety…

Libra, a storm in a teapot?

To conclude, I just move a step further…

End 2018, WeChat (in short, the Chinese Whatsapp and Facebook messenger) had a bit more than 1 billion monthly active users (versus Facebook with 2.4 billion active users).

92% of them use also WeChat Pay… trusting their social media to do transactions. Of course China is not the USA or Europe (having GDPR to protect data privacy): privacy perception, and related trust, are not the same. Despite this, we should not underestimate the potential usage.

Knowing that WeChat Pay has been launched only in August 2013 (starting with the 200 million active WeChat users acquired since its launch in January 2011), the payment adoption and the transaction volume have grown at a never seen speed. To compare, Amazon started in 1996 and reached end 2018 $410 million daily sales. WeChat Pay reached $145 million daily... in only 5 years... with a number of active users far under Facebook one. If I was Amazon, I would be very concerned.

What is for sure is that Libra, whatever if it will be launched or not, has shown that the emerging world of crypto assets, currencies or not, will have an extremely wide impact amplified by any large company willing to jump in. Will it be the wake-up call for state coins? Or rush for regulation? I cannot predict but I am sure that if I read back my article in some months, I would wonder why I wrote it...