Libra Can Create A Trillion Dollar Market Even Without The U.S.

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Facebook's Libra and a cellphone may the key to freeing billions of people from mismanaged 3rd world currencies.


After facing bipartisan opposition to its plans for Libra, many question the ability of Facebook to pull off an international digital currency. Marketocracy’s Robert Frazier sees Libra bringing billions of people in third-world countries into the world economy , and the trillion-dollar marketplace it would create becoming the future of Facebook.

Ken Kam: Facebook has been a very profitable position for you over the last 7 years. What do you think about Libra as a shift in their strategy?

Robert Frazier: I think over time it will become the most important part of Facebook’s business. Much like PayPal made eBay a great success, much like AWS brought Amazon into the black, Libra will be the surprising innovation that was born out of the necessity of running a truly global brand in the first, second and third world context.

Kam: Crypto has been around for quite a while now, what makes this effort different and why does Facebook get to set those rules?

Frazier: There are lots of reasons to not like Bitcoin and other crypto-currencies. The transaction costs are astronomical. The environmental impact of mining and server farms is immoral. The ways that crypto has enabled black-market money laundering, human trafficking, drug dealing, and malware/ransomware hacks is criminal.

As a human being, I am opposed to crypto in that it enables evil in many facets of our marketplace. I am also not a fan of speculative trading in commodities because buying commodities is basically wasting working capital on the hopes of speculation.

Libra as a concept (without knowing all the details), deals with many of the drawbacks and promotes international trade with transparency.

Kam: How do you see Libra being a profitable business for Facebook? Why does it make sense for other companies to partner with Facebook?

Frazier: Facebook is solving a very specific problem: monetary mismanagement in 3rd world countries. There is a huge upside for Facebook and its partners to bringing 3 billion people into the world economy through their existing mobile devices that are already their primary connections to the world.

Kam: As we saw in the Senate and House hearings this week, there seem to be pretty high hurdles to getting Libra launched.

Frazier: With all due respect to U.S. lawmakers, blocking Libra in the U.S. would literally just block American companies from participating in the new markets created by this opportunity.

The bottom line is that Libra could literally be the kind of platform to build a new trillion-dollar market by solving a simple problem for billions of people. It would be a shame if U.S. companies were not able to participate in this market.

Kam: Are you satisfied with the way Facebook addressed the problems of Bitcoin and other crypto-currencies you mentioned earlier?

Frazier: I like that the value will be pegged to a basket of sovereign currencies, this takes away some of the risks of commodity speculation that leads to inflation or deflation cycles.

I like that they are committing to fight money laundering with transfer limit reporting. I like that they are building this with a set of companies, not just on their own -- this creates accountability.

I like that they are building out a network of partner businesses to connect the poorest regions of the world with financial services.

Kam: Are you increasing your Facebook position with this new development in their business model?

Frazier: When the market gets this high and this hot I tend to pull back all of my positions to cash so I am prepared for any market corrections as people start to take profits. I am poised to increase my Facebook position to close to 20% as the price drops over the next few months.

My Take:  Robert makes a good point that Libra can be successful even if U.S. companies are not allowed to participate. It's premature to buy Facebook because of Libra. But there are plenty of good reasons to buy Facebook on any market downturns as Robert plans to do.

Robert Frazier is the Marketocracy manager who has provided the best guidance on Facebook through the years. Click here to see more of his thoughts on Facebook and other stocks.

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