Libra has sparked extraordinary debates in the financial world, dividing opinions into two main camps: maximalists and minimalists. The maximalists view Libra's technological innovation as capable of reconstructing commercial systems, while minimalists believe Libra's revolutionary attempt to challenge existing centralized systems will collapse like an egg hitting a stone. This raises three fundamental economic questions: Is Libra truly a currency? Will Libra remain unparalleled? What is Libra's actual value? These inquiries form the core of economic discussions surrounding Libra.
1. Libra's Ambitious Vision Faces Currency Challenges
Facebook, Libra's primary initiator, likely didn't anticipate the project's global promotion would face such significant hurdles within six months of its whitepaper release. Despite six payment giants including PayPal, Visa, MasterCard, and Stripe withdrawing their support, Libra maintains 22 global multinational corporations as nodes in its permissioned consortium chain. The project's ambitious vision, described in its whitepaper as "a simple, borderless currency and financial infrastructure serving billions," positions it as potentially the most influential project since first-generation cryptocurrencies like Bitcoin, Litecoin, and Ripple entered cross-border payments and inclusive finance scenarios.
To understand whether Libra qualifies as money, we must first clarify monetary theory boundaries. Traditionally, money serves three functions: payment medium, unit of account, and store of value. The commodity money school, represented by Adam Smith, considers payment medium as money's fundamental function, with other functions deriving from it. Bitcoin, emerging in 2008, draws its theoretical foundation from this classical economic perspective, where any generally accepted payment equivalent qualifies as money.
However, William Petty's commodity money theory originated in 17th century industrial capitalism. By the 1930s, the state money theory led by John Maynard Keynes became modern monetary doctrine's mainstream. This perspective prioritizes unit of account as money's most important function, deriving from state (government) credit. Consequently, nations establish dual currency systems based on sovereign economic rights, with central banks issuing sovereign currency that commercial banks expand through credit creation.
In modern times, state money theory dominates current monetary systems. Bitcoin and other cryptocurrencies face strict regulations across multiple economies, gradually weakening their circulation. As a second-generation stablecoin, Libra's ambitious vision struggles to achieve true currency status. The project faces strong regulatory scrutiny in the U.S., France, Germany, and Canada, with Singapore remaining the only openly supportive jurisdiction. PayPal's withdrawal potentially triggers chain reactions that could jeopardize this innovative digital currency's future.
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2. The Libra Revolution Won't Be Alone
The competing commodity and state money theories each present problems in economic activity. The 2008 financial crisis, widely attributed to modern monetary system failures—currency oversupply, excessive credit, and heightened risks—renewed market participants' doubts about contemporary monetary operations for the third time since the 1970s stagflation and 1997 Asian financial crisis.
Bitcoin's 2009 launch appeared as dawn after darkness, recalling Friedrich Hayek's free economic era. Economically, financial activity centers on transactions that fundamentally represent credit. Blockchain's unique technological attributes serve as trust machines, enabling Bitcoin users to conduct decentralized, transparent transactions and create credit. Technically, Bitcoin represents blockchain's exemplary application, maximizing distributed ledger technology with timestamping, proof-of-work, and alternating block signatures. As the recognized first-generation cryptocurrency, Bitcoin innovatively provides peer-to-peer decentralized governance, laying foundation for a decade of "coin fever."
Since 2009, Bitcoin applications have expanded across payments, transfers, securities, daily necessities, education, entertainment, and public services, spawning derivatives like Ripple and Litecoin (6.56 million cryptocurrencies by 2017) and forming the "coin community" self-governing organization.
However, every coin has two sides. Bitcoin's payment convenience soon attracted criminal organizations for money laundering, fraud, and terrorist financing. Consequently, multiple governments implemented cryptocurrency regulations, listing Bitcoin on trading negative lists. Post-WWII global economic growth accelerated with capital, labor, land, and technological dividends—particularly blockchain, big data, and AI innovations. Blockchain technology emerged alongside Bitcoin in 2009, quietly innovating as public chain architecture while commercial consortium chains like JPM Coin, Libra, and USC Token proliferated, especially after nations designated blockchain as technological innovation strategies.
3. Libra Through Hicks-Neutral Technological Progress Lens
John Hicks' 1932 economic growth cycle theory proposed that technological advancement synchronously improves capital and labor efficiency—keeping marginal product ratios (dY/dL to dY/dK) constant while increasing output.
From Hicks-neutral technological progress perspective, blockchain underlying Bitcoin, Ethereum, Libra, and sidechains demonstrates that commercial institutions like Facebook drive Libra's substantial commercial value, potentially stimulating economic growth. Specifically, Libra meets 2.8 billion users' inclusive financial needs with 1,000 transactions per second speed, permissioned consortium chain architecture, planned 100 global corporate nodes, Byzantine fault-tolerant LibraBFT consensus algorithm (3f + 1 nodes), and payment-optimized Rust programming language—making its technical system more revolutionary than Bitcoin's public chain for value internet.
Returning to cryptocurrencies, their blockchain foundation has revolutionized value internet. As Milton Friedman emphasized in Free to Choose, pricing mechanisms form market cores. Blockchain upgrades value transfer processes from first-generation information internet, delivering pricing mechanisms through peer-to-peer ledger and decentralized secure transactions. Ronald Coase's 1937 transaction cost concept noted that firms reduce information asymmetry—modern commercial banks and internet platform economies further lowered these costs. Blockchain's 2009 emergence naturally provided value internet solutions, with its 2.0 smart contracts enabling cross-border applications in law, finance, logistics, healthcare, and food—prompting scrutiny of multiple "Ponzi whitepaper" blockchain projects.
After regulatory crackdowns and market corrections, blockchain 1.0 cryptocurrencies and 2.0 smart contracts evolved further, with Libra's stablecoin project reassuring innovators. Despite strict regulations, Libra's technological innovation progressed rapidly within developer communities—recording 34 projects (10 wallets, 11 explorers, 2 IDEs, 1 API, 11 clients) in seven weeks, processing 51,000+ transactions with 7 deployed nodes, targeting 100 mainnet nodes and core feature completion by 2020.
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Innovation and regulation maintain seesaw dynamics. Blockchain innovation faces long, arduous roads—particularly with Libra's abnormal project status. However, as technology upgrading social production relations and building credit value circulation, blockchain's compliant, normalized, global era will ultimately arrive with intensified innovation efforts from China, Singapore, the U.S., and others.
Frequently Asked Questions
Q1: Can Libra replace traditional currencies?
A: While Libra presents an ambitious vision for borderless currency, its ability to replace sovereign currencies remains limited due to strict regulatory scrutiny and the current dominance of state monetary systems. Most nations prioritize monetary sovereignty, making full replacement unlikely in the near future.
Q2: What makes Libra different from Bitcoin?
A: Unlike Bitcoin's decentralized public chain architecture, Libra employs permissioned consortium chain technology with known validator nodes. It offers faster transaction speeds (1,000 TPS vs Bitcoin's 7 TPS) and maintains price stability through reserve assets, whereas Bitcoin experiences significant volatility.
Q3: Why are regulators concerned about Libra?
A: Regulators worry about potential risks to monetary sovereignty, financial stability, consumer protection, and anti-money laundering compliance. Libra's potential global scale could challenge existing financial systems and bypass traditional regulatory frameworks.
Q4: What's the future of blockchain technology?
A: Blockchain continues evolving toward enterprise adoption, with increasing focus on interoperability between chains, scalability solutions, and regulatory compliance. The technology shows promise for streamlining cross-border transactions, supply chain management, and digital identity solutions while maintaining appropriate oversight.
Q5: How does Libra's technology benefit financial inclusion?
A: Libra aims to provide low-cost financial services to unbanked populations through mobile access, potentially reducing remittance costs and enabling participation in global commerce. Its technical design prioritizes accessibility for users with basic smartphones and intermittent internet connectivity.