The Pluses And Minuses Of Facebook’s Libra

In his recent interview with Tobias, Tyrone Ross Jr, who was recognized by Investment News 40 under 40 (2019) and WealthManagement.com as a top ten advisor set to change the industry in 2019, discusses the positives and negatives of Facebook’s Libra. Here’s an excerpt from the interview:

Tobias Carlisle: I think you undersell yourself a little bit on the expertise because I have seen your conversations about Libra. So let’s just change gears a little bit and talk about what it is, what initially attracted you to it, and why now you’re stepping away from it a little bit.

Tyrone Ross: Right. So what Libra is, is Facebook’s attempt at what we discussed earlier was bringing more people into financial services. They have two point whatever the number is this week billion people on their platform that they feel like they can bring into the financial system by creating basically a virtual dollar. Which in the crypto circles is called a stable coin, essentially. It’s not a cryptocurrency, but it is going to be backed by reserves, different currency, short-term debt and things like that.

Tobias Carlisle: Just before you get too much further, explain a stable coin for us.

Tyrone Ross: Right. So a stable coin is essentially a digital dollar. They build a stable coin to simply be an on ramp onto the crypto system, the crypto economy as opposed to actual dollars. So-

Tobias Carlisle: Is the idea there’s not … so there’s a lot of volatility in Bitcoin and a lot of those crypto’s, so it has less volatility because it’s tied to the US dollar, it’s tied to something else. Is that how it works?

Tyrone Ross: Exactly. So the whole point is they’re saying, “Well we want to allow people to use this for remittence, allow them to use it for payments, allow them to use it for transferring value in any capacity, it needs to be stable.” It can’t be like Bitcoin like 10,000 today and then 7,000 next week, right? We don’t want that, we don’t want the whole Bitcoin pizza thing to happen again. So that’s basically what stable coins were about. And there’s a few others in the market right now that are larger, but that’s what Facebook was saying, “We’re going to create our own, which is going to be called a Libra.” So that’s basically what that is and you’ll be able to transact with it on all of their platforms.

Tyrone Ross: So that’s basically what it is. The next step was they said, “Okay well we’re going to have all of these partners, Uber, MercadoLibre, Visa, the whole thing. We’re going to have these people who are going to partner with us to allow us to get more people into that ecosystem.” Now I want to be very clear, here’s what people need to understand, there are wallets and digital money all over the place, Twitch, TikTok, actual Skype, we’re on Skype now, you can have wallets here, your Apple wallet, this is a real thing. But Facebook is just saying let’s integrate that, we want to lead.

Tyrone Ross: They then said, “Now let’s partner with non-profits, Keva being one, a few others, to get proximate to people who can use these services and learn a little bit more next time. So that’s when I got excited. I’m like oh, this is it. Now you get into the demographics, seven out of 10 teenagers on Facebook come from families that make 30,000 or less. As I referenced before, the United Ways said roughly 35 million families in this country is working poor. Three million people with no identity. They’re saying we want to give you identity, then we’re going to give you banking.

Tyrone Ross: Some of the stats that I said before about the different areas in the country that are underbanked, if you look at where Cash App, where Square and Cash App is having success it’s mainly in the south. I just got back from Charlotte, Cash App is a thing. What Cash App is doing is giving people banking accounts and then also allowing them to transfer value. So now just imagine Facebook, which is essentially a small country, or a medium sized country, with all of those people saying, “Now we’re going to allow you to do all of these things with us.” And whether it’s Uber, whether it’s Apple, whether it’s Amazon, everyone’s trying to keep you in their ecosystem now so you don’t have to go out for financial services. Uber cash, the Uber credit card, the Uber app, so on and so forth, everyone’s doing it.

Tyrone Ross: So this is what Facebook was looking to do. I was super excited about that again because here is a company that battered reputation and all was basically jumping out front and saying, “We’ll do it. We’re finally going to pay attention to the people who are an underclass in this country, and pull them into our financial system.” I was all in, I was fighting with people. I did not care, I was like this is it, shoot it I’m dying on this hill. Long story short, when the hearings were going on there was a bunch of us from Crypto Twitter who were in a group chat that was broadcast live, shout out to Nathaniel Whitmore, and he was broadcasting it live, and we were going back and forth on what was being said, watching it live, and giving our commentary.

Tyrone Ross: And they asked Dave Markets who I love, brilliant, super smart guy. They are killing him, they are killing Facebook, they are eviscerating him live. Here’s a chance for him in front of millions and millions of people, in front of our US women and congressmen to make a case in this country for the people that Facebook could help. And they asked him, “Give us some stats.” And that’s was it, he was like, “I don’t have them.” And at that moment I’m like oh my worst fear is being confirmed. And listen, I’m a glass half full kind of guy, I really thought that they were being altruistic and noble in this cause. But at that point I’m like this is not about those people, it’s about money.

Tyrone Ross: And I had to step away at that point because I am too dedicated and too committed and too purposeful for speaking to those people and being the voice for the voiceless, I can’t align myself with somebody that had that opportunity and then fell flat. Now with that said, not saying I won’t get back on the train, but for the time being I had to step away because a lot of people I feel like I have a strong voice with that community and people to know what I stand by. I couldn’t align myself with it until a lot of those wrongs are corrected. And maybe he comes back and he has the data, but I’m like … and I rattled off in the group chat, I went through like four threads of information.

Tyrone Ross: I’m like how do I know this? Little dummy old me, I know this, but this smart, intelligent, highly educated man is in front of our government and don’t know the stats of the people who are underclass in this country who need him, who you’re doing this for. And I’m sure, again, AOC asked him questions he could have brought up, “Well 50% of the people in your district.” A few of the democrats were beating him over the head. The party of the people, you’re the party of the people. How could you not support this? I get it. So that’s kind of where I’m at with that, so we’ll see what happens.

Tobias Carlisle: Does it matter if the tool achieves the ends that you seek? If their heart’s not in the right place?

Tyrone Ross: That’s a good question, and I look at it this way, there are plenty of people that we’ve trusted, we’ve done business with, we’ve broke bread with, and they went home and they beat their wife, or they kicked the dog, or they’re doing something that doesn’t align with our values, and we just don’t know. But they may have helped us in a time of need. So that’s the juxtaposition of life. So if it means that all of the partners are going to make a gazillion dollars, but there’s a family in the South Bronx, or Broward County, or Compton that doesn’t have to live how I lived, I’m all for it. But let’s just be aware of who the goons are.

Tyrone Ross: I don’t have any problem with that. You grow up in New Jersey, you always need to know where the goons are. They’re there, you just need to know they’re there. That doesn’t mean you don’t go to the mall and you don’t get ice cream cones with your girlfriend. The goons are over there, we’re staying here. But everyone’s allowed on the boardwalk. So I think so long as they see the purpose through I won’t be so mad. But now I think we need to be aware that the opportunity lies in understanding, which is why I need these people to understand what is going here with this technology and the people who want to take advantage of them, so long as they don’t know.

Tyrone Ross: On the flip side of that, you cannot tell me at some point there will be a lift from this, the Facebook stock gets or whatever, again going back to the original genesis of the conversation is a lot of these people don’t even own equities, right? So if we can pull more people in to get attention to this, and I’ve always said it, do whatever you do, whatever. If there’s a way for people to monetize it to make their lives better and they don’t align with your values but they can benefit from it to improve themselves, again that’s just a juxtaposition of life, wherever there’s bad there’s always good, and where evil there’s always prosperity. That’s the balance, that’s the juxtaposition of life, and that has to happen.

Tyrone Ross: So I honestly do hope it happens because there’s billions over seas, but I think we should start here within our own borders first. And if that means that a lot of people in these inner cities and rural communities and farmers and all these people can get better resources and help themselves they can wear the clown hats and pat each other on the back in the Hamptons for all I care. Let’s just make sure people can eat.

Tobias Carlisle: I can see two arguments for it. One is you don’t want to put that much power in the hands of Facebook, which even if they had been really well behaved in the past it’s still scary to have one group that powerful that really have no control over, particularly when there’s one guy who controls all of Facebook. But on the other hand, Buffet’s got this great line where he says, “The more the guy talks about how honest he is, the tighter I grip my wallet.” So whenever I hear a company like Facebook, or anybody saying we’re doing all of these altruistic things, I always think where’s the fish hook in this? What’s in it for you? So the fact that they were saying we’re just building this tool, we’re not necessarily singling out any group of people who are trying to help. But if the side effect of it even is that it does achieve an end that you’re in support of, then I can see cautiously, being cautiously supportive of something like that. I don’t understand enough about it to have an opinion, I’m just trying to think through it and talk it through.

Tyrone Ross: Right. And to your point about them having so much control, one of the congressmen asked, he pulled out a $20 bill. He said, “Anyone could use this, anybody, good, bad, ugly, tall, short, fat, skinny, anybody. Are you going to allow the Milo Yiannopoulos or whatever, all these different people who are banned on your platform now could they use Libra?” And he couldn’t answer. And I’m like, “Oh god.” So again, they could keep people off. So that part, and to be fair again I didn’t even think about that. I’m thinking about these people, I’m not even thinking about the fact that what if these people are people who they now say they want to exclude because they’re in Biloxi, or they’re in Newark, or they’re in Rochester, wherever. That part of it I didn’t think about, and when he said that I’m like, “All right there’s a censorship issue here.” So yeah, very powerful what you stated.

Tobias Carlisle: It does also seem to be against the philosophy of crypto in the sense that when I read that paper the very first paragraph, the summary and then the very first paragraph of the whole paper, they talk about the fact that it’s decentralized.

Tyrone Ross: Right.

Tobias Carlisle: This is definitely a decentralized … so is there anything out there that is equivalent that is decentralized? Are we just talking crypto, then are we just talking Bitcoin, crypto, and Ethereum?

Tyrone Ross: Yeah, you’re talking Bitcoin. And now to be clear, they did say they want to move to a more decentralized type of platform. It is open source, meaning that anyone could work on it, like the internet it’s open source, so that part is good. So they did say they want to migrate to that, which is great. But there will always be the overseer, the evil overseer. But if you’re really talking about truly decentralized, no marketing team, no humans involved or whatever, the conversation ends and begins with Bitcoin, done. That’s just what it is.

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