Libra and the Dilemma of Trust

A crypto currency challenges technology, regulation and humans.

Author: Jochen Werne

“Money is perhaps the most concentrated and acute form and expression of trust in the social-state order.”

Georg Simmel


In this clarity, the German philosopher and sociologist Georg Simmel, born in 1858, formulated the value of a currency in his work “Philosophy of Money”. This clear and comprehensible insight also provides a simple basis for understanding why, for example, states rely on the independence of their central banks. And just as simply the question arises, which order do you trust when it comes to crypto currency?

Almost 4,000 of these currencies now exist worldwide. After Bitcoin, Ether, XRP, Litecoin and Co., Libra now wants to establish itself as a future heavyweight in the market – and with a noble goal. Libra is to become the cashless payment option “for mankind” and make international payment easier.

Libra Coin – the currency of the future?

No crypto currency received comparable media attention, triggered only by the announcement of the project. And the emotionality and toughness with which the discussion is already being conducted shows how seriously the topic is being taken. It’s about reputation, influence, control, responsibility and only in the last instance about technology. Central banks and government bodies are sceptical about the “currency of the future” on a broad basis, even though the advancing globalization could argue for a single currency in the long run. A currency that supports a consistent free exchange of goods and services. Also under discussion is whether Libra Coin could be the means of payment for the approximately 1.7 billion people who have no access to banking services and whether the familiarity and the large target group of Facebook, combined with the announced low transaction costs, could make it possible to reach billions of people worldwide.

Challenges at all levels

Technically, not all hurdles have been cleared yet: In order to make a stable coin possible, it is necessary to find the right technology. It is precisely this stability that is supposed to distinguish Libra Coin from other crypto currencies and thus also make it suitable for skeptical end consumers. Members such as Mastercard, Paypal or Ebay should also provide the Libra Association with their names and brand promises additional confidence for the end consumer. But already today the alliance is not as stable as the founding members had hoped and the exits of Mastercard, Visa and Paypal weakens the consortium.

The Libra Association has repeatedly emphasized that it wants to comply with all regulatory aspects, but there are voices at the political and banking levels that are extremely sceptical about the project. The new payment system raises many questions in monetary and legal terms. Central banks and supervisors want to keep an eye on the influence of the potentially new currency and usually share the view that whoever acts like a bank must be treated like a bank. In other words, comprehensive requirements must be met and regulations observed – especially at the international level. This is difficult because current regulations are designed for the classical financial system, with which the Libra system has largely no points of contact. The aim is to keep total regulatory influence and not to allow any possible loopholes.

Despite its American origin, the Libra Coin is to be administered from Geneva by the Libra Association. The idea here is to be regulated by the Swiss Financial Market Supervisory Authority FINMA. Although Facebook has paid a lot of attention to the underlying technology, the legal issues still need to be clarified. Especially with regard to money laundering, consumer protection and possible misuse of the currency for illegal activities. Within the Association, there will be no special treatment for the founder Facebook, but equal voting rights for all members.

Acceptance and European values

With regard to Germany, it can be said that its citizens are within the international average as far as their affinity for digital is concerned. However, a historical-cutlurell caution can certainly be observed with regard to the topic of money, which certainly explains the well-known love of cash. A more pronounced European awareness of data protection with the General Data Protection Regulation (GDPR) makes many people, especially in Germany, sceptical about the subject. The fact that Libra was launched by Facebook is hardly a confidence booster after the Cambridge Analytica scandal. The fear of the transparent customer meets with security concerns about one’s own savings. Every German knows the quote: “Friendship ends with money” and thus new things are always put test. Culturally different in Sweden, where sometimes it’s only possible to pay by card. The same in China, where WeChat Pay and Alipay are no longer just a trend.

As always, changes are taking place step by step. It remains to be seen whether Libra Coin in its current form has future prospects. In any case, any change can only work if it is accepted and used by the end consumer despite all skepticism.

And this stands and falls – also in the digital world – with what Georg Simmel already put in the centre in terms of money in the 19th century: CONFIDENCE.

A more in-depth look at money and value can be found in the article “Coined Liberty 2.0“.

Following the keynote on “Libra in Retail?” at the Payment Summit 2019 in Hamburg, the article “Libra and the Dilemma of Trust” has been published to give participants further insides on the topic.

Artificial intelligence in the financial sector

It has been pleasure being guest author for the DIGIPRAKTIKER, Finanz Colloquium Heidelberg.

What role does the human factor play in times of exponential technological progress?

Author: Jochen Werne, Director Business Development, Product Management, Treasury and Payment Services at Bankhaus August Lenz & Co. AG

I. Introduction

The only constant in history was, is and remains change. Gutenberg’s invention of the printing press in 1450 was a milestone on the timeline of human development. Today we still take note of this invention, which was considered an innovation at that time, but we have long lived surrounded by smartphones and cloud applications, in which we can store the most private information and retrieve it from anywhere in the world. Today’s change is being driven by a veritable digital revolution.

Digital change already has fundamental consequences for individuals and their lifestyles, but it is developing its full potential when it comes to interacting with our social environment. In times of smart robotics and maturing systems in relation to artificial intelligence, the question arises again and again what role humans play on the stage of these technologies. Is he …

Read the full article by clicking here and being forwarded to the DigiPraktiker

Video: Full ec4u digital thoughts Conference Keynote: What’s next? Expeditions into the digital realm

Jochen Werne, Director Marketing & Business Development at Bankhaus August Lenz, explains in his keynote address how we can shape the future from the innovations and topics of the past and why digitization must be thought of not only technologically but also culturally.

ec4u Digital Thoughts Conference Keynote

Jochen Werne, Direktor Marketing & Business Development beim Bankhaus August Lenz, erläutert in seiner Keynote, wie wir aus den Innovationen und Themen der Vergangenheit in der Gegenwart die Zukunft gestalten können und warum Digitalisierung nicht nur technologisch, sondern auch kulturell gedacht werden muss.

Meetup: Influencer Marketing for FinTech and Banks

 “Thanks a lot Stefanie Milcke for the panel invitation to a great evening.

Check out this Meetup: Influencer Marketing for FinTech and Banks. Looking greatly forward to inspiring discussions”

This meetup is for all fans of the previous one about storytelling the other day and a special wish by one of my guests: Influencer Marketing.

I have invited some very cool speakers to tell us about their idea / business / approach in marketing – which I see more or less connected to influencer marketing:

Agenda
– Gerald Feind: How bloggers think and work (B2C)
– Jochen Werne: Becoming an influencer yourself (B2B)
– Ralf Mardeis: Platform meets Influencers (B2C)
– Thomas Braun: Platform meets video production (B2B/B2C)