This will be a series of article on what I think about Libra. This is the first one. Enjoy!
In the past weeks, we’ve been hearing a lot about Facebook and its new project Libra. The new digital currency has been subject of much debate, and not only in the medias. Last week, David Marcus, Head of Facebook Blockchain project, was at the American Congress defending the project he’s working on. Different issues were raised during this audition, such as legal questions, data-privacy, sovereignty and money laundering.
Still, interrogations remain about this project backed by some of the most famous tech companies in the Western world. Maybe we should look at the situation with more hindsight. But before dealing with Libra’s subject, we have to understand the context that led to this, which is mainly set by China’s economic catch-up. We will then analyze how Western tech titans of Libra Association will use Blockchain to strikes back, and finally what could be the next steps
I. China woke up, so the world is shaking
According to historians, Napoleon once said “[…] When China wakes up... the world will
tremble.” This quote is also the title of a book from a French politician Alain Peyrefitte. And he was right, the world is trembling right now. Let us leave the geopolitical side (this is not the point of this text even if it is really interesting to see how China faces several fronts) and focus on the economic and business side.
First of all, China’s economic catch-up is going pretty well, even if their 2018 annual growth rate was the lowest they have ever had (6.6% compared to 6,8% in 2017). The investments the coutry is doing both on his territory (infrastructures’ development) and abroad (One road one Belt investments) led the growth. In 2018, China’s GDP was $13.000 billion, and it was the first exporting country in the world. The country which was for long the world workshop is now trying to impose itself as a financial but also technological power.
Chinese top technological companies and startups ecosystem is the reason of China’s technological power. They are constantly innovating to provide the best services to its customer, the best products, and are always thinking about ways to maximize its efforts.
First, investing huge amount of money in R&D to develop tomorrow technologies. Certainly, 5G is a shining example of this work, but many other projects are in progress. DAMO, the R&D branch of Alibaba, has invested $1.36bn in 2018 to work on every new technology, from AI for translation, autonomous vehicles, to blockchain technology, through quantum computing. In 2017, they’ve announced a $15bn plan to support its R&D strategy.In the hardware side, many people are working on the next sensors, smartphones in different cities in China. Shenzen in considered today as the new hardware Silicon Valley. One figure is an irrefutable proof, in 2018 they applied for 568 patents on graphene technology and 2032 patents in robotics.
Secondly, through development of new business models on top of what they are already providing. Meituan Dianping is the perfect example. They have started as a delivery app (in 2013 after the merger of two companies) and they are now the most used one in China (59% of Chinese people use it, followed by Ele.me used by 36% of the population in the first half of 2018).
It has decided to diversify into tourism, shopping and retail using the community it have created. Many Chinese apps are using this model, which are used as aggregators of other apps to facilitate user experience and keep ones on the app.
Finally, Chinese companies are now looking for more than their domestic market.
They are multiplying partnership with western company to develop new products and new technologies. On July 2019, BMW partnered with Tencent to develop autonomous vehicles, in April 2018, Alibaba partnered with Ford for the same reason, in October 2018 it was Huawei and Audi. These partnerships are worth attention, since we can find the “Keiretsu” strategy in it. Of course, no equity was bought or exchange, but these partnerships, even if it is a way to develop Chinese market, are also a way to extend the influence of the Chinese tech titans.
This extension of the Chinese startups on the western market recently shift in a totally new way. This shift is named TikTok. The former app Musica.ly was acquired by the group Beijing ByteDance Technology in 2017 for approximatively $800 million. Musica.ly was already promised to a bright future, and Tiktok continued its breakthrough. In 2018, the app had accumulated insane statistics: 500 million MAU worldwide, it was one of the top downloaded apps in Appstore and Google Appstore in 2018, available in 150 countries in more than 70 languages. And this growth is continuing in 2019.
With this new competitors, Western companies are now directly threatened by these new Easter companies, and the reaction has been announced recently.
He is such a cute dragon!
Ahah, so was Drogon, but he became the bad ass dragon we now know
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