This article comes fromMedium, the original author: Facebook digital currency project Libra co-creator and head of digital wallet Calibra David Marcus (David Marcus)

Odaily Translator |

Odaily Translator |

As I traveled around the world meeting key stakeholders, it became clear to me that digital currency transfers via blockchains are not delivering the benefits they should (especially in terms of expanding access and lowering the cost of financial services), at least Didn't do as much good for the world as I, and most others, thought.

I'm often asked why we didn't build our payment system on top of our existing architecture, but took a new, more ambitious approach. I tried to find a concise and high-quality article on the Internet to answer this question, and hoped that someone could describe the advantages of a new core network to transfer funds, but I couldn't find one, so I think I should do it myself Let's talk.

First, let's examine the limitations of the current system. The existing "currency network" is closed, and many networks are not well connected with each other. We have regional payment networks (such as ACH, European Payment Council, etc.), and interbank payment networks (such as global interbank Financial Telecommunication Society, RT1, etc.), and central bank/commercial bank networks, etc. Some of these systems were created in the 1960s and 1970s, and while some have been touched upon since, they are still based on outdated, fragmented infrastructure.

Second, if we analyze the payment services and wallet products in the current market, given the infrastructure they rely on, there are certain limitations. For example, while you can send and receive payments within one wallet, you cannot send and receive payments between wallets of different companies because these systems are siled, limiting the reach of each network—this kind of It's like you can't send email to Yahoo Mail from Gmail. Without open standards that support interoperability (such as the SMTP standard for e-mail), users can only communicate with people within their own e-mail system.

Third, if someone in one country wants to use a particular wallet/bank account to transfer funds (value) to another country, today's system is far more cumbersome than one might imagine. Depending on the setup, there are many intermediaries involved in moving money from point A to point B, and at point B you also need to have a readily available liquidity pool for consumers to withdraw their money in a timely manner. The problem here is that as long as there is a delay in any link in the middle, it will increase the cost of each step.

To further illustrate the key difference, let's now imagine an entirely new world: where there are two Libra Association members, both of whom have financial infrastructure built on existing rails, and want to create an interoperable wallet between wallets. layer.

Let's take an example, if there is a transaction flow between the Calibra wallet and the Mercado Pago wallet, how will the existing transfer track handle this transaction? Alice sends $100 from her Calibra account to Bob's Mercado Pago wallet. Alice lives in the United States and Bob lives in Argentina. If Alice has a balance in her Calibra wallet, she can pay immediately. Calibra has to use a custodian bank (or banks) to protect customer funds, so the $100 will first be transferred from a US bank account to the corresponding bank account of Mercado Pago's Argentinian customer - which means a correspondent bank needs to be involved Transfer or intermediary participation. Even if these transactions use the SWIFT network, the cost to complete the transaction may reach $45-50.

Given the cost and complexity, the correct way to achieve this transfer purpose is to employ a netting agreement between Calibra and Mercado Pago whereby the account balance of one entity is settled against the other at the end of a given period. But it also means that liquidity issues need to be resolved and other costly operational constraints and requirements are met when there are a lot of bilateral transactions between each of the entities that are going to be part of the scheme. If the balance in one party's account is insufficient, the settlement cannot be completed smoothly.

Long story short, building payment systems on top of existing rails and between discontinuous payment networks will not bring more innovation to the market, nor will it lower barriers to access to modern financial services, if one wants to build a very stable The new infrastructure of the network requires a high-quality global medium of exchange to support it.

If you compare the design of the Libra project, you will find that Libra is actually helping wallets, merchants, and services around the world to transfer value at extremely low cost. At the same time, almost real-time settlement can be completed, without even considering whether banks around the world have sufficient local currency liquidity pools. Just like the SMTP protocol allows any email provider to interoperate with other email providers, Libra can be the "protocol" that enables fast, affordable, and stable money transfers across service providers, institutions, and people around the world. In turn, Libra eliminates the need for numerous money transfer intermediaries and dramatically reduces operational complexity and overhead, increasing innovation and opportunity through dramatically lower costs. There is no doubt that Libra hopes that people will get greater benefits when sending and receiving funds, and greatly reduce the threshold of using modern digital currency and financial services, so that billions of people can use these basic services and integrate into the world economy .