Nick Freer comment: Will Facebook’s Libra scale up to disrupt banks?

I remember drinking a pint of ale in the West End of Glasgow a couple of years back in a pub where you could pay for your drinks by Scotcoin – an alternative to Bitcoin – via a smartphone application. I even had some Scotcoin in a digital wallet although I fear I have misplaced it somewhere in the ether that is the web. I remember hearing from someone more in the know on all things cryptocurrency around that time that there were only a few thousand people globally who really understood the workings of blockchain technology.

There is a massive opportunity for Scotland to become a global centre for the crypto community, says Freer. Picture: Stewart Attwood
There is a massive opportunity for Scotland to become a global centre for the crypto community, says Freer. Picture: Stewart Attwood

Fast forward a few moons, and I had the opportunity to speak to a handful of the wise men who have made cryptocurrency their specialist subject when they descended on Edinburgh last week. Titan Ventures co-founder Michael Nye and industry experts Charles Read and Andrew Strong were in Scotland to address the latest cohort of companies invited onto the Wayra Blockchain and artificial intelligence accelerator run at the University of Edinburgh’s Bayes Centre.

Cryptocurrency, or crypto, has been a blockbuster financial news story over the last few weeks ahead of the launch of Facebook’s new cryptocurrency Libra. Libra is a development in money transfer that many commentators believe will disrupt the banking sector, central banks and possibly even rival the dollar as a new global unit currency unit. It’s also the view of many in the know that the currency, described by some as the “first everyday implementation of crypto”, could spark the mass adoption of cryptocurrencies.

By the same token, excuse the pun, other industry observers have asked questions about Facebook’s motivations, whether or not Libra is really about financial inclusion for the developing world and how fellow tech and payment giants who are not partners to the project, Amazon being an obvious example, will react.

The Geneva-based not-for-profit Libra project backed by the likes of eBay, Mastercard, Visa, PayPal, Spotify and Uber, faces significant privacy and security challenges. This includes indications that regulatory authorities in the US and EU will challenge Libra at every turn.

When I caught up with the Nye, Read and Strong, the Libra story wasn’t too far from any of their lips. Nye says he sees “both positives and negatives” with Libra, while admitting that an individual’s financial data is “highly vulnerable”. Read opines that Libra will “take a lot of power away form central authorities” and talked about Facebook’s potential given its multi-platform offerings like Instagram and WhatsApp. Strong thinks Libra is a good thing because it will “bring awareness [of crypto] to the man in the street”.

Nick Jones, CEO and founder of soon-to-be-launched Zumo app, says: “It’s great to see the Blockchain and crypto community developing so rapidly in Edinburgh. There is a massive opportunity for Scotland to establish itself as one of the global centres for this emerging sector, especially in fintech with the depth of experience in the space. Having Michael Nye and other top influencers visit the Wayra accelerator is a real bonus for us as alumni as we can access their expert knowledge. As we prepare to publicly launch Zumo and prepare to scale from our current team of 20, its reassuring to see that Edinburgh can attract top talent in this area. A second high quality intake of start-ups starting the Wayra program really validates this.”

In conversation with Jones and Wayra accelerator mentor Daniel Lesnick, both identified a few of the exciting start-ups to watch from the current cohort. Sage City is creating a Blockchain network that utilises so-called sidechains to help organisations improve efficiencies and lower costs, Ocyan is an infrastructure platform that enables cloud applications to scale up in the Blockchain space and Trace is helping businesses locate, protect and visualise data.

- Nick Freer, founding director of Freer Consultancy and Full Circle Partners.