Is Facebook the World’s Most Valuable Company?
What are the million-dollar wealth opportunities of 2019?
To find them, I roam the world.
From Migdal Haemek in Israel (TowerJazz Semiconductor)… to Los Altos in California (Jonetix)… to Shenzhen in China (Huawei).
Along the way, I pick up ideas galore.
Then I return home to the Berkshires in the US and have lunch with Steven Sprague, CEO of the private company Rivetz. (I can’t recommend the company, because I am on the board).
Steven is always full of exciting ideas and perspectives on technology and markets.
Five years ago, on a trip down the MassPike, for example, he told me about the blockchain.
He said that it would open the way to an “internet of money, verified facts, titles, intellectual property and digital property rights.”
“It’s basically just a giant distributed immutable database,” he reminded me at lunch. “All the money will be made through its function of enabling digital assets. That’s a new thing.”
“New” is an understatement.
The introduction of mainstream digital assets could make Facebook the world’s most valuable company — thanks to its new Libra coin.
This would be an upset.
After all, Facebook has proved spectacularly unsuccessful in monetizing its customers. With a $550 billion market cap and two billion users, its per user value is roughly $275.
Cable companies — even the silly socialist Palo Alto Cable, Steven pointed out — have a value per user of thousands of dollars.
Comcast customers are capitalized at somewhere around $8,000 depending on valuation of NBC. That is 32 times more than Facebook.
But with Libra, that may change.
Potential in the Trillions
As Art Laffer did for me four decades ago, Steven drew me a chart on a napkin. It was Sprague’s Dynamic CryptoWealth curve.
On the x axis was time; on the y axis was price.
Steven drew two lines. One line was the value of the equity, growing smoothly from left to right. No huge opportunities apparent there.
Then he drew another line, the value of what we might call FaceCoins or Libras.
“If they get the security and compliance right,” Steven said, “the value of Libras as a scarce digital asset will rise 10 times faster than the equity.”
Speculators will pile in. It will mean that Facebook’s value could soon be dominated by what is potentially a multi-trillion-dollar digital asset.
But as Steven wrote in a White Paper released this week, “we believe they left out the foundational component of user security: Protection of the private key, proof of user consent, decentralized compliance, and global privacy.”
Transactions on the Libra network will not pass muster by regulators unless they are provably “purposeful, intended and compliant.”
So where will Facebook end up on Sprague’s Dynamic CryptoWealth curve?
We cannot be sure.
But there is clearly huge potential in its new digital token.
Not only does it offer an upside path for Facebook in its doldrums, but it also shows a model for new wealth creation across the Cryptocosm in the US and around the world.
Editor, Gilder’s Daily Prophecy