“If you look at the Libra white paper closely, you can find that there were more ideas put forth by Korea. There was Cyworld when Facebook appeared and then KakaoTalk at the time of WeChat’s appearance. Given that Terra presented the white paper earlier than Libra, we cannot afford to lose our preemptive idea again merely because a large foreign company enters the market.”

Terra CEO Shin Hyun-sung made the comments to the reporter’s remark that there are voices comparing Facebook’s cryptocurrency project “Libra” to “Terra” in coin designing method and vision. Terra is a cryptocurrency project led by Terra co-CEO Shin who founded Korea’s e-commerce company TMON. Recently, Terra gathered 100,000 users in 10 days in cooperation with Korea’s mobile payment app CHAI. Currently, CHAI is available in TMON, offering a variety of promotional programs including a round-the-clock discount of up to 10%.

Decenter met Shin and Nicholas Platias, Terra’s head of research, at the Terra head office established in Seongsu-dong, Seoul, Tuesday. “Terra is a project that has already been growing. Even if Libra is released, it will take a long time for it to catch up with Terra,” they said in unison.

‘Libra is both competitor and companion’

Will Libra pose a threat to Terra? Or will it bring about benefits to the industry as a whole? It’s difficult to predict which cards Facebook will present in the future with respect to Libra, but Libra is certainly a potential competitor and a companion to Terra. “Facebook says it will help people who remain outside of the financial system through Libra but a closer look at its intentions shows that Facebook has a lot to do,” said Shin and Platias, adding that “if Libra begins its service in Asia, it could be a potential competitor.”

They concurred that Libra could be a companion to go with. “Libra is certain to help Facebook users ignorant of cryptocurrencies use them easily. This will certainly be a nice thing to the entire industry,” Platias said. “Libra could be a companion in that it can boost the industry together.”

Platias said Terra is ahead of Libra in terms of regulation. “Facebook has been in a gray zone as far as regulation is concerned. If Facebook touches the existing financial system through Libra, Facebook would volunteer to enter the territory of regulation,” he said. “As Facebook’s privacy issue emerged, the government wanted to regulate it. So the more Facebook moves, the more easily the government will try to regulate.” Shin concurred on this. “Terra is clearer than Libra in usage. Therefore, Terra will find it easier to tackle the regulatory issue than Libra if it complies with regulation clearly within limited use cases,” Shin said.

‘What must be counted is not traffic but value’

In his Terra Medium blog a few days ago, Platias said: “Libra and Terra are similar in what they are for. Terra returns value to users unlike Libra,” meaning that Terra’s project designing method itself is focused on users.

But when it comes to returning value, Libra also returns proceeds from the operation of the Libra Association to users as dividends. Then one can think that Libra will also return part of the value. “(Terra and Libra) are similar in that they run operational funds and use transaction fees to return (value) to investors. Facebook pays attention to investors but Terra is different,” said Shin, adding that “Terra pays attention to value users obtain when exploiting the platform rather than the dividends returned to investors.” Namely, Terra is trying to give more benefits to users trying to exploit the platform.

Facebook has already secured the globally viable number of users. People feel it easier to use added functions on the existing platform than to look for a new service platform. “Of course, traffic is the very important factor and Facebook is second to none when it comes to traffic. But other scenarios can come out if the game is calculated according to the share resulting from benefits,” Shin stated. The key is whether you could offer differentiated benefits like higher discount rates than other payment methods. He emphasized that traffic would not ensure the success of a platform service necessarily, saying, “Many services released by Google and Naver didn’t work well.”

‘Benefits to users’: Terra’s business model

“It’s essential to offer value that can be grabbed. Just looking at the Facebook white paper, you can find that there is no reason for people in industrialized countries to dare to use Libra,” Shin said. “Terra’s issuance amount will increase in proportion to demand, namely e-commerce transactions. If the issuance amount increases, Terra could give more discounts to users, and this will prompt many people to use Terra.” That is, demand can lead to more consumer benefits, which would in turn trigger demand again.

“We will penetrate into the markets in East Asia and Southeast Asia more swiftly and deeply. As Terra was developed as an e-commerce solution, it can be connected more easily than any other payment method and lower fees,” Shin said. “Cryptocurrency is a tool to boost the e-commerce market further. (Terra) will be able to dominate the market in terms of e-commerce payment although any strong competitor emerges.” /yjk@decenter.kr

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