As Regulators Stonewall Libra, Facebook Rolls Out New Payment System
by Zero Hedge - November 13th, 2019 10:08 am
Courtesy of ZeroHedge
Authored by Joeri Cant via CoinTelegraph.com,
As the Libra stablecoin project continues to face a hostile audience of regulators, Facebook launches a new fiat payment system called Facebook Pay.
image courtesy of CoinTelegraph
Empower people everywhere to buy and sell things online
On Nov. 12, the social media giant announced that it is introducing Facebook Pay, a payment system that is designed to facilitate payments across Facebook, Messenger, Instagram, and WhatsApp. Deborah Liu, VP, marketplace & commerce at Facebook said:
“People already use payments across our apps to shop, donate to causes and send money to each other. Facebook Pay will make these transactions easier while continuing to ensure your payment information is secure and protected.”
In an apparent bid to avoid further regulatory scrutiny, the company clearly states that Facebook Pay is “built on existing financial infrastructure and partnerships.” The firm is similarly clear that the payment service will be kept separate from Facebook’s new Calibra wallet and the Libra network.
Facebook Pay will start rolling out this week on Messenger and Facebook in the United States for “fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger and purchases from select Pages and businesses on Facebook Marketplace.”
Facebook concludes the announcement with the belief that the firm can “help businesses grow and empower people everywhere to buy and sell things online.”
Every major U.S. payment processor has left the Libra Association
At the beginning of October, the Libra Association lost seven partners out of the original 28. Namely PayPal, Visa, Mastercard, Stripe, eBay, Mercado Pago and Booking decided to leave the consortium.
However, not long after, Alfred F. Kelly, CEO of major payment processor Visa, said that the company is still in discussions with Facebook on the Libra project, adding that it believes that digital currencies provide safer payments to more people and places.
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3 Reasons Why One Trader Didn’t “Manipulate” Bitcoin Price To $20K
by Zero Hedge - November 6th, 2019 8:00 pm
Courtesy of ZeroHedge View original post here.
Authored by William Suberg via CoinTelegraph.com,
Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed recent research which claimed Bitcoin’s bull run to $20,000 was the result of efforts by a single wallet holder.
image courtesy of CoinTelegraph
Circle CEO: Research fails to understand exchanges
The findings are currently featuring as part of the $1.4 trillion lawsuit against stablecoin Tether (USDT). Its issuance, researchers argue, coincided with Bitcoin price jumps.
For Allaire, however, the idea that one Tether trader engaged in manipulation on an exchange had no logic.
“Exchanges use omnibus wallets that pool all customer balances and transactions on and off the exchange. So an analysis that shows that ‘a single wallet’ was involved in flows from Bitfinex to other exchanges is meaningless. All it shows is that traders were trading,” he summarized.
Others, meanwhile, including Cointelegraph contributors, followed Allaire in disagreeing with the conclusion that entire markets were swayed by a single wallet.
“Wake up call; every market is ‘manipulated’. Everybody tweeting something about the price of a certain asset is ‘manipulating’ the market. Doesn’t mean you can’t make money,” trader Michaël van de Poppe summarized in a Twitter post on Monday.
Bruce Fenton, former executive director of the Bitcoin Foundation, criticized the technical proficiency of the data.
“The entire premise seems to misunderstand how markets and stablecoins work,” he responded, calling the research “bad science.”
More Tether does not mean higher BTC price
The dispute comes as curious movements in Bitcoin price continue. As Cointelegraph reported, several recent jumps have sparked speculation, including one which induced the second-biggest daily gains in Bitcoin’s history.
In December 2017, Tether’s market cap was around $1 billion. But while Bitcoin’s price is now 50% lower, Tether’s market cap has increased four times over to current levels of $4.1 billion.
Therefore, the issuance
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The Dangers Of Crypto-Mining Pools: Centralization And Security Issues
by Zero Hedge - November 4th, 2019 8:05 pm
Courtesy of ZeroHedge View original post here.
Authored by Dean Chester via CoinTelegraph.com,
The larger percentage of cryptocurrency enthusiasts that turn to mining pools, the more dangerous this kind of mining is likely to become. The reason is simple: The potential rewards grow in correspondence with the number of participants and their hash power, and so too does the incentive to profit from it in less-than-legal or acceptable ways for some parties.
image courtesy of CoinTelegraph
Why mine together?
In cryptocurrency mining — just like with real-life gold mining — the days of lone-wolf gold diggers drifting from place to place with their trusty tools in tow, following the trail of the elusive gold seams are long gone. While it is true that some of us can still afford to mine solo, it’s not a viable option for most people, as they do not have enough hashing power on their own to mine blocks consistently.
The infrequency of actually finding a block these days when mining individually is what makes mining pools so tempting for many people. In sharing their resources with other miners, they are able to make the returns steadier and more predictable.
The mining difficulty is only going to increase in the future if more people get into crypto — and they most likely will.
Of course, the utility of entering a mining pool is somewhat undermined (see what I did there?) by several factors. First of all, due to the fact that mining resources and power are shared, so too must be the rewards. Every member of the pool gets reimbursed according to their computing power — that’s only fair. Additionally, however, each participant has to pay a fee to the people behind the creation of the pool.
So far so good. Mining pools are definitely not a bad thing in and of itself. But how can they be exploited or otherwise threatened?
Why centralization is unhealthy
Centralization is a bane to everything cryptocurrencies stand for. The initial vision of the crypto environment was one of equality, but the current state paints quite
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Libra isn’t dead yet — the killer blow will come from governments issuing their own digital currencies
by ilene - October 28th, 2019 1:27 pm
Libra isn't dead yet — the killer blow will come from governments issuing their own digital currencies
Major players in global electronic payments are shying away from Libra, spooked by the scrutiny Facebook’s operations are attracting from regulators around the world. Shutterstock
Courtesy of Elvira Sojli, UNSW
Barely six months after Facebook announced its own digital currency, a plan heralded as the beginning of the end for central banks and government controls over the money supply, the whole thing is looking like a house of cards.
The project, named Libra, was taken seriously in part because it had the support of major players in global electronic payments, including Visa, Mastercard, Paypal and Stripe. But now they are dropping like flies.
Two weeks ago Paypal pulled out, followed by Visa, Mastercard and Stripe, as well as eBay, Mercado Pago (Latin America’s most popular e-commerce platform) and Booking Holdings (owner of travel booking websites including booking.com).
They appear to be spooked by the scrutiny Facebook’s operations are attracting from regulators around the world.
Backlash
Facebook CEO Mark Zuckerberg defends the Libre before the US Congress on Thursday. MICHAEL REYNOLDS/EPA
European leaders are threatening to do all they can to thwart the Libra plan.
France’s minister for the economy, Bruno Le Maire, said his government would not allow a private company “to have the same monetary power as sovereign states” and would join with Italy and Germany “to show clearly that Libra is unwelcome in Europe”.
Does it mean Libra is dead on arrival?
Not necessarily. The companies backing away from it might change tack again. Visa, for example, has said its door is still open to Libra.
Others have signalled the same.
What it does means is that governments wanting to mitigate the threat from platforms such as Libra are probably going to have to do more.
The stage is set for central banks seeking to pull the rug from under Libra by issuing their own digital currencies.
What’s
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Stanford Prof: Crypto Will Rain On Banks’ Low-Interest Rate Parade
by Zero Hedge - October 25th, 2019 9:01 am
Courtesy of ZeroHedge View original post here.
Authored by Marie Huillet via CoinTelegraph.com,
A professor at Stanford Graduate School of Business says cryptocurrencies will put an end to the windfall that banks currently enjoy from low-interest deposits.
image courtesy of CoinTelegraph
In an Oct 24 interview for the university, Dean Witter Distinguished Professor of Finance Darrell Duffies said that one way or another, cryptocurrencies are likely to upend banks’ business model within the next decade.
Major disruption inevitable
Professor Duffie said the public should not be misled by the relatively still-low levels of adoption of decentralized cryptocurrencies such as Bitcoin (BTC); nor should they take the pushback against Facebook’s Libra as the sign of a moratorium on major private initiatives.
“The future is coming, and it will be very disruptive to legacy banks that don’t get with the program,” he said.
Whether it in the form of a dollar-backed stablecoin, a Facebook product, or a central bank digital currency, the benefits of the digital asset model will likely mean that banks lose their access to lucrative low-interest deposits within ten years, he said, adding:
“New payment methods will trigger greater competition for deposits. If consumers have faster ways of paying their bills, and merchants can get faster access to their sales revenue without needing a bank, they won’t want to keep as much money in accounts that pay extremely low interest.”
As the report notes, consumers and businesses currently store around $14 trillion in deposits with United States banks alone that pay out an extremely low rate of interest on average.
Banks currently pay less than 0.1% interest on checking and savings accounts, and only a slightly higher rate on one-year certificates of deposit. Meanwhile, the amount banks receive from routine overnight loans has climbed from 0.3% in 2015 to over 2% in 2019.
Slow adopters will fall by the wayside
This dependence on deposit accounts to process payments by the vast majority of the population ensures huge profits for banks. In addition, banks charge high fees from credit card vendors —
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Blockchain voting is vulnerable to hackers, software glitches and bad ID photos – among other problems
by ilene - October 22nd, 2019 9:41 pm
Blockchain voting is vulnerable to hackers, software glitches and bad ID photos – among other problems
How secure is online voting with blockchain technology? WhiteDragon/Shutterstock.com
Courtesy of Nir Kshetri, University of North Carolina – Greensboro
A developing technology called “blockchain” has gotten attention from election officials, startups and even Democratic presidential candidate Andrew Yang as a potential way to boost voter turnout and public trust in election results.
I study blockchain technology and its potential use in fighting fraud, strengthening cybersecurity and securing voting.
I see promising signs that blockchain-based voting could make it more convenient for people to vote, thereby boosting voter turnout. And blockchain systems can be effective at strengthening the security of devices, networks and critical systems like electricity grids, as well as protecting personal privacy.
The few small-scale tests run so far have identified problems and vulnerabilities in the digital systems and government administrative procedures that must be resolved before blockchain-based voting can be considered safe and trustworthy. Therefore I don’t see clear evidence that it can prevent, or even detect, election fraud.
How it works
There are a few steps in a blockchain-based voting system, which uses technology to mirror the process of in-person voting.
First, the system needs to verify a voter’s identity – often by having the user upload a photo of a government-issued ID and then a photo or video self-portrait. The system confirms the ID’s validity, and facial recognition software makes sure the person in the self-portrait is the person on the ID. Then the user is authenticated as eligible to cast a vote.
Only at that point does blockchain technology actually enter the process. The system gives each authenticated voter a digital token that represents the person’s vote and a list of the digital addresses to which he or she can send that token. Each address indicates a vote for a particular candidate or an answer to a ballot question.
The tokens don’t indicate who cast them, so votes remain anonymous. When a voter sends a token, a record of that act is stored simultaneously on several…
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Five hurdles blockchain faces to revolutionise banking
by ilene - October 19th, 2019 6:07 pm
Five hurdles blockchain faces to revolutionise banking
Courtesy of Markos Zachariadis, Warwick Business School, University of Warwick
Blockchain is touted as the next step in the digital revolution, a technology that will change every industry from music to waste. When it comes to money, it goes well beyond bitcoin. Academics have claimed it will “do to the financial system what the internet did to media”.
There are many versions of public blockchains in existence, but the majority of them share a basic premise: they offer a secure, decentralised infrastructure to maintain a “single version of the truth”, recording all changes made on the blockchain database since its formation.
Enthusiasts predict the technology will do away with the need for banks to act as intermediaries. Whether we buy our groceries online, pay for a service through our mobile phone, or transfer funds abroad, transactions will almost immediately be recorded on the distributed ledger of the blockchain, rather than waiting a couple of days for it to register in our account as banks contact each other on a system invented in the 1970s.
A lot of banks and fintechs started experimenting with blockchain in 2015 – trying to capitalise on the speed and transparency it offers. But four years later, the idea that blockchain will remove banks as intermediaries in our payments system still seems a long way off. That’s because there are five basic challenges that the technology has to overcome if it is to be accepted as part of the financial system.
1. Governance
Blockchain’s strength is it has no central authority, but this is also a weakness. Who makes the decisions about how the technology works or when it needs updating?
If Microsoft Windows needs an update, Microsoft will decide on that and send out an update. But with no central decision-maker, decisions about updates in the world of blockchain become slow and dysfunctional.
Public blockchains operate more like communities. There is no systematic way to decide on updates or improvements. Instead they happen through huge debates among ecosystem participants, with groups arguing over issues like the length of a block, the…
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Facebook’s Libra cryptocurrency can still take off and revolutionise money
by ilene - October 18th, 2019 11:02 pm
Facebook's Libra cryptocurrency can still take off and revolutionise money
Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University
Facebook’s Libra cryptocurrency has suffered a few setbacks recently. As well as facing pressure from global regulators, seven of its 28 founding members have left the project – including high profile firms PayPal, Visa, Mastercard, eBay and Stripe. It leaves 21 companies in the Libra Association, the organisation overseeing the cryptocurrency.
But Facebook is big enough to launch Libra on its own, so why are these members even needed? After all, it is Facebook’s network of 1.59 billion daily active users that form the foundation of its business case to issue a non-sovereign currency. Why share the spoils?
The answer may be twofold. First, by having a council of members this enables Facebook to claim decentralisation status – a key tenet of any cryptocurrency. It’s a far cry from the fully decentralised alternatives of bitcoin et al., but certainly not centralised, so a valid claim.
Second, and perhaps primarily, by having a group of high-profile businesses as Libra members it goes some way towards sugarcoating this disruption in the eyes of the world’s regulators, in readiness for the inevitable pushback.
Many of the departing members – most being payments firms – stood to lose much of their core business if Libra becomes successful. So, in the face of the project facing additional scrutiny, Libra quickly became a net negative prospect for them and a respectful early withdrawal is entirely rational. But their places are likely to soon be taken up by other prospective members waiting in the wings. There are many companies that will want to capitalise on what could be a revolutionary global money system.
Total membership is likely to be expanded as a show of strength. Ben Maurer, Facebook’s blockchain technology lead, explained in June that, “over time, [Libra] is designed to transition the node membership from these founding members, who have a stake in the creation of the ecosystem, to people who hold Libra and have a stake in the ecosystem as a whole”.
Facebook has already announced that…
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Zuck Delays Libra Launch Date Due To Issues “Sensitive To Society”
by Zero Hedge - September 26th, 2019 3:35 pm
Courtesy of ZeroHedge View original post here.
Authored by William Suberg via CoinTelegraph.com,
Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed.
“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But right now I’m really focused on making sure that we do this well.”
image courtesy of CoinTelegraph
Zuckerberg on Libra: Talking first, rollout second
Speaking in an interview with Asia-based news outlet Nikkei on Sept. 26, Zuckerberg appeared to show a rare display of fear in the face of mounting regulatory scrutiny of Libra.
Facebook’s digital currency has come under fire from governments worldwide since its whitepaper appeared several months ago. High-profile regulatory hearings have so far failed to quash the negative reactions; governments fear Libra will undermine fiat currency systems.
“Part of the approach and how we've changed is that now when we do things that are going to be very sensitive for society, we want to have a period where we can go out and talk about them and consult with people and get feedback and work through the issues before rolling them out,” Zuckerberg told the publication.
He continued:
“And that's a very different approach than what we might have taken five years ago. But I think it's the right way for us to do this at the scale that we operate in.”
Coinbase calls criticism “odd and misguided”
Preemptively solving aspects of Libra critics find unappetizing strikes a notable contrast to fiat alternatives such as Bitcoin (BTC), the founder of which, Satoshi Nakamoto, simply released the code and let the network grow organically.
Cryptocurrency sources have also cast scorn on authorities keen to stifle any innovation Facebook is attempting to introduce.
Libra could appear by the end of 2020. When pressed by Nikkei, however, Zuckerberg stopped short of committing to a timeframe.
Additionally, as CoinDesk notes, David Marcus, CEO of
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Buyer beware: How Libra differs from Bitcoin
by ilene - September 21st, 2019 3:11 am
Buyer beware: How Libra differs from Bitcoin
Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)
Courtesy of Alfred Lehar, University of Calgary
Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.
The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with sovereign countries in issuing currencies.
Unlike Bitcoin, which has neither an owner nor a controlling body, Libra will be governed by a Swiss foundation comprised of several members that are well-established brands, including Uber, Visa and PayPal.
Libra operates within a much more controlled environment relative to many other cryptos like Bitcoin and Ether. It also doesn’t run on a blockchain.
Instead, the book-keeping of Libra transactions is bestowed upon a set of trusted computing nodes controlled by the members of the Libra foundation. In contrast, Bitcoin is a free-for-all where anybody can join the group of computers that verify transactions.
This difference in governance structure has wide-ranging implications for the economic gains and possible risks society faces from a possible widespread adoption of new currencies like Libra.
How to grow?
A fundamental issue most fintech companies face today is scaleability. The Visa network can authorize up to 65,000 transactions per second, while Bitcoin typically processes a few hundred thousand a day.
Technically, it’s possible to expand the Bitcoin network to a commercially viable scale, but due to the lack of a governing body, several attempts to increase capacity have ended up in endless debates, fights within the community and different camps going their own ways. It’s resulted in the creation of offspring currencies such as BitcoinGold and BitcoinCash.
Libra overcomes these struggles by a well-defined governance structure where necessary technical adaptations can be efficiently decided upon in an organized manner.
But Libra decision-makers may be tempted to put their own best interests ahead of the consumers’…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.