Libra, The Self-contradictory Copestone Of Cartel Blockchains
Facebook published the white paper for its Libra ‘cryptocurrency’ last Monday and instead of providing answers to some of our burning questions, the vaguely worded, self-contradicting document has only left us with more questions.
- Facebook’s official release of Libra white paper falls flat, attracts flak from all corners
- Bitcoin is back in fashion, so are scam bots and malware targeting innocent users
- Kaspersky reports that poor consumer knowledge is hindering adoption of cryptocurrencies
- Big Four accounting firm PwC releases cryptocurrency auditing tool for its clients
- Bitcoin price action sees transition from accumulation phase to distribution phase
So what did we find out from the white paper?
* The white paper describes Libra’s mission as ‘enabling a simple global currency and financial infrastructure that empowers billions of people.’
* Libra network will share a permissioned database very much like Ripple, with a cryptographically authenticated ledger maintained by a finite number of hand-picked nodes. Testnet phase of the Libra network went online this week with 28 nodes. Facebook expects to have 100 nodes for the mainnet launch in early 2020.
* Instead of using an existing language, Facebook has developed an ad-hoc language for Libra called ‘Move’, a bytecode programming language with semantics inspired by linear logic. Unlike Libra, Move has been relatively well-received in the developer community as a potentially robust language for smart contract platforms.
* Libra uses a Byzantine Fault Tolerant (BFT) model called LibraBFT to achieve network consensus. LibraBFT is based on HotStuff, a leader-based Byzantine fault-tolerant replication protocol, authored by Chinese developer, Maofan Yin.
* Facebook also unveiled a dedicated custodial wallet app for Libra, known as Calibra, which will be integrated into all Facebook-owned social media platforms. Users will be required to complete KYC before they’re allowed to use the wallet.
* The white paper is at pains to assure potential users that identity information from Calibra wallet will not be shared with other Facebook applications or third parties, except for legal or regulatory purposes.
* Libra coin is a collateralized stablecoin backed by a collection of assets, bank deposits and government securities which are yet to be fully specified, held in the Libra reserve. Libra’s value will track an index of these assets. However, its value against each local currency is expected to fluctuate based on exchange rates.
* Governance functions on the network will be carried out by the Libra Association, a non-profit based in Geneva, Switzerland, comprising the 28 founding members of the project who also function as validating nodes.
* Facebook plans to use interests from assets held in the Libra reserve to cover network costs, ensure low transaction fees and pay dividends to the members of Libra Association, who have each contributed 10 million to the project.
* With the power of Libra, Facebook seeks to ‘undollarize’ the world and champion a cashless society.
Reactions To The White Paper
Chairwoman of the US House of Representatives’ Financial Services Committee, Rep. Maxine Waters, was among the first to express concerns and request Facebook to desist from further development of Libra pending regulatory approval,
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.
Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”
The US Senate Banking Committee and the US House Financial Services Committee will host a hearing on Libra, scheduled for July 16 and 17.
Earlier today, central bankers from Britain, France and Germany also moved to push for a comprehensive examination of Libra before it is allowed to launch. Russia has categorically refused to allow Libra to operate within its jurisdiction. China and India will likely follow suit.
Co-founder of Facebook, Chris Hughes, also denounced the project in an article for Financial Times, expressing concern that Libra coin would ‘shift power into the wrong hands.’
Author’s Take On Libra Coin
Facebook has basically created a stablecoin variation of Ripple’s XRP and thrown in a bunch of in-vogue blockchain-speak to both pique public interest in decentralized networks and circumvent regulatory blockades.
Libra coin itself seems rather redundant in this proposed ‘financial structure’, and if we take away the coin, which will be pegged to a bunch of fiat currencies, the whole concept simply reeks of low-fee Paypal or Venmo rather than a cryptocurrency.
The white paper is deliberately ambiguous on a lot of fronts, failing to fully expound upon the ‘collection of assets’ to which the value of the coin will be pegged but the concept and terminology might sound familiar to economists as it seems to be based on International Monetary Fund’s (IMF) Special drawing rights or SDR, a supplementary reserve unit-of-account introduced in 1969.
SDR is not strictly a currency or a private asset and only functions primarily as unit-of-account since collapse of the Bretton Woods system in 1971. Libra coin wants to be a new global medium-of-exchange.
Validators on the Libra network are hand-picked by Facebook, most of the founding members have a vested financial interest in Facebook, and these hand-picked corporate entities will also oversee the Libra reserve.
Facebook wants to effectively operate like a global bank while only holding money transmitting licenses which it has obtained for Calibra. Regulators can ill afford Facebook to go ahead with this monstrosity and they only know it too well.
Although regulators have been slow to act on a regulatory framework for cryptocurrencies, given that they don’t as yet pose a significant threat to extant financial systems, a digital currency issued by Facebook is a different animal altogether.
You’d think it’s impossible to get bankers and blockchainers to agree on anything. Facebook has only gone and done the impossible. Nothing unites sworn enemies like a more evil common enemy.
Bitcoin Scams On The Rise Again. What Can Be Done?
Last time scams were running rampant on social media channels, Bitcoin was trading in five-figures. Now that Bitcoin is in five-figures again, scammers are coming up with new tricks to cozen gullible folks out of their money.
Custodial exchanges are prime targets for hackers and late last week, Coinbase warded off two separate attacks which exploited zero-day vulnerabilities in Firefox browser. The vulnerabilities allowed the hacker to obtain remote access to the user’s Firefox browser and execute code.
Before Mozilla got around to patching the vulnerabilities, the hackers tried to target two Coinbase employees with spear-phishing emails. Fortunately, Coinbase detected and blocked the potential breach and noted thereafter that no financial loss was incurred.
Common scams which target individual users on social media include scam bots which impersonate various personalities on Twitter, claiming to give away free cryptocurrency to those who send them money first.
Lately, there’s been a surge of sponsored ‘investment opportunities’ propping up on Facebook, using fake web pages and articles laced with phishing scams.
While securing custodial exchanges will always remain a game of whack-a-mole, individual users can protect themselves from malware and scam bots by following a few simple guidelines – Never store private keys online, secure devices by optimizing network settings, avoid all free giveaways on social media and double-check links for web pages to make sure they’re legitimate before entering login credentials.
Knowledge Gap Is Slowing Down Both Development And Adoption Of Cryptocurrencies
Results from two interesting surveys this past week highlight one of the chief shortcomings of cryptocurrencies – they’re too complicated for the average Joe.
Russian cyber security firm, Kaspersky, published a report named ‘Uncharted territory: why consumers are still wary about adopting cryptocurrency’, which reveals that while 29% of people have some knowledge of cryptocurrencies and there is a demand among many to use them, only one-in-ten (10%) among those understand how they work.
The report also reveals that 81% of people have never purchased cryptocurrency, which highlights how far we are from adoption of cryptocurrencies as medium-of-exchange, and close to a fifth (18%), stopped using cryptocurrencies after a brief dalliance because it became too technically complicated.
Nearly one-third (31%) of responders felt that cryptocurrencies were too volatile for them to use and 35% believe that cryptocurrencies are just a fleeting fad and won’t be around forever.
Another survey of more than 2100 respondents from France and the US, carried out by French online reputation management start-up and cryptocurrency wallet provider, Reputaction, asked people whether they would trust Bitcoin or a coin issues by one of the GAFM gang (Google, Amazon, Facebook, Microsoft).
Unsurprisingly, Facebook attracted the highest percentage of ‘I distrust’ answers, which is more explicit than refraining from saying ‘I trust’, which only 6% of responders from the US did this year. Bitcoin also had the highest percentage of ‘I don’t understand the question’ answers, which further underpins the knowledge gap.
Besides user knowledge, Blockchain projects are also suffering for lack of developers. Malaysia’s Digital Economy Corporation (MDEC) is trying to address a shortfall in blockchain talent in their country by piloting a work visa program for tech freelancers to work in Malaysia short term.
MDEC will be working with the NEM foundation to define the requisite talents and the proposal is expected to be ratified with immediate effect by the immigration department in the country.
It’s probably true that blockchain is a fad and it is a very millennial fad, but it’s going nowhere. Most people who grew up using computers and smartphones from a very early age understand it. But these aren’t the ones charged with drafting bills, policing and regulation… yet. We’ll see broader understanding and acceptance when that comes to pass.
Big Four professional services firm, PwC, added to its Halo auditing suite on Wednesday by announcing a tool which supports audit of cryptocurrencies.
Just like regulators, auditors have found cryptocurrencies to be quite the quagmire due to the lack of consistency in classification of these assets, which leads to accounting inconsistencies.
PwC, which has long been a proponent of cryptocurrencies and began accepting it for payments in Hong Kong in 2017, will now be providing assurance services for its clients holding and transacting in cryptocurrencies.
The tool will provide independent, substantive evidence of private key and public address pairing to establish ownership of currencies and securely interrogate the blockchain to independently and reliably gather corroborating information about blockchain transactions and balances.
According to James Chalmers, Global Assurance Leader for PwC, growing demand for blockchain solutions from their clients and stakeholders moved them to develop a tool for auditing blockchains.
Depending on how effectively the tool is able to audit transactions on the blockchain, further to aiding institutional clients in managing their investments, it may prove useful in tracking exchange activity and to mitigate manipulation.
Suffice to say, Bitfinex is unlikely to enlist the services of PwC anytime soon.
Last night, Bitcoin closed its 7th weekly green close in 8 weeks and is looking for its first daily close above 11,000 USD since March 5, 2018.
With last week’s close above 10,000 represents a paradigm shift in trading – from accumulation phase to distribution phase. This is the phase where people start taking their profits and new demand emerges.
Short-term support can be found at 10,570 and there appears to be some resistance at 11,220. A close above 11,000 could inspire another crack at it.
A steep parabolic curve, not unlike the late 2017 rally, is beginning to form which betrays trappings of euphoria.
MACD continues to diverge ever so bullishly on the daily chart and RSI has entered overbought territory this week for the first time this month.
Bitcoin’s market dominance is always a great indicator for general bullishness and it’s closing in on 60%, as altcoin gains continue to be dwarfed by Bitcoin.
Ethereum saw its first weekly close above 300 in 10 months. Monero and NEO posted impressive gains of 18% and 27% respectively. Litecoin is hovering at its BTC support level at 0.012 BTC, where it could potentially be set for a rebound.
A weekly close for Bitcoin above 12,000 hasn’t been seen since the first week of January, 2018. Could that happen this week?
- Source: First Appeared Here
- Published Time: 2019-06-25 15:04:21
The views and opinions expressed in the article Bitcoin and Cryptocurrency News Weekly Digest do not reflect that of 48coins, nor of its originally published source. Article does not constitute financial advice. Kindly proceed with caution and always do your own research.
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