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September 2014

Facebook’s Libra Cryptocurrency isn’t Actually Cryptocurrency

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Libra

Libra

If you want a genuine cryptocurrency experience, don’t look to Facebook.

The social media giant has lately made headlines around the world for introducing its Libra cryptocurrency and related nonprofit Libra Association. The popular understanding is that Libra is Facebook’s response to Bitcoin, Ether, and other popular crypto coins—it’s a new way to transmit value on the blockchain. It’s understandably being called a “cryptocurrency.”

Except it’s not a standard cryptocurrency at all.

Libra is a permissioned digital currency quite comparable to stablecoins that already exist

There’s already a whole ecosystem of price-stable cryptocurrencies out there, so Libra fits right into an existing picture. But it does have some unique features that make it worth talking about. Where most stablecoins are pegged to an individual fiat currency, Libra is backed by a basket of fiat, including USD, as well as bank deposits and short-term government securities.

This theoretically makes it more robust than stablecoins backed by a single asset. If the value of USD suddenly fell overnight, most other stablecoins would see their own values squashed. But by deriving value from multiple sources, Libra can potentially remain steady against a variety of market turmoil.

Libra is commonly called “Facebook’s cryptocurrency,” but there are many other players involved—this is hardly an autonomous organization

A predetermined set of entities, collectively referred to as the Libra Association, have total power to shape the consensus and governance mechanisms that drive Facebook’s blockchain project. Members of this association beyond Facebook include PayPal, Mastercard, Visa, Lyft, eBay, Spotify, Uber, and more. Where the promise of true cryptocurrency is about decentralization, power is highly centralized within this association.

The speculation is that Libra will first be used as a way for companies to pay for ads on Facebook. But if the use cases expand to include remittance between Facebook users, there’s a strong possibility of there being an instantly large user base conducting transactions around the globe—Facebook’s social network already touches more than two billion lives today. It could easily lead to a new economy on the scale of a large nation.

It’s not clear why such a centralized organization needs a blockchain effort. Implementations of this technology fundamentally rely on decentralization to dilute power. But Libra’s technical documentation makes it clear: this is a ledger with corporate governance, not a true permissionless blockchain.

>> Libra to Be at the Center of the EU’s New Crypto Regulations

The powers that be are paying a lot of attention to Libra

Even the US Congress agrees that there’s a fundamental difference in how true cryptos like Bitcoin and Ether operate, and how Libra is constructed. That’s why the word “Bitcoin” was conspicuously absent from the Senate hearing addressing the social media giant’s planned foray into the crypto space. Satoshi Nakamoto’s original vision is rather absent in design and spirit here.

Even though the US is generally favorable to cryptocurrency, regulators have asked for nothing less than Facebook to completely stop developing Libra. It would appear to have less to do with the underlying technology and more to do with who’s wielding it. The concern is that Libra will undermine the US dollar banking system.

The legal structure that drives Libra was set up in Switzerland, so it’s theoretically free to continue as it wishes despite concern from the US government—Switzerland tends to be even more favorable to innovations in financial technology than America. But even though Facebook indicated that Swiss regulators will supervise the major aspects of its Libra project, the relevant authorities simply haven’t heard from the company yet.

But it’s not all bad news

Libra represents one of the most mainstream blockchain projects to come into existence, and it’s backed by some of the biggest companies in the world. It can only be interpreted as a vote of confidence for blockchain technology and cryptocurrencies at large. The markets responded accordingly—when Libra’s formal announcement broke on June 18, BTC was trading at just over $9,000. A week-long rally followed, eventually sending the price up above $13,500.

Even though this isn’t a strict Satoshi-satisfactory cryptocurrency system, it still seems poised to present another powerful disintermediation between banks and people’s ability to control their own money. The large population of “unbanked” people around the world will gain access to a new tool for managing their financial lives with new convenience. But don’t expect crypto purists to be excited about Facebook’s foray into a space that’s been working just fine without them for the previous ten years.

Libra has issues with permission and centralization that have been completely absent from the rest of the crypto world since day one. This category of technology was already doing fine before Libra showed up, but it will probably do a little better with this much added momentum.

Just don’t call it a true cryptocurrency.

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Featured image: DepositPhotos © BiancoBlue

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SBI Delists Bitcoin Cash | Keeps Support for Bitcoin SV

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SBI Delists Bitcoin Cash

SBI Delists Bitcoin Cash

In a potentially rebellious move, major Japanese financial services company, SBI Holdings, announced it is delisting Bitcoin Cash (BCH) from its digital currency exchange. Let’s check this out.

SBI Delists Bitcoin Cash (BCH)

Yesterday, we covered the controversy surrounding the delisting of Bitcoin SV (BSV). Specifically, the world’s largest cryptocurrency exchange, Binance, announced yesterday that it will delist this crypto effective April 22nd.

The move comes as a retaliation against the actions of BSV creator Craig Wright (more on that to follow).

But today, tables are turning somewhat as major Japanese financial services company, SBI Holdings, is holding onto Bitcoin SV, but is delisting Bitcoin Cash (BCH). BCH’s departure from the exchange will happen in June, and the exchange will keep support for BSV.

So What is Going On?

As with all things cryptocurrency, there are complications. Bitcoin Cash is the first hard-fork of the leading and original cryptocurrency Bitcoin (BTC) and was created in August 2017. Bitcoin SV, then, is a hard fork of Bitcoin Cash and was created by Craig Wright—who controversially claims that he is the creator of the original Bitcoin.

Wright’s proclamation that he is the person behind the pseudonym Satoshi Nakamoto has disrupted the cryptosphere. So much so, that several major crypto trading platforms have followed in Binance’s footsteps and chosen to also delist BSV. A #DelistBSV hashtag has even begun trending throughout social media.

SBI Holdings to the Rescue

Now, SBI Holdings has come to BSV’s defense in a move that is bound to divide the cryptocurrency universe further. Reports from Cointelegraph suggest that the CEO of the financial giant, Yoshitaka Kitao, has a personal connection with Wright. A past Tweet of Wright’s stated that Kitao is “a friend and man I respect a lot.”

>> FBCoin: Facebook Set to Launch Its Own Cryptocurrency Coin

A Split Market?

With SBI ousting Bitcoin Cash, it’s hard to know where the market will go next. Will we start to see an exchange split across the globe? Team BSV vs team BCH?

Despite the news, Bitcoin Cash is climbing in value—up nearly 6% in the past 24-hours, trading at approximately $314 USD.

BSV has crashed this week on the back of the delisting controversy. While SBI’s move may help to rescue Wright’s pride, it hasn’t been able to rescue the coin’s value. BSV is currently down more than 21% on the day, trading for $55 USD according to CoinMarketCap.

What team are you on?

Featured Image: DepositPhotos © sirichaiDeposit

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Ripple (XRP) Soars 18% | Binance Futures Launches XRP/USDT Contract

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Ripple

Ripple

Even when the crypto space enjoyed a sustained rally in the first of 2019, XRP seemed to lag behind considerably, and much of the blame for that had been placed at the door of the company Ripple. However, things seemed to have gone off to a rather good start for XRP in 2020, after it surged considerably over the past two days.

While it is true that there were gains in the wider cryptocurrency space, it should be pointed out that XRP emerged as the biggest gainer in the market and surged by as much as 18% since Monday—and, there seems to be one very specific reason why XRP is climbing.

Key Drivers

As everyone knows, the rise in the price of a cryptocurrency is directly related to the number of exchanges in which its trading pairs exist. In that regard, XRP got a major boost recently. In a fresh development, Binance announced that that it is going to introduce a new trading pair involving the stablecoin Tether and XRP. Considering the fact that Binance is the biggest crypto exchange in the world, it is a big deal for XRP, and it can be said that the tide has turned a bit for Ripple.

One of the most important aspects of XRP is that it is a cryptocurrency with a genuine use case, and while Ripple has signed up many clients for pilot tests, last year, it reached a formal deal with Moneygram.

>> Bitcoin Set for Breakout Amid Escalating Iran Tensions

The aim of the deal was to speed up the remittance process for Moneygram, and on Monday, a report confirmed that the usage of XRP has sped up that process considerably. It has been revealed that between December 1 and December 25, the number of transactions completed by Moneygram soared considerably. The transaction volume rose by as much as 70% year-on-year, and that reflects the effectiveness of the Ripple products.

Featured image: DepositPhotos © rastudio

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