Facebook Introduces Crypto Play

Facebook introduced its new plan around cryptocurrency earlier today, including Libra, a new cryptocurrency, and Calibra, a new Facebook subsidiary that will oversee Libra financial services.

It was a crypto shot hear ‘round the world.

More details from The New York Times:

The effort, announced with 27 partners as diverse as Mastercard and Uber, could face immediate skepticism from people who question the usefulness of cryptocurrencies and others who are wary of the power already accumulated by the social media company.

The cryptocurrency, called Libra, will also have to overcome concern that Facebook does not effectively protect the private information of its users — a fundamental task for a bank or anyone handling financial transactions.

But if the project, which Facebook hopes to begin next year with 100 partners, should come together, it would be the most far-reaching attempt by a mainstream company to jump into the world of cryptocurrencies, which is best known for speculative investments through digital tokens like Bitcoin and outside-the-law e-commerce, like buying drugs online.

If Facebook treats our money the way they’ve treated our personal information, buying drugs online will very well appear a viable option.

All kidding aside, the move is already sending shockwaves through nation states and federal banks around the globe.

According to a report in Bloomberg, French Finance Minister Bruno Le Maire said Libra shouldn’t be seen as a replacement for traditional currencies, that “it is out of the question” that Libra “become a sovereign currency. It can’t and it must not happen.”

A German member of the European Parliament, Markus Ferber, said that “Multinational corporations such as Facebook must not be allowed to operate in a regulatory nirvana when introducing virtual currencies.”

So where should we land on this?  We’ve seen all manner of cryptocurrency plays come and go, Mt. Gox crash and burn, etc.  

I think we should all take a deep breath and remember we’re not talking about some upstart ICO. We’re talking about the world’s biggest social network with the largest number of users introducing a form of digital currency that could upend traditional banking and fiat currency as we know it.

Potentially.

But only if its user base, and the vendors who participate, trust in the new system and, ultimately, in the currency (and, hence, in blockchain).

And trust is not something Facebook has exactly had an overabundance of the past couple of years.

Facebook tries to offer reassurances. Back to the Times: “Your financial data will never be used to target ads on Facebook,” said Kevin Weil, vice president of product for Calibra. 

The currency itself is being built so that any software developer in the world can build a digital wallet or other services on top of it, similar to the way that Bitcoin can be sent between people.

The structure of the new Libra currency is based on the blockchain technology made famous by Bitcoin.

The blockchain concept makes it possible to hold and move digital currencies almost instantly, usually with low transaction fees. Because blockchains are shared databases, they can function without any central operator like the central banks that have historically governed currencies. This structure will allow Libra to be overseen by many companies.

Customers will be able to hold and spend their Libra with businesses that accept the currency, and there will be services that quickly convert Libra into traditional currencies and send the money to traditional bank accounts, according to project documents released on Tuesday.

And the most important graph:

Initially, the Calibra subsidiary will offer little more than a wallet to hold and spend Libra. When Libra is released next year, the plan is to make the wallet available to the billions of people who have accounts with Facebook Messenger and WhatsApp.

If Facebook can create a viable, useful form of currency on platforms with the scale of Messenger and WhatsApp — as Tencent has done with WeChat in China — well, it could literally break the bank.

All of them.

Facebook Coin

Happy Friday.

For you golf fans, this year’s U.S. Open is off to a walloping good start, and, even better, if you’re a Tiger Woods fan, he’s in the hunt (-1 in the first round).

Justin Rose seems to have put together quite the round, tying the record 65 (-6) that Tiger himself set at Pebble Beach back in 2000. We’ll see if the wind starts whipping and the greens start firming up in round 2. Or perhaps the marine layer will blow, and nobody will be able to see anything, including the golfers.

While the golfers do their thing, Facebook’s long-not-very-well-kept secret blockchain/cryptocurrency payment project, "Project Libra," is getting some big named backers, according to a report from The Wall Street Journal.

Visa, Mastercard, PayPal, and Uber have all backed the new cryptocurrency, and each will invest around $10 million in a consortium that will govern the digital coin, the "Libra."

According to the Journal, that money would be used to fund the creation of the coin, one which will be pegged to a basket of government-issued currencies to avoid the wild swings witnessed by other cryptocurrencies.

The Verge also reported on the development, and addressed how the new "stablecoin" might be used:

As well as allowing users to send money over Facebook’s messaging products like WhatsApp and Messenger, Facebook hopes that its partnerships with e-commerce firms will allow users to spend the currency online. The company is reportedly also looking into developing ATM-like physical terminals for people to convert their money into Libra.

The Block reports that Facebook has also posted additional blockchain jobs this week, just ahead of the release of a whitepaper next week formally announcing Project Libra.

Be interesting to see whether or not the value of a bitcoin changes one way or the other over the course of the next week.

Coin of the Facebook Realm

And you thought you had a bad week.

Actually, my week was pretty good, but there were some that weren’t so lucky.

Like Tumblr. 

Remember them?  No?

The all-things-blogging-and-sharing site that Yahoo paid a cool $1.1B for in 2013, and which was later subsumed into the Oath/Verizon Media Group.

And which is now for sell, and which brings with it some 400M blogs but which Yahoo wrote down by $230M in 2016 before the sell to Verizon.

Speaking of Verizon, Can you hear me now?  I’m leaving you, Verizon. I was going to go to Google Fi, but I had one of the worst customer service experiences *ever* with them the other day.

The whole point of Google Fi (and other MVNOs) is to limit my interaction with humans on the phone.

But due to a billing situation when trying to order my Google Fi sim card, I was forced to call Google’s customer support, which made any trek I’ve ever had to the State of Texas Department of Motor Vehicles outlet feel like an excursion to Six Flags.

Never again, Google.  Keep to the algos, you’re clearly worst in class with the call centers.

So, instead, I’m moving to Tracfone…Don’t call me unless it’s really, really necessary.

If you’re having trouble giving your money to someone, check this out: Facebook’s apparently moving in to the crypto payments world, big time.

According to a report from TheBlockCrypto, Facebook’s “Project Libra” puts Facebook’s stablecoin at the center of a brand new payments network.

Summary:

1. Facebook is planning to launch a full payments network (rather than just remittances) and in discussions with payment networks Visa and Mastercard, payments processors such as giant First Data as well as large e-commerce merchants to support the launch.
2. Facebook is seeking up to $1 billion in investments collectively from these firms in order to act as collateral to bolster and back a stablecoin that will be associated with the payments network.
3. A stablecoin will exist as the currency of the payments system in order to eliminate credit card fees for . merchants as well as to avoid the volatility of other cryptocurrencies like bitcoin and ether.
4. The company is considering tying the coin to Facebook’s core ads engine, rewarding users for viewing ads and then purchasing goods, similar to how loyalty points rewards work.

Why do I think this is potentially a very big deal?

Facebook conquered its first couple a billion people by linking identity and demography, putting faces (sorry) to names on the Interwebs.

Now they’re going to possibly enable all those people to start trading in transactions with one another using cryptocurrency, in (again, possible) partnership with major payment processors and networks (Visa, MC, First Data), and with large e-commerce merchants.

And, they’re going to tie all that with their advertising network, which could flip the switch on the Facebook value exchange, whereby users could be paid to watch ads, early loyalty awards with their purchases, etc.?

People, we’re already WAY behind China when it comes to using mobile apps for simple things like payments for, well, pretty much everything!

Someone has to take on this e-payment capability sometime, and the Apple Pays and Venmos of the world aren’t moving the needle.  You say you don’t trust Facebook? But might you trust them partnering with Visa, MC, and other vendors you already *do* trust?

The Facebook Coin, if it proves out, could be the biggest tech news of the year.

Now, show me the money.

Floating Unicorns and Robert Mueller

This is a big news day. Too much to keep up with.

Yes, the long awaited Mueller investigation report has been made public, and we mere mortals can finally read about what did or didn’t happen in the 2016 U.S. presidential campaign. I got my copy from the "failing" New York Times.

But there’s also big news in Tech. Pinterest and Zoom went public today, and Zoom shares are already zooming up some 75%. Pinterest began trading up 25%. Will these unicorns continue to prosper? Stay tuned.

I’ve got bad news for those of you who were excited about the coming Samsung Galaxy Foldable phones. The Verge (and other reviewers) have indicated the Folds have started to…well…uh…fold. Actually, the pictures they’ve shared show more of a crease, bu The Verge author indicated whatever you call it that "its just enough to slightly distort the screen."

Here’s more:

It’s a distressing thing to discover just two days after receiving my review unit. More distressing is that the bulge eventually pressed sharply enough into the screen to break it. You can see the telltale lines of a broken OLED converging on the spot where the bulge is.

FYI, the list price for the Fold is $1,980, and is expected to be available next week. Could we soon see a repeat of earlier Samsung recalls?

Me, personally, I’m find with my perfectly flat iPhone 7 plus for the time being, and I’m not an Android (although some might argue otherwise).

If you’re looking for a place to invest, you might want to look towards the future of crypto. Not necessarily just the currency, but also the pick and shovel plays that plan on putting the blockchain to work for business.

According to a report from Reuters, VC investments in crypto and blockchain startups this year have surpassed $850M, and reached $2.4B over 117 investments last year. Blockchain may be struggling to find a place it can call home, but that’s not keeping away the angel wolves willing to throw it a few million Bitcoins its way!

And whoopsie, I almost forgot: Facebook had another privacy breach. This time, they "unintentionally uploaded" 1.5 million people’s email contacts without their consent.

Writes Business Insider:

Since May 2016, the social-networking company has collected the contact lists of 1.5 million users new to the social network, Business Insider can reveal. The Silicon Valley company said the contact data was "unintentionally uploaded to Facebook," and it is now deleting them.

The more things change…

IBM’s Banking Blockchain

Happy Tuesday.

If you’ve been watching the continuing decline of the price of Bitcoin, you may be keep your eye on the wrong ball…err, wrong side of the coin.

Coindesk reported Monday that IBM is taking its banking clients “a step closer to cryptocurrency,” with six of its international banking clients having signed letters of intent to issue stablecoins (tokens backed by fiat currency) on World Wire, an IBM payment network that uses the Stellar public blockchain.

The network promises to let regulated institutions move value across borders – remittances or foreign exchange – more quickly and cheaply than the legacy correspondent banking system.

The network went live yesterday, and already has one stablecoin running on World Wire, a U.S. dollar-backed token created by San Francisco startup, Stronghold.

But the article points out this is much broader than a cryptocurrency play, and that IBM is doing “a lot of other stuff in the private permissioned space….code for enterprise blockchain.”

You can learn more about IBM’s blockchain efforts here, and developers can learn more about IBM Developer blockchain and hyperledger solutions here.

A Crypto Kinda Friday

It’s a crypto kinda Friday.

Engadget’s reporting on an interesting blockchain story, one which has ticket broker Ticketmaster fighting bogus ticket sales by acquiring Upgraded.

Upgraded is a company that combine’s the distributed trust of blockchain with encrypted barcodes to minimize the fraud sometimes seen with paper-based or PDF tickets.

The Engadget story claims with the new one solution one would “have a clearer sense of when a concert pass is legitimate, while even holders will have more of a grip on where their tickets are going.” But Ticketmaster told Engadget it didn’t have a definitive time frame for integrating the Upgraded’s solution.

…While U.S.-based cryptocurrency exchange Coinbase made a recently developed automated security scaling tool available to the public. 

In a report from Coindesk, it was said Coinbase released a program called “Salus” which can automatically choose to run and configure different security scanners and issue a report on the results.”

Salus was available as an open-source tool via GitHub starting yesterday, and is said to “offer the advantage of being able to centrally coordinate security scans across a large number of software storage repositories, avoiding having to configure a scanner for each project.”

And finally, if you’re worried about those crypto assets, U.K-based security firm G4S announced a new service for protecting them.

According to a story from Cointelgraph, the company is offering high-security offline vault storage for crypto assets, a new capability which builds on the company’s existing expertise, which is running prisons and detention centers.

What’s fascinating about the offering is the how. G2S explained in a press release that the company not only take crypto assets offline, but it breaks them up into fragments so that they are independently without value, and then stored in the company’s security vaults.

Access to these sites is heavily restricted with multiple layers of security and robust protocols, and only when all the fragments are combined with specific technology can they unlock access to the value stored within.”

“It has been a justified cliche to describe the cryptocurrency space as a Wild West. Working with our clients, our innovative vault storage concept offers the highest protection to keep people and their assets secure and bring order to the frontier.

So how long until we see a cold storage Bitcoin heist flick on the big screen?  Maybe not until Bitcoin gets back over $10K?!

Walmart’s Leafy Green Blockchain

TechCrunch recently reported on an initiative in which Walmart has been working with IBM on a food safety blockchain, and that Walmart would be requiring all suppliers of leafy green vegetables for Sam’s and Walmart upload their data to the blockchain by September 2019.

TechCrunch’s story notes that “most supply chains are bogged down in manual processes,” making it difficult to track down food safety issues like E. coli romain lettuce. But “by placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital.

Each node on the blockchain could represent an entity that has handled the food on the way to the store, making it much easier and faster to see if one of the affected farms sold infected supply to a particular location with much greater precision.

Walmart has been working with IBM for over a year on using the IBM Food Trust Solution use case in this scenario.

Most notable is the time compression involved. The story notes that before moving the process to the blockchain, it typically took approximately 7 days to trace the source of food. With the blockchain, that has been reduced to 2.2 seconds, which means that also “substantially reduces the likelihood that infected food will reach the consumer.”

You can learn more about the IBM Food Trust blockchain solution here.

State of Blockchain Q1 2018 Report

As the CoinDesk Consensus 2018 cryptocurrency and blockchain event kicks off this morning in NYC, CoinDesk released its “Q1 2018 State of Blockchain Report.”

Peter Ryan with Disqus detailed some of the top 6 takeaways that defined Q1 2018:

1. It’s a bear market for crypto. Following its peak of $20K, bitcoin suffered a 51 percent decline in the first quarter. However, 79 percent of respondents to the CoinDesk Sentiment Survey said they thought this bear market would be short-lived.
2. Crypto market is maturing. Bitcoin futures markets were introduced in Q417, and there’s been steady growth in this activity through Q118. But the shorts outpaced the longs, 5,000 to 3,000, which has likely led to the slumping price, along with a fall in demand in the spot bitcoin market.
3. Miners stay long. The amount of processing power devoted to securing the bitcoin network diverged from the market cap, with the hash rate (a measure bitcoin mining) growing 47 percent over the quarter. Miners take the long view.
4. Taxes are coming into the picture. Cryptocurrencies generated an estimated $70 billion in global tax revenue for 2017. But the tax parameters around crypto remain confusing to survey respondents, both about the legal and tax status of the entire asset class.
5. ICOs continue to boom. ICO raised $6.3 billion in Q1, and the average raise has almost doubled from $16 million to $31 million.
6. Fees decline. Transaction fees on the bitcoin network dropped from an average of $40 in Q417 to around $9.49 per transaction in Q118.

As for the broader opportunity for the blockchain, SiliconAngle’s James Kobielus writes that today’s blockchain startups “will need to show that they have staying power and can ride a ‘land-and-expand’ strategy to greater success.” 

And he asserts that to be considered to be mature enough for broad enterprise deployment, a commercial blockchain platform would need to meet several criteria:

• Blockchain solutions should be general-purpose in their ability to be deployed into a wide range of industries, business functions and other application domains.
• They should be deployable into private clouds, public clouds and various multicloud deployments of a hybrid, B2B and community-wide nature.
• They should be able integrate seamless with enterprise investments in other data, transaction, security and other platforms.
• They should be standardized within a dominant open-source community with wide representation.

He also writes that:

Of the principal blockchain projects, only the Linux Foundation’s Hyperledger Fabric is likely to become the standardized foundation for truly enterprise-grade open-source blockchains. Contributed by IBM Corp. and Digital Asset, Hyperledger, now in version 1.0, boasts more than 185 collaborating enterprises across finance, banking, the “internet of things,” supply chain, manufacturing and technology.

You can read more in Kobelius’ post here.

Long on the Blockchain

Bloomberg is reporting that the cryptocurrency market is headed south. Like beyond-the-boarder, deep into Mexico south.

The peak for Bitcoin was $19,511 on December 18th, soon after the introduction of regulated futures contacts in the U.S. 

But now, reports Bloomberg, Bitcoin has seen more than half its value wiped out after “waves of negative news,” including escalating regulatory threats from around the world (including in India, South Korea, China, and the U.S.), along with a record $500 million heist at Japanese exchange Coincheck Inc.

Nothing like a virtual coin bank heist in Tokyo to bring down a bull Bitcoin market! Quick, was George Clooney or Matt Damon anywhere in the vicinity??

Bitcoin was trading as low as $7,643, and overall down 21 percent on the week (and is bringing down other virtual coins, including Ripple, Ether, and Litecoin, all of which tumbled 28 percent).

Turbo’s Take: One, I wish I’d held on to those 7 Bitcoins I’d had in Coinbase and which I sold a year ago this month. I’d take $7K per coin. Two, this is all missing the larger plot — it’s not about Bitcoin, or even virtual currency — it’s about the underlying technology that powers these systems, the blockchain (see IBM’s blockchain overview here). It’s about the power to increase transparency and decrease friction in markets and transactions of all types. So, if you want to go short on Bitcoin, be my guest. But I would recommend you go long — very long — on the blockchain.

IBM, Banks Collaborate to Advance an Open, Blockchain-based Trade Finance Platform

Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group have joined an initiative launched by UBS and IBM in 2016 to build a new global trade platform based on blockchain technology.

This new platform, called Batavia, is built to be openly accessed by organizations of all sizes anywhere in the world, and can support trade finance for transactions across all modes of trade, whether goods are being transported by air, land or sea.

Batavia advances the work initiated by UBS and IBM to develop a trade finance platform built on the IBM Blockchain Platform powered by the Hyperledger Fabric Blockchain framework.

The development work is being done collaboratively by the five banks and IBM in consultation with transportation industry experts as well as the banks’ customers to ensure that the platform is flexible and intuitive for customers and can be commercialized.

Batavia is targeting pilot transactions with customers on the network in early 2018 to test and refine the platform.

Designed to support more efficient, transparent and cost-effective transactions, the new global trade financing platform will help organizations more easily build multi-party, cross-border trading networks worldwide.

Batavia will allow transacting parties to view the progress of a shipment as it leaves the warehouse, is loaded onto a plane, truck or boat and arrives at the receiving port, automatically releasing payments incrementally along each step of the process.

The platform will help connect participants in a trading network, delivering the potential to transform global trade. The open nature of the platform, which encourages broad participation by many banks, vendors and regulators, will also help open new trade corridors, bring new players into the market and expedite processes that before were prohibitively time-consuming and expensive.

Traditionally, trading partners, including buyers, sellers, their banks, transporters, inspectors and regulators have relied on large volumes of paper-based documentation to securely conduct trade transactions. This process can take up to weeks, incurring costs, making data vulnerable to errors due to repeated manual reprocessing and tying up capital.

Delays and lack of transparency in trade can make it difficult for companies to access financing, limiting their ability to trade across borders and grow revenues. The Batavia platform will eliminate the necessity to handle and compare documents, allowing buyers, sellers and their banks to execute transactions with a high degree of efficiency and transparency.

Blockchain enables greater transparency by digitizing agreements entered into a permanent, immutable ledger that all involved parties in a trade transaction can view. The status of a contract until its fulfillment is updated automatically through IoT sensor data or user input.

Batavia will save users time and reduce costs by ensuring the integrity of data as it changes hands, reducing third-party verification processes and minimising the potential for errors, tampering or disputes. When all participants in a transaction can access a shared version of the truth, they can interact with greater trust, build larger and more distributed networks, and in turn, grow revenue.

You can learn more about the IBM Blockchain Platform here.