Coinbase is introducing a new push notification feature to alert mobile app users of price swings and market fluctuations in cryptocurrencies supported by the exchange startup.
These automatically generated messages are intended to assist investors and Coinbase clients of real-time market performance without the hassle of shifting between different websites and apps. The startup previously offered price alerts for a limited number of assets.
“Customers asked for real-time price alerts natively in the Coinbase app to address the inconvenience of having to check multiple sources for crypto market information,” a Coinbase representative told CoinDesk. “Real-time price alerts available natively in the Coinbase app streamlines access to information that helps customers make more informed investment decisions.”
The alerts will be succinct, according to Coinbase. Only including information regarding the percentage change of price swings, the time duration of the fluctuation and the current token valuation.
The feature will be combined with the in-app news and asset pages, Coinbase said, and users can opt in or out of the feature and choose which assets to track. It was developed internally.
In the past, Coinbase has introduced services such as its watchlist, which allows users to customize how market data is presented.
Coinbase expects to expand price alerts to include assets that aren’t currently tradeable on the exchange. The San Francisco-based unicorn currently supports 22 digital assets.
Coinbase image via OpturaDesign / Shutterstock.com
Social currency startup Roll has raised a $1.7 million seed round to help content creators monetize relationships with their fans.
“From our perspective, the most important thing is that creators have to be in control of this economy,” Bradley Miles, one of Roll’s co-founders, told CoinDesk in an interview.
Roll’s seed round was led by Arthur Hayes, the CEO of BitMEX. Other investors include Gary Vaynerchuk, Techstars Ventures, Hustle Fund and Techstars NYC.
“I am really excited to work with Roll,” Hayes said in a statement. “I believe in their vision that allows influencers and artists to better monetise their contribution to the world economy using digital tokens. It is a worthy vision and a concept that will prove successful.”
Vaynerchuk is a digital media and marketing entrepreneur who has also made a number of early investments in major companies, such as Snap, Twitter and Venmo. In crypto, Vaynerchuk previously invested in Coinbase.
Currency for ‘creators’
Miles described Roll as “a blockchain protocol and platform that creates social money.”
Content creators – the popular term for online personalities on YouTube and other platforms – often need ways to incentivize their fans to take helpful actions. With Roll, creators could create a specific currency that carries their own brand, running on ethereum.
“Social money gives them a simple way to repeatedly generate social activity,” Miles said.
So, for example, a creator with a podcast could create a co-branded currency. A news show, for example, might call the currency it creates on Roll “mics.” With Roll, they would create a supply of “mics,” with a limit enforced by its smart contract, and then start creating a market with their users for earning mics and spending them.
They could give users five mics if they posted about one of their episodes on Twitter. Then later they might let people join a private video chat with the hosts at a cost of 75 mics. They could also be redeemed to, for example, cut the line at a live event, get a special autograph or other unique things that a random person might not care about but a super fan would value a lot.
So the tokens end up having a real value but it’s defined by the creator and the token’s market is likely to revolve around that creator.
The idea is that it gives creators a way to activate their fans in a variety of ways that aren’t controlled by the platform they are sitting on. On YouTube, for example, there’s the familiar refrain to “like and subscribe,” but with a loyalty points system that the creators control, they might be able to move fans onto other platforms as well or help give them an incentive to do things in real life.
“We’re excited about Roll and the potential for social money to alter the dynamics of social media as it exists today, giving much more control to creators,” Phil Toronto, VaynerX’s SVP of investing, told CoinDesk via email.
Roll’s Miles said the company is looking for creators who interact heavily with their fans. They expect to see a lot of early adopters in very interactive online entertainment verticals like beauty vloggers, gaming streamers and fitness personalities.
Previously, another token-based startup aimed at this same space first dramatically slowed its rollout plans before ultimately shutting down in June 2018.
De-platforming
“We’ve seen creators over the last few years become unsatisfied over the level of control they have over the platforms,” Miles said.
By using a blockchain, Roll hopes to build units of value that can exist independently of a creator’s chosen media platform.
Siddharth Kalla, another co-founder of Roll, told CoinDesk:
Describing Roll as a product for the long tail of content creators, the company’s business model is based on this economy growing. Roll will hold a small pool of tokens minted by each creator. Down the road, Roll might work to get its tokens listed on exchanges or create its own. For now, it’s just facilitating their creation.
Said Miles:
Correction (June 20, 14:38 UTC): Gary Vaynerchuk invested personally in Roll. The funding was not made through his VaynerX parent company, as was reported in an earlier version of this piece.
Team photo courtesy of Roll
QuadrigaCX’s late founder and CEO used customers’ funds to trade for his own account on other cryptocurrency exchanges, the Canadian firm’s bankruptcy trustee said.
In a bombshell 70-page report released Wednesday, Ernst & Young claimed that Gerald Cotten, who apparently died last December, transferred millions of dollars in crypto out of customer accounts and into other exchanges, with the funds being used to furnish Cotten’s personal lifestyle and trading habits. Overall, it appears that Cotten effectively stole more than $200 million USD from his customers.
“Significant volumes of Cryptocurrency were transferred off Platform outside Quadriga to competitor exchanges into personal accounts controlled by Mr. Cotten,” the report said. “It appears that User Cryptocurrency was traded on these exchanges and in some circumstances used as security for a margin trading account established by Mr. Cotten.”
Fees and trading losses “appear to have adversely affected Quadriga’s cryptocurrency reserves,” while other sums were sent to wallets whose owners EY could not confirm.
Between 2016 and the end of 2018, Cotten transferred 9,450 bitcoin, 387,738 ethereum and 239,020 litecoin out of his exchange’s accounts (respectively, $88 million, $105 million and $33 million USD at present market prices, though their values have fluctuated – and increased dramatically – over that time).
Cotten also appears to have created fake accounts on Quadriga, credited them with fiat amounts that did not actually exist, and use this fake fiat to purchase actual crypto from customers, with the largest account using the name Chris Markay.
More losses
Later, the report says that Cotten margin traded zcash, dash, dogecoin and omisego, where he “generated substantial losses.”
An unidentified third exchange received 21,501 bitcoin ($201 million in today’s prices) into an account under Cotten’s name. All but 8 bitcoin were liquidated, netting some $80 million CAD ($60.4 million USD).
While this exchange is not cooperating with EY, it is cooperating with local authorities in its jurisdiction. EY is now looking to open “formal channels” with these authorities.
Evan Thomas, a litigator with Osler Hoskin & Harcourt in Canada, told CoinDesk that “based on the report, what [Cotten] did was clearly fraudulent and betrayed the trust of Quadriga users.”
Cotten’s actions could not have been an accident, Thomas indicated, saying:
QuadrigaCX filed for protection from creditors in January, owing customers $190 million worth of crypto and fiat, most of which it could not access because only its late CEO Gerald Cotten knew where the private keys were.
EY’s hunt for the missing funds, first as court-appointed monitor and then as trustee when QuadrigaCX formally entered bankruptcy in April, has largely been fruitless.
As of May, the estate had just $21 million of assets to cover $160 million in remaining liabilities, though the most recent report brings the sum closer to $24.5 million.
The U.S. FBI is looking into the losses, as are Canadian authorities.
Other issues
EY’s report also detailed rampant mismanagement and poor practices, noting that Quadriga did not keep administrative logs and had no contingency plan for the loss of funds or its leader.
What’s more, the exchange seemingly engaged in poor accounting practices.
For example, the exchange paid two of its nine payment processors $11.8 million CAD (roughly $9 million USD) in fees alone.
Quadriga did not maintain any documentation, however.
“The Monitor has been unable to locate any accounting with respect to the pooled Quadriga Funds,” the report said. “The Monitor notes the TPP accounts were used to process User Fiat transactions, fund general Quadriga operating costs and on multiple occasions funds were directed to Mr. Cotten, parties related to Mr. Cotten or counsel/parties acting on his behalf.”
It went on to add:
EY also believes that properties in Nova Scotia, properties in British Columbia, investment securities, cash holdings, a boat, an aircraft, luxury vehicles and gold and silver coins that purportedly belonged to Cotten, and now belong to his widow Jennifer Robertson were paid for using Quadriga’s customers’ funds, and therefore should be liquidated.
“As Mr. Cotten’s and Ms. Robertson’s personal expenditures and the accumulation of their personal assets since 2015 was sourced from Quadriga funds, the Trustee intends to seek the recovery of the Preserved Assets subject to the Asset Preservation Order back to the Estate for immediate liquidation on the basis that the funds which Mr. Cotten directed be paid to them constitute preferences or transactions at under value under the BIA and may be subject to other causes of action asserted by the Trustee,” EY wrote.
The proceeds from these sales, if successful, will go to the creditors’ estate, and could total as much as $12 million CAD ($9 million USD).
Customer claims
In a separate filing, EY outlined the process that former QuadrigaCX users who lost money when the exchange went belly-up should follow to file claims.
“Users will be requested to complete and deliver their Proofs of Claim to the Trustee prior to 5:00 p.m. (Halifax time) on August 31, 2019 (the ‘Claims Submission Date’),” EY said.
EY acknowledged in the filing that creditors have encountered difficulty finding the information they need to prepare claims because Quadriga’s website has been down since January.
A committee and lawyers representing users “have expressed concern with the platform site being offline as Users cannot access statement details or information necessary to complete their claims,” EY said.
In response, EY says it worked with the creditors’ lawyer to help users find ways to retrieve account balance information.
That process involves an online portal where users are asked to type in their QuadrigaCX account number and first name.
“If a match is found, your balances will be displayed,” the EY-built web page says, warning: “Be sure to print or screen capture the results.”
EY added that it is “mindful of User privacy concerns which [were] also taken into account in preparing the claims process.”
Special form
The auditing firm has also modified the standard form for bankruptcy claims “in order to fit Quadriga’s unique circumstances of having claims against it denominated in Cryptocurrency and Fiat,” EY said.
The form, which misspells the word “ethereum” and is interrupted by a page break in the filing, looks like this:
Thomas told CoinDesk that based on the new reports, there may not be much for customers to recover.
“Right now, it looks like the primary source of recovery for creditors will be the fiat and the frozen assets,” he said, concluding:
Nova Scotia Supreme Court image via Nikhilesh De for CoinDesk
View
- The bitcoin price rally seems to have stalled near $9,300 with the price-volume analysis suggesting scope for a minor pullback to $9,000-$8,700.
- Record open interest in bitcoin futures listed on the Chicago Mercantile Exchange indicates a surge in institutional interest. So, pullbacks, if any, will likely be short-lived.
- The long-term technical charts indicate scope for a rally to $10,000 and above.
Bitcoin (BTC) is struggling to find acceptance above $9,300 even as futures listed on the Chicago Mercantile Exchange (CME) are witnessing record open bets.
The top cryptocurrency by market value is currently trading at $9,250, having hit a high of $9,362 earlier today, according to data source CoinMarketCap.
Notably, the cryptocurrency has failed at least two times in the last four days to hold on to gains above $9,300.
For instance, prices hit a high of $9,318 at 08:00 UTC on June 16 only to fall back to $9,040 by 10:00 UTC. Similarly, the rise to $9,366 seen in the U.S. trading hours on June 17 was short-lived with prices falling back to $9,000.
While bitcoin bulls seem to be having a breather, the open bets in CME futures have hit record highs for two consecutive days.
The open interest – the number of contracts or commitments outstanding in futures at a given point of time – jumped to a record high of 5,311 contracts or $250 million on June 17 and hit a new lifetime of 5,391 on the following day.
It is worth noting that open bets have continued to rise along with the price this year and are currently up almost 80 percent from the levels seen in June 2018.
A rise in open interest along with the rise in price mostly indicates long (buy) positions are being built up. As a result, bitcoin’s recent rally looks sustainable – more so, as the CME has associated record open bets with an increased institutional interest in the leading cryptocurrency.
Further, JPMorgan Chase recently pointed to the difference between trading volumes on cryptocurrency exchanges and CME as a sign of increased institutional activity in bitcoin.
Therefore, the cryptocurrency looks set to test $10,000 and may possibly break higher, as suggested by long-term technical charts below.
Monthly chart
The falling channel breakout confirmed in April indicates the path of least resistance is to the higher side. It is worth noting that a similar bearish channel breakout in October 2015 was followed by a 2.3-year bull run.
Also supporting the case for a rise to $10,000 and above is the bullish crossover of the 5- and 10-day moving averages.
The long-term bullish outlook would be invalidated if the price finds acceptance below May’s low of $5,350, although that looks unlikely.
The long-term bullish outlook would be invalidated if the price finds acceptance below May’s low of $5,350, although that looks unlikely.
That said, the rise to $10,000 could be preceded by a temporary price pullback.
4-hour chart
The above chart shows sell volumes (red bars) have been bigger than buy volumes (green bars) over the last four days on major exchanges included in the calculation of Bitwise’s “real” bitcoin trading volume.
As a result, the price may fall back below the support at $9,000. That would expose the ascending trendline, currently located at $8,690.
The case for a pullback would weaken if the price finds acceptance above $9,300 on the back of high volumes.
Disclosure: The author holds no cryptocurrency at the time of writing
Bitcoin image via CoinDesk archives; charts by TradingView
The Computer Science and Artificial Intelligence Laboratory (CSAIL) at MIT designed a system to run complex mathematical algorithms to secure online communication. “Fiat Cryptography,” as the code is called, currently secures about 90 percent of Google Chrome communications.
Researchers presented their paper at the EEE Symposium on Security and Privacy in May, though the technology was originally theorized and deployed in MIT labs in 2018.
Fiat Cryptography is designed to automatically generate — and simultaneously verify — optimized cryptographic algorithms for all hardware platforms, a process which used to be done by hand.
You heard that right: as recently as a year ago the internet’s data encryption was achieved by a gaggle of cryptographers who would write and rewrite algorithms, manually weighing various mathematical techniques and chip architectures to optimize for performance.
Apart from the obvious issue of human-introduced bugs and nonoptimal algorithms, overtime, the maths or chip architecture the algorithms were written for would become obsolete, meaning pen would have to scratch paper again.
Researchers looked for a solution first in C programming and assembly languages, and transferred those techniques to their code library — a list of best-performing algorithms for each architecture.
Using a compiler to convert programming languages into code the algorithms are then automatically proofed with Coq, a mathematical theorem prover. Each iteration is tested before the best-performing one is selected for a particular chip architecture.
During the process researchers leveraged the body of human written code already in existence, and found that the automated process of generating keys and certificates for data encryption matches the performance of the best handwritten code, but completes it much faster.
“It’s basically like taking a process that ran in human brains and understanding it well enough to write code that mimics that process,” said Adam Chlipala, a CSAIL researcher who worked on the project, in an interview with MIT News.
Fiat Cryptography has since been deployed by Google’s BoringSSL, an open-source cryptographic library used by Google Chrome, Android apps, and other programs.
Chlipala was joined by CSAIL graduate students Andres Erbsen as first author and Jade Philipoom and Jason Gross as co-authors, as well as Robert Sloan, an engineering graduate student.
The researchers are currently working on ways to make their compiler run even faster in searching for optimized algorithms.
Image via ShutterStock
The Italian Banking Association (ABI) will deploy blockchain technology to run reconciliations beginning March 2020, Finextra reported.
The first use of the blockchain among Italy’s banks will integrate distributed ledger technology in interbank processes to accelerate settlements.
The move is part of the Spunta Project, a program managed by ABI Lab, the association’s research and innovation arm, to improve transparency and efficiency of communication between banking counterparts.
The banking consortium also aims to enact daily rather than monthly reconciliations. The Italian word “spunta” translates to check.
The latest round of tests reportedly began in February with participation from 18 banks, which together represent 78% of the Italian banking sector by number of employees.
Last October marked the successful completion of the first trial round, lead by Intesa Sanpaolo, Italy’s second largest bank, and 13 others. In the 10-month proof-of-concept and testing phase each bank was assigned a node and the banks uploaded actual data bank data, processing 1,200,000 transactions through the course of the trial.
The trial validated the use of blockchain and smart contracts to assist in knotty banking operations to reduce discrepancies between banking ledgers.
In February of this year, the Italian House of Representatives approved a bill defining DLT and blockchain, as well as the technical criteria that smart contracts will have to comply with in order to have legal validity.
Intesa Sanpaolo bank pavilion image via Shutterstock
Japanese messaging giant LINE may soon be able to open a cryptocurrency exchange for users based in the country, according to a report from Bloomberg.
LINE is close to winning a crypto exchange license from the Japanese Financial Services Agency (FSA), which could issue the approval as early as this month, the news outlet reported on Thursday, citing sources familiar with the matter.
With that regulatory clearance, LINE would be able to launch the platform – called BitMax– in a few weeks to offer cryptocurrency trading services to its 80 million users in Japan, the report added.
In July of 2018, LINE launched a cryptocurrency exchange dubbed BitBox based in Singapore, which excludes users from the firm’s home nation due to lack of regulatory clearance.
As of March this year, only 19 cryptocurrency exchanges in Japan had received a license from the FSA as the agency had tightened up its scrutiny following the $530 million Coincheck hack in January 2018. Coincheck obtained a license from the FSA earlier this year.
Bloomberg further said LINE now has another banking license pending in Japan, which is unlikely to be issued until next year. Under such a banking license, LINE would be able to create a cryptocurrency payments tunnel for other services like online shopping.
In March, the FSA granted a license to cryptocurrency exchange Rakuten Wallet, which was rebranded from a bitcoin exchange called Everybody’s Bitcoin Inc that was acquired by Japan’s e-commerce giant Rakuten in 2018.
LINE image via Shutterstock
Token, a San Francisco and London-based open banking platform, raised $16.5m in funding from prominent tech funds including Opera Tech Ventures, the venture arm of BNP Paribas, Octopus Ventures, and EQT Ventures, according to an announcement Tuesday.
This strategic round of funding comes on the heels of the company’s partnership with Mastercard. Token is working to develop a connectivity layer for the legacy payments processor’s open banking hub “that will help third parties establish and maintain communication with banks for data and/or payment,” said Token representative Erin Lovett. The partnership represents “the first movement in open banking by a large infrastructure provider.”
Combining open APIs, cryptographic security features, and programmable money to develop new banking applications, the company said it assists banks aggregate client account information from multiple external sources, initiate bank-direct payments, and reduce the cost of payment acceptance.
An API also provides compliance with PSD2 obligations, a regulatory directive in the EU.
Through SDK’s, Token removes the need for businesses to store customer or bank details on site and integrates with commercial websites to provide a ‘one click’ checkout. It also collects customer spend data.
Apart from the data platform, Token has developed an eponymous cryptocurrency, Token X, which they claim is the first stablecoin designed for “instant payment execution.” It runs on Stellar and Ethereum, but is designed to be ledger agnostic. In function, TokenX performs like Facebook’s Libra.
The token is backed 1:1 by fiat money and has been independently audited to confirm that assets in escrow match the outstanding stablecoins, the company alleges. Additionally, transactions using TokenX are screened for AML and sanctions, and those purchasing or redeeming the currency are meant to follow KYC processes.
Token was founded in 2015 by Steve Kirsch and currently works with 4,001 banks, including Tandem Bank, Think Money Group, An Post, Sberbank Croatia and Slovenia, and Khaleeji Commercial Bank.
The firm raised $18.5 million in Series A in 2017, and an additional $16.5 million in June 2019. Lovett said Token plans on doing a Series B round early next year.
The latest round of funding will support Token’s expansion and connectivity to banks across Europe, in both open banking and digital money solutions.
Coin bank image via CoinDesk archives
YouNow, a video platform that aims to reward active users with its own cryptocurrency, is taking a belt-and-suspenders approach to compliance.
The New York-based startup has filed a Reg-A+ offering circular for its Props token with the Securities and Exchange Commission (SEC) – even though it isn’t selling them to investors, accredited or otherwise. If approved by the regulator, the qualification would clear YouNow to distribute Props to content creators, network transaction validators and others without registering the tokens as securities.
The key difference between this token and other efforts? “No funds will be raised through the public offering, created to allow compliant ‘mining’ of Props in [the] US,” says the company.
Instead, YouNow will disperse millions of Props, an ERC-20 token that runs on the ethereum blockchain, to users of its app.
Previously, YouNow raised $25 million through the sale of Props, $20 million of that via a simple agreement for future tokens (SAFT), a legal structure devised at the height of the 2017 initial coin offering (ICO) boom.
But while the 178 million Props allocated for the current “offering” have a nominal price (13.6 cents apiece, or $24 million total), the only consideration YouNow asks is participation in its platform.
From the release
Props is backed by Union Square Ventures, Comcast Ventures, and Venrock, among others and is planning on giving away tokens as grants to programmers on the platform and for popular users.
“Over the past two years, the team focused on launching Props in a manner compliant with US regulators and now, pending final approval by the SEC, there is the opportunity for apps to integrate and ‘mine’ a legally compliant digital token and obtain a stake, for both the apps and their users, in the network they contribute to,” said Venrock’s David Pakman. “This visionary new model is ushering in a new era of transparent and more equitable distribution of value, and sharing that value with end-users.”
Facebook’s announcement that it would create a stablecoin on a blockchain means more as a competitive answer to WeChat and Alipay’s payment services than it does to the crypto industry, according to AngelList co-founder Naval Ravikant.
Ravikant told CoinDesk via email:
The immediate question for the crypto industry following the announcement of Facebook’s ambitious Libra project was whether this new token will lead more users into the broader world of cryptocurrency or insulate them from other projects. That is, will someone who becomes a Libra user be more likely to one day hold bitcoin, ether, EOS or other crypto assets?
For his part, Ravikant sees a way Libra could meet a need, noting that it could lower the cost of global payments, but, he added, “I struggle to see why it needs to be on a blockchain other than for PR / Marketing.”
The Asian consumer payments giants Tencent (parent of WeChat) and Alibaba (parent of Alipay) seem to agree: They say they won’t be following Facebook’s lead into cryptocurrency development.
That said, most of the industry sounds upbeat following the news that the fifth largest company in the world by market capitalization, Facebook, is leading a slew of financial giants (such as Visa, PayPal and Stripe) into the blockchain universe.
For example, Fred Wilson, a partner at Union Square Ventures, one of the founding members of the Libra Association, wrote on his blog:
In fact, others pointed to specific mechanisms by which individuals might find their way into crypto in a world where Libra becomes a common way of transacting value.
“It’s good news for exchanges and good news for crypto because you’ll have a lot more vetted users,” Avivah Litan, an analyst at Gartner, told CoinDesk. She foresaw exchanges as being a major source for attaining Libra in the early days. “So now when you’re signing up for Libra you’re going to see more cryptos as well.”
People who already have access to financial services will be motivated to find ways to get crypto in order to get better deals, Kyle Samani of Multicoin Capital told CoinDesk.
“The value prop is clear: discounts through merchant partners like Uber and Lyft and Spotify (and many more to be announced),” Samani told CoinDesk via email. For the unbanked, it’s the chance to use a currency that’s potentially more stable than their country’s national currency.
Preston Byrne, an attorney at Byrne & Storm and an early entrepreneur in the world of permissioned blockchains, told CoinDesk he foresees Libra being helpful at a high level so long as the network is not built in a walled-off way.
“As long as it requires people who are hooking into the ecosystem to use things that are otherwise good for cryptocurrency, then it’s good for cryptocurrency,” Byrne said.
Joey Krug, Augur’s creator and an investment officer at Pantera Capital – one of the industry’s largest crypto investors – pointed to one way the infrastructure has already committed to play nice with the rest of the industry.
“Libra has stated the underlying network will have pseudonymous addresses just like any other crypto network, which means exchanges can list Libra, effectively making it an on-ramp to all of crypto,” Krug told CoinDesk.
Byrne did note that Facebook and its partners could use their clout to crowd out other cryptocurrencies, if they wanted to. For her part, Arianna Simpson, founder of Autonomous Partners and a former Facebook employee, does not see an existential threat to bitcoin in Libra.
“Other cryptocurrencies – Stellar and Ripple come to mind – are much more likely to have their raison d’être called into question,” she wrote in a note to her limited partners, which was shared with CoinDesk.
In fact, on bitcoin, Samani offered another tantalizing bit of speculation. He argued that with interest rates on sovereign bonds moving so widely into negative territory, the Libra reserve is going to have a hard time finding extremely conservative investments with an upside.
Samani said:
Big does not always win
If Facebook is able to convince the world that crypto works, Libra itself will have to work. And that’s no sure thing.
Industry insiders were quick to recall the many headline-grabbing tech products that never caught on.
That said, the general response seems to be excitement about Facebook and its partners potentially educating billions of people about public-private keys, payments without intermediaries and money on the internet.
But there were a lot of notes of caution, particularly about whether or not Facebook could really lead users to use its new blockchain.
Joel Monegro of Placeholder, a prominent New York City-based venture fund, compared it to the earliest iterations of the Microsoft Network, which was basically Microsoft’s attempt to create its own proprietary internet.
Monegro told CoinDesk via email:
Similarly, CoinFund founder Jake Brukhman rattled off a list of major failures by other tech giants. Though generally optimistic about Libra’s potential to benefit the whole market, Brukhman cautioned that “people also tend to get excited and underestimate how hard it is to launch successful products even as established exceptional companies.”
For example, he mentioned Amazon’s Fire Phone. Additionally, Google has had a cascade of failed creations. In social media alone, it failed with Orkut, Buzz, Wave and Google Plus. Apple’s self-driving car product was stillborn.
But Albert Wenger, also of Union Square Ventures, wrote on his blog about how critical a wide distribution network has been at key moments of technological expansion. He too drew an example from Microsoft: the introduction of Internet Explorer (IE) to all Windows users in 1995.
IE drove tremendous adoption of the internet. But, as Wenger wrote, “It is useful to remember that Microsoft was not the primary beneficiary of the web.”
But is it my giant?
The 53 co-authors of “The Libra Blockchain” white paper said the blockchain was built to offer “a new global currency — the Libra coin.” Currencies are money’s consumer application, but will be Libra be consumer-friendly?
William Quigley was a co-founder of the company that created tether, the original stablecoin, and he’s now the CEO of WAX, a startup organized around digital property rights. He thinks Libra will save people money on almost everything they buy.
“It’s probably 1.5 percent of global GDP is just eaten up in currency conversions,” Quigley estimated. “I think that’s a big part of what Facebook is looking at.”
Others aren’t betting against the world’s entrenched financial institutions, however.
As Tyler Cowen, one of the globe’s most influential economists, wrote on his blog: “Have banks ever lost a political battle of this kind?”
If any coalition could uproot those channels, it may be the group of extremely powerful companies Facebook has assembled. But that sheer size could pose another danger to the masses.
“It comes with the risks of centralized pain points and vulnerabilities,” ConsenSys founder Joseph Lubin told CoinDesk. “Data silos enable incumbents to maintain pricing power, and also come with the risks of data breaches, privacy, and security issues – problems that many have already begun to associate with Facebook.”
Maya Zehavi, a blockchain consultant and entrepreneur, offered similar concerns. While Facebook theoretically won’t control the Libra blockchain, earlier iterations of the company have been known to wreak havoc on startups that build businesses dependent on Facebook platforms. Just ask Zynga.
At this very early date, Zehavi said Libra looks like a “closed loop.”
“If you want to make an investment or if you want to run a product today, you need to be able to run a node, a full node,” she said. “You need to have the infrastructure in place to be a part of that network.” Plus, there’s the cost.
Founding members of the Libra Association have paid $10 million each for the privilege of running a node, though there are plans to ultimately open node membership to anyone. (Founding members also get a return on their investment in the form of interest generated by the Libra reserve’s potentially vast pool of coin-backing assets.)
Still, Quigley, the tether creator, thinks the 10 years of crypto history to date should be the main framework for evaluating Facebook’s Tuesday announcement. Several people CoinDesk spoke to made some version of his same point:
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