Crypto Throwback Thursdays: Could Facebook leave Libra? 😲

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It’s Thursday. Time to fill your stomach with another meaty portion of crypto news. There’s the ongoing soap opera at Libra, a push to regulate all stablecoins, positive news from Bakkt, and much more for you to tuck into. Ready, steady, go!

 

Mr Zuckerberg goes to Washington

 

Will Libra ever actually happen? If Facebook CEO Mark Zuckerberg’s resilience in the face of the House Financial Services Committee’s grilling on Wednesday is anything to go by, definitely. Equally, it was quite clear from the tone of the questions that politicians of all hue have issues with him. So he might have an uphill battle on his hands. Or rather, the Libra Association has an uphill battle. As he was keen to remind us throughout, Facebook is not the Libra Association and it doesn’t make all its decisions.

 

Here are the key takeaways:

 

  • Could Facebook really leave Libra?Rep. Bill Huizenga (R-Mich.) questioned whether the association will launch without US regulator approval, as Facebook has suggested in the past.Zuckerberg was clear that Facebook would not be a part of it if it did. “I believe we would be forced to leave the association,” he said. “I would hope that [the] association will weigh our recommendation and what we say publicly that we think should happen.“If we don’t receive the clearances that we feel like we need to move forward and the association chooses to move forward without us then we will be in a position where we will not be a part of the association.”Given the huge role that Facebook played in the formation of Libra, and their clear importance to the success of the project, it’s highly doubtful the rest of the association would carry on against their wishes.
  • Should Facebook leave Libra?Rep. Nydia Velázquez (D-NY) asked Zuckerberg directly why he and Facebook should be trusted after years of privacy scandals related to data breaches and the Cambridge Analytica affair. She pointed to Facebook’s “credibility issue” in the area.Zuckerberg was upfront about the social network’s image issues, acknowledging that he is “not the ideal messenger for this right now.”“We’ve faced a lot of issues over the past few years,” he said, “and I’m sure there are a lot of people who wish it were anyone but Facebook that was helping to propose this,” he said.Valid points from both, but would they be more supportive if it was another large corporation pushing their own cryptocurrency? Support for bitcoin hasn’t exactly been forthcoming so far. And would Libra have anything like the same potential without Facebook?
  • Will Facebook go with a basket of stablecoins instead of fiat?Zuckerberg also discussed the basket of currencies Libra will use to underpin, following statements made by David Marcus last week that they could use a basket of stablecoins to underpin Libra in place of fiat.Asked whether he would agree to restrictions on the basket of currencies that will sit behind the currency, he replied: "I think it would be completely reasonable for our regulators to impose a restriction that says it has to be primarily US dollars."

 

Is regulation coming for stablecoins?

 

Libra wasn’t the only stablecoin to get the third degree this week.

 

First, the G7 group of major western economies and Japan released a report advising that stablecoins could “pose challenges for competition and antitrust policies” and should not be launched until all legal and regulatory risks have been addressed.

 

The report warned that should stablecoins reach a global scale, it could “undermine competition in financial markets” and threaten financial stability and monetary policy.

 

A globally-adopted stablecoin could “lead to significant market concentration”, the report explained. This is the result of “the strong network effects that initially spurred their adoption, the large fixed costs needed to establish operations at scale and the exponential benefits of access to data”. And the threat is even greater if the cryptocurrency is “based on a proprietary system, as this could be used to prohibit entry or increase barriers to entry to such system.”

 

And the G7 weren’t the only ones at it. The G20 group of 20 finance leaders on Friday agreed to set strict regulations, warning that issuance of stablecoins should be banned until various global risks they pose have been addressed.

 

Finance chiefs of the G20 major economies agreed that stablecoins have significant potential benefits for financial innovation. However, they also hold “serious” public policy and regulatory risks.

 

“Such risks, including in particular those related to money laundering, illicit finance, and consumer and investor protection, need to be evaluated and appropriately addressed before these projects can commence operation,” the G20 finance leaders said in a statement issued after their meeting.

 

Not to be left out, the US congress was also seeking guidance. In a draft bill published Tuesday, Rep. Sylvia Garcia (D-Texas) introduced legislation to the House Financial Services Committee to regulate stablecoins under the Securities Act of 1933.

 

The agency would impose strict requirements on stablecoins similar to stock including disclosure, registration, investor accreditations, and more.

 

So what do you think? Is there a big future for stablecoins? Are government's right to want them regulated? Let us know your thoughts on social media.

Have you seen our latest RoundUp?

All the latest news this week is in Episode 4 of Season 2 😎

Particularly shiny, the word ’Satoshi’ just got official. The Oxford English Dictionary added it into the latest publication. Defined as “The smallest monetary unit in the Bitcoin digital payment system, equal to one hundred millionth of a bitcoin.” we’re looking forward to more crypto education.

Exciting news also came in from Brave, the crypto browser where 8 million monthly users are joining the crypto revolution 🦁

You can watch this and all the Libra news right here:

A change in fortunes for Bakkt?

 

After a slow start, Bitcoin futures platform Bakkt looks like it is finally taking off. On Wednesday, Bakkt hit a new all-time high, with 640 BTC futures contracts traded on the exchange, worth $4.8 million.

 

There was a great deal of anticipation around the exchange, which allows users to settle futures contracts in crypto, but after a slow start many started to cry damp squib. However, it was never going to be an overnight success, and things look to be heading in the right direction.

 

Has Google achieved Quantum Computing and is it a threat to Bitcoin?

 

In an article in the science journal, Nature, on Tuesday, Google announced that it has achieved quantum computing.

 

The search giant claimed to have built a computer capable of solving problems that classical computers cannot. Google's processor, Sycamore, performed a truly random-number generation in 200 seconds. That same task would take about 10,000 years for a state-of-the-art supercomputer to execute.

 

IBM, however, disagreed. Big Blue argued that Google hasn't achieved supremacy because "ideal simulation of the same task can be performed on a classical system in 2.5 days and with far greater fidelity."

 

Whether IBM or Google are correct, it’s undeniably a big step – one that many threatens the fabric of crypto. Equally, commentators are clear that such a threat is minimal given the limitations of the technology as it exists. A cryptocurrency like Bitcoin could simply upgrade the encryption scheme used on the network to one such as SHA-512, which is more complex and requires enormously more computing power to break through.

 

Dragos Ilie, a quantum computing and encryption researcher at Imperial College London, explained that: "Google's supercomputer currently has 53 qubits. In order to have any effect on bitcoin or most or most other financial systems it would take at least about 1500 qubits and the system must allow for the entanglement of all of them."

 

Bitcoin core developer Peter Todd was also at pains to explain why it was not an issue.

Grayscale Investments hits new heights

 

One of the world's largest digital asset management firms, Grayscale Investments has revealed the largest rate of investment in its history for the quarter — $254.9 million according to their latest income report. They also received approval for a publicly-traded large-cap crypto-asset fund, which gives investors broad-based exposure to cryptocurrencies with one vehicle.

 

The scale tripled the $85 million Grayscale accrued in Q2. Michael Sonnenshein, the managing director of Grayscale, said the increase was evidence that professional investors now commonly regard cryptocurrencies as a viable option in their portfolios.

 

Sonnenshein also credited their successful #DropGold ad. They’ve just released a second in the series, which you can watch below:

 

BitMain’s first rodeo

 

Chinese mining giant Bitmain is investing $500 million in a massive new 33,000 acre mining facility in Rockdale, Texas.

 

According to an announcement, Bitmain’s mining farm is up and running at 25 megawatts, which is half the capacity it will ultimately reach. Once it hits 50 megawatts, Bitmain says it will be the “largest Bitcoin mining facility in the world.”

 

The project began in 2018 alongside the Rockdale Municipal Development District (MDD) and crypto company DMG Blockchain Solutions. Clinton Brown, Rockdale lead project manager for Bitmain, says, “This facility [will play a] significant [role in supporting] Bitmain’s global expansion plans. The stable and efficient energy resources in Texas are fundamental to the inevitable scale of growth for the cryptocurrency mining industry.”

 

“There’s going to be jobs, there’s going to be revenue,” Rockdale Mayor John King said during a ribbon-cutting ceremony. “We’re going to see great things coming in the future.”

 

HTC Exodus 1s brings a Bitcoin full node to your pocket

 

Want a Bitcoin full node? Have $244? Need a new phone? Look no further than HTC’s new Exodus 1s – a full bitcoin node in your pocket!

 

Taiwanese electronics giant HTC launched its new “cryptophone” at Berlin’s Lightning conference last weekend. The device comes with a built-in hardware wallet that allows users to store, exchange, send, receive, buy and sell major cryptocurrencies. Unlike other blockchain smartphones, HTC says the Exodus 1s can hold all the transactions in the Bitcoin blockchain, effectively giving millions of people the power to transact Bitcoin, sending and receiving it directly, without needing a bank, crypto exchange or other third party.

 

The full Bitcoin ledger can be stored on an SD card (sold separately, 400GB+ SD card required) and allow a user to verify and relay transactions without requiring a centralised third party.

 

“We are providing the tools for access to universal basic finance; the tools to have a metaphorical Swiss bank in your pocket,” Phil Chen, decentralised chief officer at HTC said in a press release. “Full nodes are the most important ingredient in the resilience of the Bitcoin network and we have lowered the barrier to entry for any person to run a node, which is simply a computer, mobile in our case, participating in the global Bitcoin network that propagates transactions and blocks everywhere, which is the foundation and fundamental definition of a peer-to-peer cash system.”

 

Keep reading...

 

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Team Luno

On our way to the moon, we write about all things crypto. And don’t forget we’re humans too. Our blog conveys the views of Luno and the many unique opinions and characters within our team. We’ll never provide you with financial advice, and we urge you to conduct your own research before purchasing or trading any cryptocurrencies. It’s a brave new world out there, and the market can be volatile at times, so never trade with funds you can’t afford to lose. Want to let us know how much you love our blog? Tweet us @lunomoney.

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