Live! Read-Through Of Facebook’s Global (ShitCoin), Thanks But No Thanks (#GotBitcoin?)
Facebook Releases Cryptocurrency White Paper for Libra Currency. Live! Read-Through Of Facebook’s Global (ShitCoin), Thanks But No Thanks (#GotBitcoin?)
Chair of House Financial Services Committee Requests Halt on Facebook’s Crypto Project
Rep. Maxine Waters, chairwoman of the United States House of Representatives’ Financial Services Committee is requesting that Facebook halt development on its cryptocurrency, the Libra, as reported by CNN Tech Reporter Brian Fung in a series of tweets June 18.
In her statement, Rep. Waters explained:
“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”
In response, Rep. Patrick McHenry, also of the Financial Services Committee, said the following:
“It is incumbent upon us as policymakers to understand Project Libra. We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system.”
The implications of these statements remain unclear, as does their significance for Facebook and Project Libra.
This news comes the same day that Facebook released the white paper for its new crypto project, as Cointelegraph reported.
Recently, Facebook has been assembling investors into its “Libra Association,” a who’s who of major payment and tech companies willing to invest $10 million each into Project Libra.
Only last month, the Financial Services Committee passed a resolution to form the Task Force on Financial Technology. The Task Force’s mission is to “examine the current legal framework for fintech, how fintech is used in lending and how consumers engage with fintech.”
Facebook Releases Cryptocurrency White Paper For Libra Currency
Social media giant Facebook has released the white paper for its long-awaited cryptocurrency and blockchain-based financial infrastructure project today, June 18.
According to the paper, Facebook’s global stablecoin, dubbed “libra,” will operate on the native and scalable Libra blockchain, and be backed by a reserve of assets ostensibly “designed to give it intrinsic value” and mitigate volatility fluctuations.
These assets consist of a basket of bank deposits and short-term government securities that will be held in the Libra Reserve for every Libra that is issued.
The website for the digital asset, calibra.com, was briefly down around 5AM EST, about when it went live.
The new cryptocurrency will be governed by a not-for-profit, Switzerland-based consortium — the “Libra Association” — which counts Mastercard, PayPal, Visa, Stripe, eBay, Coinbase, Andreessen Horowitz and Uber among its founding members.
Facebook ostensibly plans to expand the association to around 100 members by the time of Libra’s launch in the first half of 2020. The white paper notes that:
“While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.”
The Libra Association Is Itself Governed By The Libra Association Council
The council’s members initially are the founding members, each of which runs a validator node on the network and was notably required to make a minimum investment of $10 million to seal the position. Each $10 million investment secures an entity one vote on the council, per Facebook.
Facebook has also revealed the release of the Libra Investment Token — distinct from its global user-oriented cryptocurrency libra — which can be purchased or distributed as dividends to the association’s founding members and accredited investors.
As libra is not technically pegged to any given national fiat currency, the white paper states that users will not always be able to redeem the token for a fixed amount of fiat, although Facebook claims that the reserve assets have been chosen so as to minimize volatility.
While the reserve assets are ostensibly held by “a geographically distributed network of custodians” in order to secure decentralization, the reserve is managed by the association itself, which is the only party able to mint and destroy the coin.
New libra are minted once authorized resellers have purchased the coins from the association with enough fiat to fully back their value, and burned when authorized resellers sell the token back to the association in exchange for the underlying assets. Moreover, the white paper states:
“Since authorized resellers will always be able to sell Libra coins to the reserve at a price equal to the value of the basket, the Libra Reserve acts as a ‘buyer of last resort.’”
Facebook further notes that the software that implements the Libra blockchain is open source in order to create an interoperable ecosystem of financial services and broaden inclusion.
Previous reports had indicated that the coin will facilitate payments across Facebook’s various platforms including WhatsApp, Messenger and Instagram, giving the new coin potential exposure to a combined 2.7 billion users each month.
Facebook Has Yet To Answer US Lawmakers’ Questions About Libra Crypto
Facebook is still working on its responses to a plethora of consumer protection questions about the Libra cryptocurrency asked by a group of U.S. senators last month.
The Senate Banking Committee wrote an open letter to Facebook at the beginning of May, asking the social media giant a number of questions about Libra, after word of the project leaked out in the press. The questions primarily centered around user privacy and data protection, though a few concerned the cryptocurrency network itself.
After months of speculation and rumors, the company formally unveiled its vision for Libra on Tuesday – but it has not yet submitted a response to the letter.
“We received the letter and are addressing the senators’ questions,” a Facebook spokesperson told CoinDesk Tuesday morning.
To be sure, the documentation Facebook published offers a hint of what the answers to some of the committee’s questions might be.
Take, For Example, The Senators’ First Two Questions:
How would this new cryptocurrency-based payment system work, and what outreach has there been to financial regulators to ensure it meets all legal and regulatory requirements?
What privacy and consumer protections would users have under the new payment system?
Facebook’s new Libra white paper and supporting documentation outline the mechanism for the basket of fiat currencies and government securities that back the Libra token, as well as the Libra investment token that gives its governance council the ability to monitor and modify the network and its protocols.
Moreover, Facebook said in other documentation that it, or at least its new Calibra subsidiary, would secure money transmitter licenses in various U.S. states that treat cryptocurrencies as money. Calibra has also registered as a money services business (MSB) with the Financial Crime Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. (Though it is a legal requirement for businesses conducting financial transactions, registering as an MSB does not indicate any sort of regulatory approval.)
Calibra Says It Will Also Abide By European Union And Financial Action Task Force
(FATF) guidelines, as well as the laws of each jurisdiction it provides services in. Facebook has also reportedly held talks with the Commodity Futures Trading Commission (CFTC) about Libra.
The Senators also asked if Facebook shares or sells any consumer information (or information derived from such data) with any unaffiliated third parties. Company literature says that neither Facebook nor Calibra will do so without consent from the customer.
Still, the senators may want more detailed answers to these questions and others, specifically:
What consumer financial information does Facebook have that it received from a financial company?
To the extent that Facebook has received such information, what does the company do with it and how does it safeguard the data?
Does Facebook have any information bearing on an individual’s (or group of individuals’) creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used (either by Facebook or an unaffiliated third party) to establish eligibility for, or marketing of a product or service related to, credit, insurance, employment or housing?
How does Facebook ensure that such information is not used in violation of the Fair Credit Reporting Act?
The senators’ letter did not give a deadline for Facebook to respond, and it is unclear when the answers will be sent.
Facebook’s New Crypto Faces Scrutiny From European Authorities
he unveiling of Facebook’s Libra cryptocurrency was immediately met with political opposition in Europe.
French Finance Minister Bruno Le Maire and German member of the European Parliament Markus Ferber called for regulatory scrutiny of the social network’s blockchain project, according to Bloomberg.
Facebook, with more than 2 billion users, could become a “shadow bank,” Ferber warned.
“Multinational corporations such as Facebook must not be allowed to operate in a regulatory nirvana when introducing virtual currencies,” he said, sounding the alarm for regulators to take a closer look.
Le Maire echoed this sentiment during an interview with Radio 1, when calling upon the Group of Seven central bank governors to prepare a report on Facebook’s project for their July meeting.
His concern is that Libra may grow to replace traditional currencies. Similar fears have been stoked by Italian Prime Minister Matteo Salvini’s recent prevarications around the mini-BOT, a proposed national currency that some analysts predict will shake the foundations of the European Union.
“It Is Out Of Question’’ That Libra Be Allowed “Become A Sovereign Currency,” Le Maire Said, Adding:
“It Can’t And It Must Not Happen.”
Facebook’s initiative to “build a financial ecosystem that can plug in and empower billions of people” was formally announced Tuesday after months of rumors and speculation. Libra is a stablecoin designed to tame the volatility of cryptocurrencies and thus be useful for day-to-day commerce. During its development, Facebook partnered with some of the biggest names in payments and technology, such as Visa, Uber, and Coinbase.
The currency is expected to launch in 2020 and will be pegged to a basket of established government-backed currencies and securities, designed to limit inflation and maintain liquidity, which will be controlled by the Libra Association. The Association will also purposefully burn or mint tokens in response to shifts in demand.
Calibra, a Facebook subsidiary, plans to build a digital wallet that will exist inside its Facebook Messenger and WhatsApp services to make it easy for people to send money to friends, family and businesses through the apps.
Facebook’s Libra Cryptocurrency: A Technical Deep Dive
Facebook announced Tuesday that its highly anticipated cryptocurrency, Libra, will run on a blockchain network secured at launch by 100 distributed computer servers, or nodes. Twenty-eight node-running members are currently on board.
The Libra blockchain will go live in 2020, with the Libra Association – a Switzerland-based non-profit – tasked with leading the cryptocurrency’s ongoing development. In a white paper released Tuesday, the organization detailed how the Libra blockchain will be Byzantine fault-tolerant, meaning faulty behavior by some of the actors in the network will not compromise the security of the broader network.
“[The Libra blockchain makes] it extraordinarily difficult for an attacker to compromise 33 separately run nodes that would be required to launch an attack against the system.”
All initial nodes tasked with validating transactions in the network will be run by “Foundation Members.” The group of 28 founding members includes the likes of Visa, Mastercard, Coinbase, PayPal, Uber, Lyft and others, which are each investing around $10 million to join the consortium.
This contrasts with the more open approach of public blockchains like bitcoin or ethereum, in which anyone in the world can dedicate the computing power necessary to validate the network’s transaction history. However, Libra’s node participation will eventually open up to everyone.
“In the initial version of the system, only founding members will be able to be a node that participates in the consensus algorithm,” Ben Maurer, Facebook’s blockchain technical lead, explained to CoinDesk in an exclusive interview, adding:
“Over time, it’s designed to transition the node membership from these founding members who have a stake in the creation of the ecosystem to people who hold Libra and have a stake in the ecosystem as a whole.”
Elsewhere in its announcement, Facebook noted how it intends to work alongside the existing financial system. For example, it noted specifically the regulatory issues of other blockchain products.
As more nodes are added, Facebook says Libra will become more fully decentralized.
“The Libra ecosystem is diverse – the organizations that make up the pool of validator nodes are from a variety of industries and sectors and will be located in different places around the world,” the white paper states. “This will create a strong and distributed infrastructure, which will increase resiliency and ensure the validator nodes are not subject to common influence or attack.”
On Tuesday, the Libra Association published documents detailing the full cryptocurrency project, one in which Facebook played a “key role” in hatching. The aim of the Libra project as detailed in the white paper is to create a “more accessible, more connected global financial system.”
Moving forward, Facebook is expected to maintain a leadership role over the initiative in 2019 but decision-making authority will ultimately rest with the non-profit Libra Association.
New Programming Language
Perhaps most notable of the project’s technical specs is that Facebook has built a dedicated computer programming language called “Move” to run its new Libra blockchain.
“The reason why we built our own language is that we want to really focus on the flexibility of the blockchain over time,” Maurer told CoinDesk, adding:
“One of the key ways to do that is by having programmability inside of the blockchain. If you want to take advantage of new functionality or new techniques, you don’t have to wait for the entire network to upgrade.”
Facebook’s reason for creating a whole new language is to remedy the shortcomings of existing blockchains, Maurer explained.
“In existing blockchains, there are a lot of issues with writing code securely,” he said. “The Move language is built with safety being a key principle of the design.”
According to a source with knowledge of the development process, clues to the technical implementation of the system could be found prior to Tuesday in Facebook’s February acquisition of Chainspace, a startup formed by a group of blockchain engineers at University College London.
“If you look at the stuff George Danezis and the technical team wrote on payment systems on the Coconut protocol, you will get a good flavor of some of the things they [Facebook] are looking to do, and the scale they are looking to do it at,” the source said, referring to an August 2018 white paper on the smart-contract protocol.
Danezis, as well as Chainspace’s Shehar Bano and Alberto Sonnino, all work at Facebook now and are listed as signatories on the Libra white paper.
Privacy And Security
At launch, the Libra Blockchain will require its members to be responsible for spinning up nodes that connect, participate and ultimately secure the Libra network.
These founding members include payments giants Mastercard, PayPal and Visa, as well as tech majors like eBay, Lyft, Spotify and Uber.
Staking startup Bison Trails is one of several crypto companies involved in the foundation.
Speaking to the roster of current partners, Bison Trails CEO Joe Lallouz told CoinDesk:
“One of the most impressive things, to me, about this project is how thoughtful they’ve been about truly making it distributed. Bringing on lots of partners to make sure there isn’t any centralization of decision-making or governance.”
All these organizations will have to ensure the software and hardware they are running for the Libra network is “independent” from all other internal company systems, the white paper states.
In addition, these nodes while validating and committing transactions to the Libra blockchain will not store any data on a user’s real-world identity. Instead – following the example of traditional blockchain networks such as bitcoin – information about the users of the system will be restricted to their public alphanumeric blockchain addresses.
“Transactions do not contain links to a user’s real-world identity,” says the Libra white paper. “This approach follows the norm of pseudonymous transactions adopted by other major blockchains. This approach is familiar to many users, developers and regulators.”
“Move is designed to make it safe to write programs that manage Libra assets,” the white paper states.
Even so, the Libra Association is eager to have the Libra Blockchain and all its associated tooling fully inspected and secured by the broader public before its hopeful mainnet launch in the first half of 2020.
As such, the Libra Association has released “early-stage code” under a permissive and free software license by the Apache Software Foundation.
“This testnet will help us gather feedback from the community about the direction of the project and work toward ensuring a scalable, reliable and secure launch,” the Libra Association said.
To this, there will be a supplementary bug bounty program sponsored by the non-profit in partnership with cybersecurity company HackerOne to financially motivate researchers and developers in uncovering any hidden security and privacy vulnerabilities in the open-sourced code.
Speaking to the global motivations of not only the broader Libra project but this bug bounty program specifically, the Libra Association said:
“The Libra Association is a global effort and so is the Libra Bug Bounty Program. We will be globally inclusive as we promote researcher contributions from all over the world and host bug bounty events in diverse locations.” Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s, Live! Read-Through Of Facebook’s