🇬🇧Clouds on Libra, Fear, Anathemas … and Telegram with Gram
The clouds on the Libra initiative, in the form of strwings by the various articulations of the international establishment (financial and non-financial), are dense. The main issue is that they don’t know (they don’t have the technical means, because they don’t exist) how to deal with the problem.
For cryptocurrencies they have chosen to enforce compliance with the AML/CTF rules with KYC aims to exchangers : at present, however, Bitcoin (as an emblem of all cryptocurrencies) is used at 90% for speculative purposes and speculators in general do not evade financial surveillance. In the remaining 10% there are several actors : who exchanges, the miners, p2p, the darknet activity and who buys goods and services. Taking into account the insignificance of the total amount of the value of the transactions in cryptocurrencies, compared to that of total trade in fiat currency, the reality is that cryptocurrencies is not used with the purpose of purchasing tangible or intangible assets. As a result, by going beyond the needs of the media to create alarmism for audience and those who ride the tiger to emerge and make a name by dint of bullshits, the problem has never been real for anyone (the same as for the supposed criminal and terrorist problems).
In addition, financial surveillance is structured on the update of black-lists and statistical verification of transaction identities : if transactions are almost exclusively of speculative genesis black-list and reporting statistics are respected. Finally, elude for privacy purposes the current finance intelligence for cryptocurrencies is elementary : there are no tools that can detect it and, much less, to prevent.
With Libra things are going to be different: it is a stablecoin for merchant and non-speculative purposes. So potentially, considering who issues and that being the case, the possibility of buying goods and services without being able to know who-what-from-who buys will grow exponentially. Consequently the fear of the establishment and as a reaction (in the absence of anything else) the storm of anathemas dictated by the understandable fear.
From the United States to Europe, red flags are appared at any level. From U.S. Congress and Senate to the G7 through the European Antirust and the Association of American Lawyers (see the end of post for link to deep), all of which have a common denominator : to get, directly and not, information from Facebook on how it intends to develop the project and prospecting apocalyptic scenarios in the area of monetary anarchy. Not only. Several worry, quite rightly, about the processing of users transactions data.
On the monetary side you have to remember that in Libra’s white-paper is declared that Calibra, the branch of Facebook that will manage Libra, will stick to the KYC’s international regulations. From the beginning, Libra’s spokesperson made it clear that the stablecoins will not be introduced in countries under the US embargoes and where cryptocurrencies is banned. But Calibra will only manage the group’s transactions and not the entire Libra ecosystem, which, like all cryptocurrencies, to work will be based on the exchanger segment and, therefore, we return to the issues seen above in a context multiplied.
Under the value-added point of view the purpose of Facebook with Libra (and much more with Calibra) is to bring in fiat currency and to make it spend within the ecosystem in exchange for goods and services : so a declarically addressed global marketplace, good expressed in communication intents and intentions in the white-paper, especially for unbanked and underbanked. But these people, given their nature, will require unique identification to operate : it’s declared that it will be provided by Libra.
So the issue arised by those who care about privacy: Libra is based on private blockchain no a public one. Given the infamous Facebook track-record accumulated over the years, with regard to customer data, who will ensure the correct use (even just by Calibra, which is expected however not to be of little weight) of identities and transactions connected to them?
Facebook from its side is acting on several tracks. The first is to pour oil on troubled waters in form of uncertainty about the effective online of operation. In the semi-annual report states, in extreme synthesis, that the fuss kicked up by the project can predict for the group high operating costs, in terms of adapting to the different (unclear) regulations and safeguarding of reputation. So Libra may never come to light or it borns far beyond what was originally planned.
The second track is to play ping-pong with the elites. The company does not miss a trick in declaring that it will submit to the various regulations (the Swiss one, because Libra Association is based in that country, FinCEN and Bank Secrecy Act in the USA, AML/CTF in general), knowing well that there is not regulation for what they propose to do and inviting, the institutions that are confronted with it, to invent something.
Finally, the project at the same time, continues clearly on its own path announcing, for example, the collaboration with Hackerone for preventive security and making, in about two months from the presentation, more than 500 changes to the open-source code.
Interesting the reactions of the crypto-ecosystem monetary and not. On the inner side The Financial Times claims that three of Libra’s founders are thinking of cutting support : they are worried for the reputation side, considering the institutional and political negativity that the initiative has raised; then the idea is that it is a pretext, for the different regulatory agencies, picking nits also at their home. On the external side the crypto-lobby (which in the U.S. has spent in 2018 1.1 mil USD, according to Center for Responsive Politics) is worried that Libra is causing regulatory obstinacy over the sector, and is acting accordingly to mitigate the possible damage.
NYT reports that the other big-players are all in business for their own product, but it doesn’t support the news that has no other evidences ; the only news is that Walmart (which is not a big-one, crypto-sector or digital-general) has filed a patent for its own cryptocurrency.
Curiously and intelligently in countertrend the Bank of England Governor who, in summary, stated that the Dollar-based-system is no longer able to stand the different signs of a different shocks characterising, by direction and intensity, current economic policies. Globalization, protectionism, trade wars, hourly minds change by tweets, hiring central banks in schemes with interest rates close to zero and without inflation, damaging growth. Assuming very similar positions similar to the Russia and China ones, Mark Carney quoting Libra considers the idea of a global synthetic currency based on blockchain as a store of value. Not bad.
China, in the light of Libra, continues to accelerate the crypyo-Yuan project; FED announcing the online, by 2024, of its real-time retail payment system in competition with the current one managed by the financial system.
The scenario on Libra at the moment is that they will see the light in the expected time, less or more. It will not be an easy birth : it will be progressive, for territories and services, and the creature will gradually shape up, depending on the mutations that itself will produce in the regulatory system.
Finally, Telegram. The text and ancillary service company, (including Passport, a proprietary personal identification system) who makes privacy its workhouse, has certain features. It is not a big-one, it has 365 mil users today, it has a great product, it has been founded and is carried out by competent people, who are not afraid to carry out their project : they have successfully challenged the censorship and the Russian boycott; now they are providing just-in-time the dissidents of Honk-Kong with a patch to get around China Gov censor actions. As we reported, in January 2018 Telegram launched an ICO for the realization of a monetary token, Gram, and raised 1.7 billion USD. The company has announced that, in the next two months, it will put the cryptocurrency on-line, regardless regulations and whatnot. We are not for users and articulation of service at the Facebook level but I will be a very good test under every point of view, not least the competitive one.
Maybe, and underlining maybe, we are at the dawn of a disruption of monetary systems : the signs are consistent.
This is adaptation of a neuronal Italian/English AI translation by IBM Watson.
Below links for further reading on the concepts expressed above.
Facebook Is Inviting Washington to Regulate Libra — Good Luck With That
Is it a bank? Is it anonymous? Is it an investment? The questions are unending.
Social Intelligence: Everybody Problem with the Self-Sovereign Digital Identity
Archive, october 2018, eachone digital identity
Regulators Have Doubts About Facebook Cryptocurrency. So Do Its Partners.
SAN FRANCISCO - One of the biggest selling points of Facebook's ambitious plans for its new cryptocurrency, Libra, was…
Fed plans to launch real-time payment service by 2024
The Federal Reserve said Monday that it will build and operate a real-time payments system, a long-awaited decision…
United States Patent Application: 0190236564
United States Patent Application 20190236564 Kind Code A1 CANTRELL; Robert ;   et al.
CryptoEconomy Intelligence: ICO Analysis about ICO Launched by Telegram in Texting Sector
Archive, February 2018, ICO and new cryptocurrency by Telegram