When Facebook first publicised its plans to launch a new ‘decentralised’ digital currency in 2019, Libra, many people were surprised at the news. Few months after Libra’s announcement, Facebook released its official whitepaper to the general populace, and eyebrows were raised. Like many people, you may have some cryptocurrencies sat in a wallet without making more for you, or some cash gathering dust in a bank losing value every day. Don’t worry because you can now get… Cryptocurrency advocates remain massed and ready to rush the barricades of traditional finance. Who will rise to lead this charge? It will soon launch a digital yuan on its nascent Blockchain Service…
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When Facebook first publicised its plans to launch a new ‘decentralised’ digital currency in 2019, Libra, many people were surprised at the news. Few months after Libra’s announcement, Facebook released its official whitepaper to the general populace, and eyebrows were raised.
People became more aware of the reality, and imminent debates followed. Many questioned the timing of the launch of Facebook’s new cryptocurrency, which was touted to be a global alternative to existing means of making payments.
Since the launch of Bitcoin in 2009, other third-party platforms have risen to fill in necessary gaps that would boost bitcoin’s adoption and ease its use.
For Facebook, ever since the announcement of the Libra, it seems as if all hell was let loose. From every corner, it has been one level of scrutiny to the next, from analysts to international organisations. Even the US Congress was not left out of the subtle war on Libra.
Classifying cryptocurrencies has been a heated subject for a long time now, and many experts are not new to such debates. Many believe that Libra ought to fall under the category of securities because of its degree of centralisation. Libra’s level of centralisation means that changes can easily be made to it by the owners, which can influence its exchange rate.
There have been several comments that there is no need for Facebook to create a new cryptocurrency when it can just adopt Bitcoin. Citing Cash App, the company integrated Bitcoin into its operation instead of pursuing a new crypto idea.
In October 2019, a caucus member of the US Congress, Warren Davidson, made his thoughts on the digital currency known, and, of course, it was not far from the general opinion. Mark Zuckerberg, the CEO of Facebook, had previously appeared the before Congress to talk about his Libra Project but ended up raising more questions than calming nerves.
During an interview with the co-hosts of Noded Bitcoin Podcast last year, Michael Goldstein and Pierre Rochard, Congressman Warren Davidson appeared to be unimpressed about Libra, and he even labelled it “shitcoin”, when talks veered towards Facebook’s cryptocurrency. Regarding Bitcoin, all he had for it was praises, even reminiscing on his first encounter with the pioneer cryptocurrency back in 2013.
To bolster his point, Davidson mentioned a strategy being used by Libra and that is presenting the stablecoin as decentralised digital money just like Bitcoin. Meanwhile, Libra will be owned by the entity called Facebook. He also recalled the popular privacy issue which has plagued Facebook for a long time now. He asked if people would be comfortable with their transactions being tampered with.
With each passing day, the world waits earnestly to see what the Libra digital asset will become. Despite its many challenges, Facebook’s cryptocurrency remains a hot topic of discussion. Fears linger about what Libra would mean for the crypto community, whether it will be a facilitator or a death bringer.
The coming of Libra has exposed the flaws of traditional cryptocurrencies even more. The electricity consumption of Libra will be far less compared to Bitcoin. Its transactions per second will be in the environment of 1,000, a feat Ethereum and Bitcoin that have 15 and 7 TPS, respectively, can only wish for.
Owners of Libra will be able to send money globally at a cheaper rate and faster too. Additionally, Libra will finally pave the way for the over 1.7 billion unbanked to gain access to the global financial system.
The Libra digital asset is expected to have something other cryptocurrencies do not possess, and that is being pegged to lots of global currencies. Automatically, this will make it a more stable digital currency compared to others.
Bitcoin has had the challenge of mainstream adoption because of its high volatility. This will Facebook’s digital asset address, alongside issues like loss of value and use for illegal activities. Thereby easing the minds of merchants who stay away from cryptocurrencies due to their lack of trust for them, which stems from issues like these.
Bitcoin’s style of conducting transactions is slow. Before a transaction can be approved, six miners must confirm it first. Its scalability is yet another issue hampering its mainstream adoption.
Bitcoin transactions take at least 10 minutes to be confirmed, a length of time even payment processors like PayPal, Visa and MasterCard can beat, as there is almost instant.
Since a good number of payment processors are in partnership with Libra, the digital asset may finally be able to surmount the scalability issues Bitcoin has been unable to overcome.
With the alliance’s Facebook’s cryptocurrency is fostering, the potential of Libra relegating other digital assets to the background cannot be denied. But at the same time, its impending success can be a boost to the crypto community as well.
This will help other cryptocurrencies break the barrier keeping them from going mainstream. Whatever be the prediction, one thing is sure that the future holds a lot of promise.
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Author: Takarudana Mapendembe
Why China’s Cryptocurrency Matters More Than Bitcoin
Cryptocurrency advocates remain massed and ready to rush the barricades of traditional finance. Who will rise to lead this charge?
The Chinese government, if you can believe that.
It will soon launch a digital yuan on its nascent Blockchain Service Network (BSN), dubbed “the blockchain of blockchains.” It’s already testing this digital yuan in several large cities.
Is China doing this to encourage innovation and competition among new money systems? Does it want its citizens to have financial self-sovereignty?
I don’t know anybody who believes that.
China didn’t spend six years working on a blockchain to liberate its people. It wants to control the movement of money and enforce the social credit system.
So you can imagine my surprise when I read that BSN will connect with public blockchains like Ethereum and bitcoin. If that’s true, every person in China will soon have only one degree of separation between the yuan and bitcoin, as well as a framework for using cryptocurrency as part of their normal, daily lives.
Does this mean Chinese citizens will suddenly all buy bitcoin?
I doubt it. The Chinese government will control every aspect of BSN, undoubtedly blocking unapproved swaps of yuan with any currency, national or digital.
But you never know, right?
If the Communist Party thinks pumping bitcoin’s price will undermine the U.S. dollar, they just might loosen the reigns. Or perhaps their developers will create exclusive linkages with Party-favored public blockchains?
Maybe once they make the yuan more accessible and useful for people in other countries, foreign interests will start to use BSN?
Many analysts believe China will force its trading partners to use the digital yuan in exchange for access to its markets or in return for Chinese investments. If that’s true, China will essentially force mandatory adoption on a global scale.
(Granted, it will be the adoption of a closed, restricted, localized, controlled, censorable cryptocurrency issued by the People’s Bank of China…but adoption is adoption, right?)
Even if China confines its cryptocurrency to its borders, its blockchain will give cryptocurrency a greater sense of inevitability.
“Bitcoin sucks but did you hear about what China’s doing?”
— People all over the world
China’s central bank will use the technology to distribute financial stimulus and government benefits. Businesses and households will use personal wallets to send instant, direct payments to each other. Everything will work as easily as AliPay or WeChat Pay, popular payment apps in the country.
If BSN delivers more nimble payments, better capital controls, and stronger anti-money laundering tools, how long do you think other governments will wait before they feel compelled to follow? Central banks have talked about digital currencies for years. Perhaps China will force them to act.
Pressure may even come from voters and special interests. In a post-bailout world, they may like the idea of a national currency that their governments can send directly to their wallets rather than to the banks and financiers.
Could the digital yuan could be crypto’s killer app?
You may have heard that U.S. Congress tried to pass a bill to create a digital dollar. Does that mean the U.S. government wants cryptocurrency?
At no point did anybody propose a cryptocurrency. The idea was for banks to create free accounts for every American. Those accounts would be linked to the Fed’s database. As a result, the government could send money directly to individuals digitally.
While the U.S. Federal Reserve has quite openly solicited input on a digital dollar, its plans call for revamping traditional technology, not introducing a blockchain. A true U.S. cryptocurrency remains a long way off.
As I wrote last year, U.S. Congress Will Pass Blockchain Bills as Soon as Somebody Tells it What ‘Blockchain’ Means. It will take a lot of lobbying to get Congress to understand how this stuff works, let alone why it’s useful.
Yes, members of Congress have introduced 32 crypto bills since last year — but motion is not progress.
Half of those bills tell the government to investigate terrorism, money laundering, and trafficking of humans and drugs using cryptocurrency.
Does that mean Congress thinks cryptocurrency is for terrorists, sex traffickers, drug dealers, and money launderers?
No, but it does mean those are Congress’s biggest concerns right now.
Most of the other bills establish legal and legislative standards for regulating cryptocurrency. Very inside-the-beltway stuff that’s hard to explain.
That might seem like cause to celebrate, but those bills haven’t gone anywhere.
Right now, the cryptocurrency industry doesn’t have enough money and votes to make a difference.
As I wrote in Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency, that will change as traditional finance expands its role in the cryptocurrency industry.
We have already seen money from traditional finance flow into cryptocurrency, first by endowments and pension funds, now by prominent investors and large funds. Lobbyists and campaign contributions will help them rig the rules in their favor.
Wyoming’s government has already started passing pro-crypto laws to get financial companies and blockchain businesses to relocate there. As the industry grows, you can expect more states and countries to woo big-moneyed interests eager to capitalize on this new technology.
All that momentum — that sense of inevitability — will pressure governments to keep up the pace, but that will take time. China is moving much, much faster than they can.
Don’t underestimate the chance that its success will push the U.S. to adopt cryptocurrency. Congress can move quickly when it wants to. Last year, Facebook published a white paper and the U.S. government flipped its wig. We got emergency hearings and a Presidential statement.
What do you think will happen once the digital yuan starts to gain steam?
Author: Mark Helfman