The hidden gem in Facebook’s Libra blockchain whitepaper
And two additional things to pay attention to following recent developments in the crypto market
1. Binance just moved $1.2 billion at an overall cost of $0.015
Next time someone tells you there’s still no killer app for blockchain, consider this tweet by Changpeng Zhao, CEO of Binance, the world’s largest crypto exchange by trading volume. It’s a timely reminder of just how disruptive blockchain technology is.
Based on CZ’s tweet, Binance moved $1.2 billion dollars worth of their native BNB token in 1 second at a cost of less than 2 pennies. Yes, that’s right — more than a billion dollars in 1 sec at a cost of $0.015.
Let that sink in for a moment.
Now, just imagine the cost and time it would take to execute the same transaction using legacy financial services.
An alternative open, efficient and decentralized financial ecosystem is getting built these days and traditional banks are scared for a reason. They are about to get disrupted.
2. The Facebook effect: the General Manager of the Bank for International Settlements (BIS) completely reversed his position on the potential and impact of digital currencies
In a stunning u-turn Agustin Carstens, chief of the Bank for International Settlements (BIS), the so-called central bank for central banks, acknowledged that they now support central banks efforts across the globe to develop local digital currencies.
In an interview with the Financial Times Carstens said that “many central banks are working on it (digital currencies); we are working on it, supporting them. And it might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies.”
Remember, this is the same person that just recently claimed that “Bitcoin has become a combination of a bubble, a Ponzi scheme and an environmental disaster” and that “Bitcoin and cryptocurrencies are only useful for illicit or illegal transactions.”
It seems that following Facebook’s blockchain announcement Carstens finally realized that fighting technological progress is a losing battle. The time has come for a better monetary system that is more transparent and prevents the manipulation of local currency.
Perhaps Carstens should have a chat with BitMEX CEO Arthur Hayes, who in an interview with Bloomberg this week was asked about the potential impact of Facebook’s Libra blockchain. His response? “I think it will destroy commercial and central banks.”
Which in turn also brings me to my third point.
3. The hidden gem in Facebook’s Libra blockchain whitepaper
I previously shared my thoughts on the implications of Facebook’s Libra blockchain announcement. Over the past couple of weeks I’ve also read a lot of commentary on Facebook’s move and two things stand out to me.
First, it seems that a lot of the coverage revolved around the minute details of the plan. Yet, the right lens to apply to this announcement should be focused on the Macro, not the micro. Focusing too much on the nuanced technical details that were included in the Libra whitepaper is tempting, but isn’t the right way to fully appreciate this move. Knowing Facebook’s product development process, the nitty-gritty details will change many times before Libra is actually rolled out in 2020.
The bottom line is that one of the largest and most influential tech companies in the world is going all-in into blockchain technology and cryptocurrency with a partner list that includes prominent names such as Visa, Mastercard, Paypal, Uber and Spotify. As I wrote previously, this is a watershed moment for the blockchain industry that will have significant positive knock-on effects. Expect other major tech and finance firms to follow suit soon.
The second thing that I think got a bit under the radar is buried in Facebook’s whitepaper and relates to identity management. On page 9, Facebook briefly mentioned in a couple of sentences an additional aim for the Libra association: “An additional goal of the association is to develop and promote an open identity standard. We believe that decentralized and portable digital identity is a prerequisite to financial inclusion and competition.”
This could turn out to be a real bombshell. The press coverage following Facebook’s announcement naturally focused primarily on the payment protocol that the company is developing. However, if Facebook can also develop a mechanism for users to manage their digital identify using Calibra this could have just as much impact as the Libra payment rails.
Imagine having access to your personally identifiable data and healthcare records on Calibra. This could be a real game-changer in how people trust, manage and verify data and could potentially lead to items such as passports, driving licenses and health records all becoming digitized on the blockchain, making physical identity docs obsolete.
The personal data would also be in orders of magnitude more secure given that it would be stored on an immutable ledger. Every user would have access to their personal data via their private keys. The user will then be in a position to decide who they want to share their data with and for how long. The data would be portable and private. Facebook or anyone else won’t be able to access it without the user’s signed digital signature. A true identity management revolution.
Indeed, the size of the opportunity ahead for blockchain technology is truly astounding. Expect many new disruptive products and services in the coming years.