From the Cypher 4 — July 23rd, 2019
What you need to know from the last week in crypto
Big names in crypto visited lawmakers in Washington last week and the industry has made some major strides on infrastructure development. Let’s jump in.
◆ Libra Gets Grilled ◆
David Marcus, Head of Facebook’s Calibra, visited Capitol Hill last week to field questions on the social media giant’s new cryptocurrency, Libra.
All in all, it wasn’t pretty. Marcus encountered a barrage of questions from lawmakers regarding Facebook’s flagrant abuse of user data, effectively casting major doubts around whether the company could be trusted with the user data it will inevitably accumulate. While the network is intended to be turned over to the Libra Foundation within 5 years, Calibra is a private company owned by Facebook which is developing the entirety of the Libra infrastructure, including its wallet. This would deliver a treasure trove of user transaction data on potentially 2 billion users; disconcerting to say the least
While Libra came away a little worse for wear, Bitcoin emerged a winner in light of the former’s issues with centralization, required permissions, and Libra’s holding of fiat currencies.
◆ A Stablecoin is Born ◆
Popular crypto exchange Huobi Global has partnered with Stable Universal and Paxos to release a new USD stablecoin, HUSD.
Built as an ERC-20 token on top of Ethereum, the asset is designed to be an efficient “fiat on-ramp” to reduce friction and limit investor’s risk exposure to volatile cryptomarkets. With the experienced Paxos team providing custody for the 1:1 collateralized assets, we are seeing crypto investment platforms continue to mature and key partnerships deepen. While regulation continues to move at a snail’s pace, infrastructure is advancing rapidly, preparing for an influx of institutional capital once the requisite regulatory foundation is implemented.
◆ Why Can’t We Be Friends? ◆
Leading China-based blockchain platforms Ontology (ONT) and NEO (NEO) have partnered to establish an interoperable protocol between the two chains.
The move comes amidst a growing trend of interoperability in the space. Major projects such as Cosmos, Polkadot, and Metronome have all devised their own approaches to enabling cross-chain transactions that expand the scope of development and potential use cases for integrated chains. The move by ONT and NEO, both of whom were designed with a focus on supporting DApp development on their platforms, is a strength in numbers approach to keeping pace with other projects who were focused on interoperability from their genesis.
From a macro-perspective, we are seeing early signs of consolidation in the space. With the overall vision being the establishment of a next-generation internet, it is becoming increasingly apparent that cooperation and compatibility is the best road forward. Eventually, this cooperation could call into question the need for so many independent blockchain platforms, and lead to a marrying of projects under a single entity.
◆ Right Bakkt At Ya! ◆
Bakkt is back in the headlines as the Intercontinental Exchange (ICE) owned entity is set to launch user acceptance testing for its bitcoin futures contracts today.
Hampered by regulatory delays, the testing today of both daily and monthly contracts is a vital step forward for a company with ambitious goals of physically-settling bitcoin futures in the U.S. If successful, the contracts would usher an influx of institutional capital into the crypto markets. There has been a lot of talk around these topics, but little to show for it thus far. Let’s hope the Bakkt team can maintain momentum and execution along its proposed roadmap.
◆ Rising Sun Payments ◆
The Japanese government has announced plans to develop an “international network for cryptocurrency payments” similar to SWIFT.
Originally proposed by Japan’s Ministry of Finance and the Financial Services Agency (FSA), development of the network will be overseen by the Financial Action Task Force (FATF). There still remains significant ambiguity around the networks exact function, but the proposal is in line with Japan’s efforts to stimulate economic growth through digital currencies.
Japan is arguably the most forward-thinking Asian country in regards to crypto adoption, so it’s no surprise that this network finds its genesis in the Land of the Rising Sun. With China becoming increasingly hostile to crypto communities operating in the country, it is essential that Japan continue carrying the crypto torch in the region.
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