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Only an Idiot Would Use Facebook’s Shady Cryptocurrency

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In its neverending conquest to take over the world, Facebook is building a network of online merchants and financial institutions to support its secretive new cryptocurrency. The Wall Street Journal reports that Mark Zuckerberg’s war machine is looking for $1 billion to fund the secretive stablecoin project, Project Libra, and is talking with heavyweights like Visa and Mastercard to get that cash.

FACEBOOK WANTS $1 BILLION TO FUND PROJECT LIBRA

The company started Project Libra over a year ago as a simple way to transfer money between WhatsApp users. But in true Facebook fashion, it’s grown far beyond that original scope.

The project has expanded to include e-commerce payments on Facebook and other websites as well as rewards for viewing ads, shopping online, and interacting with content.

Facebook cryptocurrency daily users potential

The upcoming Facebook cryptocurrency would reach the platform’s nearly 1.6 billion daily active users. | Source: Wall Street Journal

Facebook’s 2.38 billion monthly active users mean that, at launch, Project Libra would almost immediately compete with rivals Apple Pay (383M) and PayPal (267M). However, there are several reasons why you, and everyone else, should avoid Facebook’s upcoming cryptocurrency at all costs.

WHO TRUSTS FACEBOOK ANYMORE?

Let’s take a walk down memory lane to remember the times that Facebook proved it should be nowhere near your money.

CAMBRIDGE ANALYTICA

There’s no better place to start than Facebook’s Cambridge Analytica scandal – the mac daddy of screw-ups. In 2014, the social media company sold the personal data of  87 million users to Cambridge Analytica without the users’ consent. Doing so was in direct violation of the company’s privacy policies.

Adding your financial data to the massive pile of personal information that Facebook already has on you is asking for trouble.

PLAINTEXT PASSWORDS

If Facebook’s data breaches weren’t enough to scare you, let’s examine how the company handles passwords. Hint: Not well.

In March, Facebook revealed that it had been storing hundreds of millions of account passwords in a readable, plaintext format since 2012. Although there was no evidence that outside parties had access to the passwords, employees could grab them with ease.

Don’t forget about the company’s Amazon snafu that exposed data from 500 million accounts either.

By trusting any amount of money to a company that can’t even secure passwords, you’re effectively placing a sign on your back that says, “Please come and rob me!”

FACEBOOK CENSORSHIP

The beauty of Bitcoin and other cryptocurrency assets is that they’re censorship-resistant. No single party can freeze your bitcoin wallet or block a transaction. Facebook can, and will, block your financial account whenever it pleases. The company’s already begun showing this overreach of power with its recent account bans.

This week, Facebook announced the bans of several individuals including Alex Jones, Louis Farrakhan, and Milo Yiannopoulos. Representatives from the company explainedthat those they banned violated the platform’s policy on hate speech and promoting violence.

While that reasoning may hold, it sets a dangerous precedent for future action. Where do you draw the line on censorship? The banning demonstrates that Facebook has the power to freeze your crypto assets if it doesn’t share your particular views and can block transactions to causes it may not support.

FACEBOOK CRYPTO SHOULD BE DEAD ON ARRIVAL

Facebook’s cryptocurrency comes with all of the downsides of the company behind it and none of the benefits of an actual cryptocurrency. Anyone hyping it up as a step toward mass adoption simply doesn’t understand what makes crypto great.

If you’re looking for a currency with poor security and oppressive censorship, give your money to Facebook. If not, stay far, far away.

Source: Only an Idiot Would Use Facebook’s Shady Cryptocurrency

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ICO-Funded Decentralized Crypto Exchange Caught Plagiarizing Whitepaper

Some on Bitcointalk have concluded that decentralized crypto exchange Localcoin is a scam because they’ve conclusively found that their whitepaper was plagiarized. This hasn’t stopped projects in the past. In a post last month, user ICOEthics raised the alarm and published his findings.

EVERYONE POINTS THE FINGER AT EACH OTHER

A Localcoin representative responded that the company had outsourced their whitepaper. The intent was to explain the derivation of the plagiarism, but it opened a new can of worms. The contractor says that the original whitepaper materials were furnished to them by Localcoin – meaning that Localcoin did the plagiarism.

In a follow-up post, the Localcoin representative posted screenshots of his latest conversation with the apparent author of the whitepaper.

An allegation emerges that Localcoin owes some marketers around $15-17,000.

CCN attempted to contact the apparent whitepaper author, Dexter, but while he read our request for comment, he chose not to respond.

Localcoin's apparent whitepaper author didn't feel like commenting.

Localcoin’s apparent whitepaper author didn’t feel like commenting. Source: Telegram

The questions raised throughout the thread go much deeper than simple plagiarism though. We have to wonder why this project is worth anything if the majority of it is outsourced. Localcoin is an apparent fork of Bitshares and a reboot of a previous attempt at Localcoin.

We’re going to leave out judgement on who was plagiarizing who, or what the real story is here. We reach the same conclusion as one poster on the topic:

“So, we do point the finger to the plagiarized whitepaper owners. We opened this thread so you can discuss and provide evidence to your public and investors and try to convince them that it is not “your fault” and you are “not responsible” for that plagiarized whitepaper. If you wrote or someone else wrote the whitepaper for you, in the end, your company/project is the only one responsible for everything.”

REAL DECENTRALIZED EXCHANGES ARE NEEDED MORE THAN EVER

What’s really at issue with the Localcoin fiasco is the desperate need for reliable decentralized exchanges, and the fact that it is apparently not going to be one. There is some speculation, based on the following screen capture, that the entire project may actually be just one guy.

It's possible that the project is just one person who outsourced everything.

Is Localcoin really operated by just one guy, Fluke Hawkins, who outsourced everything? Source: Bitcointalk

The Binance hack demonstrates more than ever that decentralized exchanges are a necessary evolution, even if some very smart people feel that it won’t be enough. Decentralized exchanges at least take the stupid out of it. For hacks of similar size to happen, numerous participants will have to be doing it wrong.

But decentralized exchanges will need to be easy. They will need to be secure at the user level, and operated on secure devices.

The Localcoin solution might almost be there. It offers much more than just trading. Here’s what the application looks like:

The ambitious project could have changed the way people trade. If only it could be trusted.

The ambitious project could have changed the way people trade. If only it could be trusted. Source: Localcoin App

YOU COULD HAVE BEEN A LEGEND, BUT YOU BECAME A FAILURE

Unfortunately, as you can see, the order books are largely empty. Interest in the project has declined and increasingly, chatter around it falls strictly into two categories: discussion about the nature of the promoters, and the promoters themselves.

The Localcoin token plays some kind of role in token launches on the Localcoin platform.

A bad seed doesn’t grow good fruit. If you can’t trust that the code, the ideas expressed in the whitepaper, and so on, are original, is there anything about the project you can trust?

The timing couldn’t be worse for an upstart decentralized exchange. The industry desperately wants a serious competitor to the centralized monsters.

Source: ICO-Funded Decentralized Crypto Exchange Caught Plagiarizing Whitepaper

Financial Advisory Firm Says Past Market Trends Point to Bitcoin at $20,000 by 2021

Financial advisory firm Canaccord Genuity has predicted that bitcoin (BTC) could hit $20,000 by 2021 based on retrospective projections in an analysis published on May 9.

This prediction is based on a close similarity between the four-year price cycles of bitcoin during the 2011–2015 and 2015–2019 ranges, as shown in the following graph:

Bitcoin price cycles. Source: Canaccord Genuity

Canaccord Genuity points to the bitcoin mining rewards schedule as a possible cause for these four-year price cycles, since the reward drop — which decreases by 50% for every 210,000 blocks mined — has so-far occurred about once every four years. However, the report cautions:

“As always, we caveat this observation with the obvious — this is simply pattern recognition and not reliable fundamental analysis.”

Canaccord Genuity analyst Michael Graham commented on cryptocurrency prices at the beginning of 2018, saying that the upswing in regulatory enforcement would likely have a major impact on the crypto market via dislocation (therefore making it hard for crypto assets to be accurately priced).

Earlier this week, Galaxy Digital Founder and CEO Michael Novogratz predicted that the price of bitcoin would exceed $20,000 by the end of 2020. Novogratz did not provide a specific rationale for his conviction, but did note that bitcoin is in a bull market and is outperforming the price growth of other cryptocurrencies.

At press time, bitcoin is trading at $6,404.55 and is trending up by 4.89% on the day, according to data from CoinMarketCap.

Source: Financial Advisory Firm Says Past Market Trends Point to Bitcoin at $20,000 by 2021

Tim Draper Believes Bitcoin Will Grab 5% of the Earth’s Market Share

While Elon Musk and Jeff Bezos are focused on Mars, billionaire venture capitalist Tim Draper has his feet firmly planted on the ground. Draper might appear to have his head stuck in the clouds with a lofty $250,000 bitcoin price prediction. But from what he tells Fox Business, the early bitcoin investor isn’t stargazing:

“I’m a believer that in four years, something like that, bitcoin will be about a 5% market share of the earth.”

Draper’s Bitcoin War Chest is a Cool $189 Million

He pointed to bitcoin’s best features such as decentralization, transparency, and simply being a better currency than fiat. Draper was an early bitcoin investor, having purchased 30,000 BTC when the price was hovering at $632 per coin. He points out that the investment is worth 10x that amount today, and he’s got no doubt that it’s going much higher.

Draper envisions a future in which bitcoin further disrupts the venture capital business model.

“I eventually want to have a fund where I take in bitcoin and I fund everybody in bitcoin and they pay their employees and suppliers in bitcoin. And then I pay my investors in bitcoin. Because I would then require no acounting, no legal, no bookeeeping, no custody. It would all be done.”

Considering that transactions would be recorded on the blockchain, all relevant participants would be able to see everything. Tim is a big fan of bitcoin but he keeps an open mind about other cryptocurrencies, too. Though he does expect that the number of coins will be whittled down to only the best projects.

Tim Draper has a $250,000 price target on bitcoin. | Source: CoinMarketCap

Tim Draper on Facebook

Everyone knows Facebook is pursuing a $1 billion fund for its new stablecoin, and Draper has been linked to discussions with the company about the initiative. Incidentally, the gloves came off on one of Facebook’s founding members earlier this week, with Chris Hughes calling for the breakup of Mark Zuckerberg’s company. Draper isn’t buying into it.

“If the shareholders will benefit somehow by a breakup, then sure go ahead and do it. But the idea that he has all this centralized power…I think he’s just building a business and it’s a great business. And there are plenty of competitors to him out there. And I’m very pleased that he’s done so well.”

If his tone is any indication, perhaps we will be hearing about a VC investment into Zuckerberg’s new blockchain project.

Meanwhile, the bitcoin price is currently hovering at $6,379. It’s a far cry from Tim Draper’s $250,000 target but if he’s right and it captures 5% of the earth’s market share, the moon will seem a lot closer than it does today.

Source: Tim Draper Believes Bitcoin Will Grab 5% of the Earth’s Market Share

Why Use a Blockchain? By Maria Kuznetsov

As the implications of the invention of have become understood, a certain hype has sprung up around blockchain technology.

This is, perhaps, because it is so easy to imagine high-level use cases. But, the technology has also been closely examined: millions of dollars have been spent researching blockchain technology over the past few years, and numerous tests for whether or not blockchain technology is appropriate in various scenarios have been conducted.

Blockchain technology offers new tools for authentication and authorization in the digital world that preclude the need for many centralized administrators. As a result, it enables the creation of new digital relationships.

By formalizing and securing new digital relationships, the blockchain revolution is posed to create the backbone of a layer of the internet for transactions and interactions of value (often called the ‘Internet of Value’, as opposed to the ‘Internet of Information’ which uses the client-server, accounts and master copy databases we’ve been using for over the past 20 years.)

But, with all the talk of building the digital backbone of a new transactional layer to the internet, sometimes blockchains, private cryptographic keys and cryptocurrencies are simply not the right way to go.

Many groups have created flowcharts to help a person or entity decide between a blockchain or master copy, client-server database. The following factors are a distillation of much of what has been previously done:

Is the data dynamic with an auditable history?

Paper can be hard to counterfeit because of the complexity of physical seals or appearances. Like etching something in stone, paper documents have certain permanence.

But, if the data is in constant flux, if it is transactions occurring regularly and frequently, then paper as a medium may not be able to keep up the system of record. Manual data entry also has human limitations.

So, if the data and its history are important to the digital relationships they are helping to establish, then blockchains offer a flexible capacity by enabling many parties to write new entries into a system of record that is also held by many custodians.

Should or can the data be controlled by a central authority?

There remain many reasons why a third party should be in charge of some authentications and authorizations. There are times when third-party control is totally appropriate and desirable. If privacy of the data is the most important consideration, there are ways to secure data by not even connecting it to a network.

But if existing IT infrastructure featuring accounts and log-ins is not sufficient for the security of digital identity, then the problem might be solved by blockchain technology.

As Satoshi Nakamoto wrote in his (or her) seminal work, “Bitcoin: A Peer-to-Peer Electronic Cash System”: “Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable.”

Private key cryptography enables push transactions, which don’t require centralized systems and the elaborate accounts used to establish digital relationships. If this database requires millions of dollars to secure lightweight financial transactions, then there’s a chance blockchains are the solution.

Is the speed of the transaction the most important consideration?

Does this database require high-performance millisecond transactions? (There is more on this point in our guide: “What is the Difference Between a Blockchain and a Database?”).

If high performance, millisecond transactions are what is required, then it’s best to stick with a traditional-model centralized system. Blockchains as databases are slow and there is a cost to storing the data – the processing (or ‘mining’) of every block in a chain. Centralized data systems based on the client-server model are faster and less expensive… for now.

In short, while we still don’t know the full limits and possibilities of blockchains, we can at least say the use cases which have passed inspection have all been about managing and securing digital relationships as part of a system of record.

Authored by Nolan Bauerle; images by Maria Kuznetsov

Source: Why Use a Blockchain? – CoinDesk

Boston Fed Announces Plans To Design a Blockchain ‘Supervisory Node’ – Anna Baydakova

The Federal Reserve of Boston is starting a new blockchain experiment this summer.

The Massachusetts state regulator has been one of the earliest and most involved government bodies to dip their toe into the new technology. It has been quietly developing blockchain systems since 2016 but has said very little about their plans.

Now the first results of those trials are out and the Boston Fed published a white paper on its proof-of-concepts on ethereum and Hyperledger Fabric. Now it’s getting ready for the next stage, Boston Fed’s vice president of IT Paul Brassil told CoinDesk.

The team is going to look into possible opportunities to set up a “supervisory node,” a regulatory surveillance tool that should be able to connect to various banking blockchains in the future. This node will watch the money flows and settlements between different banks, Boston Fed’s senior vice president Jim Cunha said.

“If you look at the future, there might be one blockchain that is holding securities, one that is holding derivatives, one is holding cash or interbank transfer — how do you as a supervisor watch the traffic on all these platforms that also will be on different technology?”

Cunha adds, that Boston Fed is not looking at these explorations from a policy standpoint and that is expects to work with the central Federal Reserve on these rules. But in the meantime monetary authorities have to keep apace with the technology development.

“We are surrounded by very large financial institutions and banks and we know that all of them are experimenting with the blockchain technology. So the more we can work with them and understand their roadmap, the more we know that we’re moving in a right direction,” Brassil said.

First, the Boston Fed plans to set the agenda and determine the main direction of this experiment and the work on this ideological part will start as early as this summer. Cunha said there are no plans yet for the publicly releasing the project.

“Right now there is very little research on it, so our next goal is to look into what an audit node look like,” Cunha said. “What kind of data we should have access to, how to interact, how to update nodes, can you create operational problems with it? What kind of coding you will need to do to store the information about the movement of funds, so you can do analysis of the flows. We are really starting from scratch.”

In the future, it could be possible that we will see multiple blockchains by various banking institutions, Brassil said, so the Fed’s supervisory node should have a technical capacity “broad enough to cover all the platforms.”

“Startup in the basement mentality”

Boston Fed started blockchain technology trials back in 2016 by experimenting with ethereum. At that time, there were no specialized blockchain developers on staff, so the team of coders educated themselves watching relevant videos on YouTube. Cunha and Brassil called it their “startup in the basement.”

During that period, developers tried to put depository institution balances under the Boston Fed supervision on a blockchain and create mock transactions — a kind of a blockchain-powered back office model. They conducted the testing first on the ethereum blockchain and then on Hyperledger Fabric. In the end, the latter was considered a more suitable option.

Why did they pick Fabric? first of all, a permissioned blockchain is preferable for a government entity. Among other challenges, the necessity to maintain a supply of ether to pay gas in transactions complicated the task and they were also worried about speed limitations.

“The time necessary to create a block was slower than could be tolerated in a production environment,” the white paper said.

Now, with the project of the blockchain back office on hold and the “supervisory node” experiment in the pipeline, Boston Fed is hiring some professionals to ramp up its blockchain testing, Cunha told CoinDesk.

“We are trying to add stuff to do something more robust internally, we need more dedicated resources,” he said. The new blockchain team will not be large, though, only “a handful” of people.

Boston Fed is also actively talking to other monetary authority bodies, though Cunha and Brassil won’t name the particular institutions. That said, they are excited to spread the word about the project.

“We have to share information because the whole industry needs to educate itself,” Cunha said.

Image of the Boston Fed office — courtesy of the Boston Fed. 

Source: Boston Fed Announces Plans To Design a Blockchain ‘Supervisory Node’ – CoinDesk

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Impressive Bitcoin Price Smashes Through $6,000 as Crypto Stars Align – DailyCryptoTimes

The bulls are back. After a prolonged period in a sideways range, the bitcoin price has finally established a powerful uptrend. As BTC  breaks the $6,000 level, enthusiasm is returning in waves to the cryptocurrency industry. Even the Binance hack has failed to put a dampener on a buoyant BTC/USD.

Bitcoin has broken critical resistance at $6,000. | Source: CoinMarketCap

Bulls Are Unstoppable As BTC/USD Clears $6,000 Hurdle

Why all the enthusiasm about the bitcoin price breaking $6,000? This level has been closely watched for some time. A bounce through this technically significant price point has been long-awaited, and there are several bulls desperate to dive into the marketplace. Speaking to Forbes, Tim Enneking of Digital Capital Management is hugely confident that a clear break will lead to further gains in the original digital currency. He said:

“6k will probably [be] a tough nut to crack, but once it definitively falls, there will almost certainly be a strong surge higher.”

It’s not hard to find analysts who think this rally has legs. Here is TradeBlock’s director of digital currency John Todaro outlining once again how strong the momentum is in bitcoin:

“The market over the past 1-2 months has seen significant upward momentum and has brushed off numerous negative headlines within the space. If we break above the $6,000 level, we could continue to trade higher as momentum builds and negative news reports have a limited downward impact.”

Bitcoin Ignores Binance Hack

Binance is the world’s largest cryptocurrency exchange. Because of this, it seems safe to assume that the recent hack of 7,000 BTC should have been disastrous for the BTC/USD price. So far this has not been the case at all. Bullish trends look their most potent when they ignore headwinds and keep surging. This is precisely the characteristic that bitcoin is displaying as it keeps breaking out to fresh yearly highs.

Novogratz Sees Bitcoin at $20,000 in 18 Monthsf

In an interview on Fox Business, Bitcoin perma-bull Mike Novogratz was spreading his usual brand of positivity. As you can see in the following video, he doesn’t have much time for Warren Buffett’s negativity. Novogratz expects BTC/USD to be back to its historic highs of $20,000 within 18 months.

Whether you look at fundamental or technical analysis, it’s hard to come up with a reason to bet against BTC’s bounce through $6,000. Crypto adoption is picking up pacesearch interest is returning, and the dip buying is back.

The main threat looks to be overbought conditions, but shorting bitcoin when it’s in this kind of mood has historically been like trying to hold back the tide.

Source: Impressive Bitcoin Price Smashes Through $6,000 as Crypto Stars Align – DailyCryptoTimes

Banks Across 27 Countries in 6 Continents Hop on R3 Blockchain Pilot – DailyCryptoTimes

Enterprise blockchain software firm R3 and over 50 banks and corporates successfully tested sending transaction confirmations across 27 countries spanning six continents. The historic feat was made possible through the platform Voltron which is built on R3’s Corda blockchain.

The participating banks sent letters guaranteeing that a buyer’s payment to a seller would be received on time.

The global trial included several high-profile banks including Standard Chartered Bank, Alfa Bank, CIB, CommerzBank, Commercial Bank of Qatar, National Bank of Egypt, RBI, Société Générale and The Saudi British Bank.

Voltron is designed to reduce the time it takes to carry out a letter of credit confirmation, a process that typically takes anywhere from 5 to 10 days.

Ninety six percent of trial participants believe that the blockchain-based platform will increase the speed of sending the letters of credit to under 24 hours, and that it will also reduce costs.

According to R3’s announcement,

“Traditional trade finance processes are largely paper-based, time-consuming and prone to risk. According to a survey of trial participants, 86% of firms believe such inefficiencies are increasingly becoming ‘intolerable’ for both corporates and banks. As a result, 61% said they are likely to move trade flows to ‘open account’, a far more risky option for exporters.”

96% of participants in the trial said Voltron will accelerate their Letters of Credit process, improve efficiencies and reduce cost.

Head of CIB Innovations at Alfa Bank, Denis Dodon, says the platform makes it easier to share information and improve workflows.

“Everything is done in the same interface, which is connected to all the workflow participants. Information is shared instantly, which will significantly expedite the transaction, optimizing working with documents, which could be rectified in an instant, should there be any discrepancies identified. Corda based DLT environment creates values to every participant. It really works in a business logic named by R3 as ‘I see what you see.’”

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