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Why Facebook’s Libra coin backfired?

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Libra Coin

Facebook has a lot of history, most of it is not pretty.

From the allegations of stealing the company from friends to the allegations of breaching privacy from its dopamine addicted feeders, most of Facebook’s history is marked by dark milestones.

Governments turned a blind eye so far, because that’s the right thing to do with the company that can ship jobs in a blink of an eye, and those jobs mean taxes and revenue.

But then Facebook ventured into crypto, an attempt to undermine the FIAT financial monopoly of Governments all over the globe. Facebook may not have thought through the repercussions of that decision.

By now everyone has heard about Libra, however, for the benefit of the few who may not, here is a quick recap:  Facebook formed a company called CaLibra that is registered in Switzerland (where else!). CaLibra is gearing up to issue its own cryptocurrency called Libra and plan to launch it by the year 2020. They have been facing backlash from authorities and the bitcoin evangelists.

How many times do we see authorities and bitcoin evangelists speaking against the same thing? Facebook deserves the credit here for bringing these two very opposite forces to agree on one thing, that is, to hate Facebook’s crypto move.

Bitcoin evangelists hate it because Facebook says Libra is decentralized, however, the whitepaper has a clear caveat about the possibility of forever remaining a private blockchain. 

Private blockchain can be distributed but never decentralized.  This in our view is a basic distinction.

Beyond the blatant misinformation, their plan to create a parallel fiat system is a slap on the face of the Governments who forgave its intrusive practices in the past.

Naturally, both groups are furious.

What happens when Libra pegs against Bitcoin?

bitcoinFacebook plans to peg Libra plans against Fiat and other low volatile assets to maintain stability.  

Let’s say Libra grows into a billion member giant. That will make Facebook larger than any financial institution in existence.  When they garner such a monopoly over the financial system, what happens to the fiat if all of a sudden they decide to peg against Bitcoin?

That is an underlying concern that banks and Governments are battling with, even though no one is coming outright to say it.

If Facebook eventually decides to use Bitcoin to back its Libra coin, that could disrupt the monopolistic control over money that fiat has been enjoying for ages.

On the other end, such a move will send Bitcoin (and other dependable crypto) to the moon.

They can freeze users account, with money in it, that’s not decentralized 

Because, and we cannot reiterate this enough, Libra is not a decentralized blockchain, Facebook can change the rules of engagement as and when they wish.  That means, they can one day declare that speaking your mind is against their policy and ban you from Libra’s network.  

What happens to the money you may have in your Libra account?  

What happens to all the money so seized?  Who gets to keep it? Will they burn all of the seized balances?  Under what authority?

What happens when court orders to freeze accounts?  

Libra-Freeze-Bank-AccountWe are assuming CaLibra, as an entity, will have to oblige court orders to freeze accounts.

Let’s say, CaLibra maintains that since it is a (not) decentralized network, the participating members will decide on freezing decisions.  All participating members are traditional business giants, they will never go against court orders. Given that, they will have to execute court orders – we are presuming they have some kind of backdoor to freeze accounts.

That is a concern of most blockchain and crypto evangelists.  

CaLibra is registered in Switzerland, will it be bound by the laws of other countries?  If not, why would any country take the risk of allowing a financial instrument that is not bound by its own laws?

They say no real-world ID is required, and that’s not true

Let’s forget for a second what we know about Facebook, which is, they don’t need permission to use our data, that is, they already have access to who we are, what we like, who our friends are, etc.  

There were allegations that Facebook’s data was used to build algorithms that can predict your sexual orientation even before you know and they can caLibrate their ads to appeal to those subconscious queues. 

In the context of Libra, they are saying that you won’t need ID to use Libra, however, you will need a government-issued ID to open their CaLibra wallet. CaLibra wallet is the only way to acquire Libra in exchange of fiat.

So. 

“You don’t need ID to use Libra as long as you verify your ID to get Libra. Go figure.”

What about ‘right to forget’ under GDPR? 

If you want to buy Libra, you have to deposit fiat. How do you do that? You link your bank account. When you link your bank account, your identity is known. It’s not only known – it is now on blockchain where it can live forever.

What happens if someone decides to be forgotten?

How will Libra handle that?  If it can truly delete the accounts out of existence, then why call it blockchain or decentralized?

“If you can delete the history, then what you have is not a blockchain!”

How do you trust developers with access to what could end up being one of the largest financial pools?

Developers-TeamLibra has its own language called Move.  

This means, only a select group of developers will have insight into its working and probably have backdoors built in, in case of emergency.

A backdoor that exists to tackle emergencies is not guaranteed to be used only for that purpose, as such, it leaves a big question unanswered about the accountability (and who is enforcing that accountability) of the Libra financial system.

If Facebook asks users to put their trust on them, then it goes against everything Blockchain and cryptocurrencies are about: trust decentralization.

All of these issues could impose bans on Facebook in some jurisdictions

Authorities don’t like it when someone dabbles with their monopoly over money.  

The issues raised above relating to privacy, security, identity management, GDPR issues and cryptocurrency bans in some locations that Facebook operates in, might put Facebook in a compromising position.  The good news is that CaLibra is established as a separate entity, in case they run into these expected turbulent waters.

Conclusion

UsersCentralized nodes structure, hefty price tag for voting voice, contradictory ideology behind the identification requirements, scammy past, potential hurdles from Governments across the globe, potential for greater intrusion into personal lives and many other negative possibilities make Facebook’s Libra coin a bitter pill to swallow.

Facebook does have one antidote to all these woes, and that is its size.

Facebook has close to 2 Billion users on its platform and on boarding even a fraction of these users will make Libra coin the most popular crypto in the world overnight, even more so than Bitcoin.

This could help the cause of bitcoin and conversation around decentralization, however, might subject Facebook to undue hardship in the near future. 

Thank you for reading the article.

Cover Image Source: “Libra Cryptocurrency Gold Coin by Facebook”by orgalpari is licensed under CC BY 2.0

Subscriber-Banner-smallIMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

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About the author

RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.

RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new blockchain technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.”  Of course, that is just his opinion.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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All Roads Lead to $100K Bitcoin: Various Perspectives that Support $100K BTC

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Bitcoin to 100K

Bitcoin to 100K

There are a lot of theories in the crypto space that argue that Bitcoin will reach $100,000 before the next halving.  Some even argue that we could reach that price point before the end of 2021.

Here we have compiled a few perspectives that support a higher price point for Bitcoin.

IF we missed any, please let us know and we will be glad to add it for others to read.

Bitcoin’s ability to reward savers

If you saved $100,000 throughout 2017, today its value would have been $94,000, a total loss of 6% due to inflation. That is without considering the fees and hidden charges that institutes charge.

Even if you invested in the S&P 500 for 12 months at $8333 each month throughout 2017, your portfolio value today would have been $110,000.

If you saved $100,000 in Bitcoin throughout the 2017 (prices ranged from $920 through $14,000 during Jan 2017 through December 2017).  For the purposes of this comparison we are using the last week prices from each month as available on Coinmarketcap historical snapshots.

$100,000 invested in equal amounts throughout 2017 would look something like this.

Bitcoin to 100K

Since 2017, Bitcoin price has crashed and rebounded.  At the lowest point of the crash of $3000 per bitcoin, your portfolio value would have been $144,000.

In today’s average price of $16000 per bitcoin, your $100,000 savings would have been worth $770,000.

Due to its increasing demand and reducing supply, Bitcoin is expected to reach $100,000 in the next 4 years. Some models show that bitcoin will be worth $1 Million by 2030.

Only time will tell us whether bitcoin reaches these prices or not, but point being, no other asset of any class has crazy growth predictions like Bitcoin has.

Stock-to-flow ratio

According to Plan B, Gold had the highest stock-to-flow (SF) ratio of 62.  That is, it will take 62 years to produce the gold that is currently in the market.  In other words, you cannot willy-nilly inflate the supply in a year or two due to how scarce gold is and how difficult it is to find and mine it.

Current SF for Bitcoin is 25, however, by the end of 2020 or 2021, this could jump to 50.  By the next halving in 2024, Bitcoin could surpass the SF of gold.

According to Plan B, “The predicted market value for bitcoin after May 2020 halving is $1trn, which translates in a bitcoin price of $55,000. That is quite spectacular. I guess time will tell and we will probably know one or two years after the halving, in 2020 or 2021. A great out of sample test of this hypothesis and model.”

However, following the trajectory of Plan B’s SF analysis, Bitcoin could easily reach $1 Million dollars by 2030, according to some commenters.

Stimulus and unlimited printing of fiat

COVID has exposed another flaw in the fiat system.  It is that governments can print as much money as they wish whenever they wish to do so.

Whenever governments resort to simply print money without having a basis in asset value or growth in GDP, it erodes the value of the fiat in circulation.

This is what happened to Argentina, Venezuela, Zimbabwe and more.  

The US dollar has lost over 99.97% value since 1900.  For instance, whatever you could buy with $1 in 1900 will need $31 today.

COVID has added salt to the wound for fiat.  It exposed the blatant fact that governments can and will print money to their whim without regard to the inflation and impact on savers.

This increased supply in fiat helps stock market and market liquidity which in itself helps people who are invested in the stock market and other vehicles which is generally the wealthier part of the society.

Other factors strengthening the crazy Bitcoin price predictions

  • Institutional FOMO, for instance, Square, PayPal, Grayscale, etc., entering the market
  • Easier onboarding of new retail investors
  • Greater technologies and DApps being built on Bitcoin 
  • Great DeFi services to lend and borrow money
  • Globally accepted single denomination that does not need to be converted in the future (with enough places accepting bitcoin)

What other factors do you think will contribute to Bitcoin’s shooting past the $100,000 barrier?

Let the FOMO begin…

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

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Crypto Roundup: All Your YouTube Influencers in One Place

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Crypto Roundup

Visit our Crypto Roundup section daily for a dose of all your favorite Crypto YouTube influencers in one place.    

Worried about missing updates from your favorite YouTube crypto influencers?  

Welcome to the Crypto Roundup.  

On this page, we will post a quick summary of the videos from some of the most popular YouTube crypto influencers.

Ivan on Tech  Altcoin Daily

Crypto Zombie Box Mining

Ellio Trades Lark Davis

Data Dash Bitboy Crypto

MMCrypto Chico Crypto

Altcoin Daily

Video title: Bitcoin Will Be OVER $20,000 By Christmas 2020! BIGGEST WEALTH SHIFT OF OUR LIFETIME! Cryptocurrency

Date: 19-Nov-20

  • World’s biggest wealth shift of our lifetime is happening right now and no mainstream media is talking about it, except CNBC.

  • Preston Pysh predicted on August 26th that: “Bitcoin should be reaching its all time high by Christmas.”

  • If you are looking to buy a dip, there may not be one.
  • Ricardo Salinas Pliego, a mexican billionaire, has just revealed that 10% of his liquid assets are into bitcoin.

Lark Davis

Video Title: STOCKS HIT NEW HIGHS! WILL COVID VACCINES LEAD TO MEGA PUMP IN 2021? [Are You Ready?]

Date: 19-Nov-2020

  • Stock markets and bitcoin pumps higher on the news of the second successful covid vaccine.
  • There could be more chances for the new stimulus. Means more inflation, more debt and simultaneously pumps stocks, gold and bitcoin.

Crypto Zombie

Video Title: BITCOIN $18.5k TOP!!?! DON’T BE FOOLED!! HODL FOMO BEGINS!!! $TRILLIONS FLOOD!!

Date: 18-Nov-2020

  • Overall sentiment of Bitcoin has changed drastically from ICO craze in 2017 to a time where people are FOMOing to own more bitcoin.

Ivan on tech 

Video Title: BIG WARNING TO ALL HODLERS!!!!!!!!! DO NOT GET REKT!!! BITCOIN $18,500 REJECTED – NOW WHAT?

Date: 18-Nov-2020

  • Ivan expects bitcoin to shoot past $20K resistance before end of this year, giving it 85% probability

Chico Crypto

Video Title: World’s Most Powerful Turn BULLISH on BITCOIN

Date: 19-Nov-2020

  • All those who hold big bags of Bitcoin will come out of the shadows to talk up the Bitcoin rally, a $20K bitcoin could be on the cards before the end of this year
  • Ethereum mining could act as a big catalyst for Ethereum’s price
  • Big companies like google could play a bigger role in mass adoption of crypto

Let the FOMO begin…

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Lessons from the Veteran HODLERS to the Newbies!

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Lessons in Crypto

For all those who entered the crypto market after the 2017 bull run – here are few lessons from the HODLERS from the last bull run(s).

This is our attempt at making all you newbies aware of the mistakes veteran cryptoers did.

Let’s get started…

Don’t FOMO in to all the hype

FomoIt’s hard not to FOMO in crypto.  The trick is to make sure you don’t lose your shirt in crazy bets.  Always limit your bets to what you are comfortable losing.

The common ways you can become victim of FOMO are:

  • Following your favorite YouTuber without actually doing your own research on the project.
  • Investing into projects at the top.
  • Believing in promises of 100x or 1000x without any substance behind those claims.

HODLing far too long

Remember why you are into crypto – to make the money.

Never fall in love with your crypto, and HODL the tokens even when they are 10x and more.

Have a strategy to take your capital out before you become a HODLer.  

If you believe the project really has what it takes to go beyond 100x and more, just sell in instalments so as to not miss the ride.

One of the best ways to HODL is to take your capital in full and profit in tranches.

This rekt story will give you a right perspective of what it looks like, it’s one of many:

Don’t put all your eggs in one basket

Never go all in on one project. No matter how strong the project may look, even the projects with strong fundamentals don’t do well sometimes. 

And, you will be kicking yourself watching other projects go up and your portfolio just doesn’t seem to make a move.

And don’t over do it and have a portfolio with over 100 projects either. It is very difficult not to have invested in more than 15 projects but anything less than 20 is a good way to go, in our opinion. 

Put aside the share of Profits for Taxes.

One way you can get a good night’s sleep is by paying taxes. 

Always keep a habit of putting aside a % of your profits in USDT or other stable coins, as a reserve to take advantage of market volatility and also to meet your tax obligations. 

Exchanges are more evil during bull run

Foreign ExchangesDon’t trust exchanges. Yes we already know that, but they play more games during bullrun, some intentional and some technical. 

Many exchanges tend to go under maintenance when the prices shoot up too high too soon (Coinbase?), and you can’t sell. 

And the shady exchanges scam out before you know.

Regulators seem interested when the market cap of these projects goes through the roof, which then adds FUD around the project crashing the prices.  

Exchange may freeze funds pending investigations when such issues arise.

Take for example OKEx. Users are unable to withdraw their assets from the exchange for almost a month now, not certain if they ever will, and all that started with the legal dispute.

Never fall for Arbitrage gains

Arbitrage is when you buy in one exchange at a lower rate and sell on the other for a higher rate to take some profits. 

Some shady exchanges show a lot higher prices than the other genuine exchanges and when you deposit your assets to sell at those prices there won’t be actual volume to execute the trade. You may be stuck with either a high fee for withdrawal or other funky rules to take your own money out. 

Remember, there is no free Giveaway

Free CryptoScammers rise with the rising market.  

When the crypto market buzzes with all time highs – scammers cash in big time on newbies.

The most lucrative scam in crypto is ‘Free Giveaway’. Whether it be through YouYube ads or discussion groups and wherever they can get your attention.  Read this article on various sophisticated scams that are being deployed.

We hope these lessons help you through your trades and crypto life.  Stay safe and always DYOR.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

Continue Reading

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