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Stripe Sees Former BoE Governor Mark Carney Join Board Of Directors

February 22, 2021 by Blockchain Consultants

Stripe, a US-based payments company dedicated to the development of new commerce solutions for the Internet, has recently added a brand new member to its Board of Directors: Mark Carney. Carney joins up with Stripe after having served in the Bank of England (BoE) as one of its crypto pioneers.

Carney’s Still A Big Fish

The official introduction of Carney as a Board Member occurred on Sunday, standing alongside names like Diane Green, Christa Davies, Sir Micheal Moritz, Jonathan Chadwick, as well as the two co-founders of Stripe: John and Patrick Collison.

In the mandatory public statement, Stripe cited Carney’s extensive experience regarding global governance and financial systems, which will be especially useful with the payment firm’s rollout of new climate efforts.

The Mandatory Kind Words

In a public statement, Carney declared that commerce by its very nature has changed within these past ten years. He praised Stripe, as one always does in this situation, stating that the firm has been at the forefront of this change. He said the firm helped enable this digital economy, explaining that it provides both small and large businesses across the globe with both resilient and innovative global payment solutions.

In his mandatory kind words, he declared his eagerness to work alongside Stripe and support it throughout the coming years. He stated that the firm will develop and construct a global infrastructure that will allow the Internet at large to become an engine for inclusive and robust economic growth.

Crypto Hedge Funds Defraud Investors of $100 Million

Stripe itself was founded back in 2011, marketing itself as an all-encompassing payments processing platform dedicated to various forms of online business such as e-commerce. Stripe even dabbled in Bitcoin payments for a time, rolling out BTC payment options back in 2015. However, Stripe had also pulled out of Bitcoin in 2018 due to the platform’s issues with the network in terms of slow processing time and high transfer fees.

Stripe even had its finger in Diem, back when it was first announced and was still known as the Libra Project. Massive pressure from various global governments had completely crippled Libra, before the entire project built itself back up. Time will tell how Libra, or rather Diem, will fare in the future.

Stripe Still Positive About Crypto

It should be noted that John Collison, one of the co-founders of Stripe, has been giving positive sentiments regarding crypto for some time now. The man is hopeful for crypto’s future in general, even if Stripe was forced to pull out thanks to the ever-expanding problem of transaction fees within the top crypto networks out there.

Carney himself had already expressed positive sentiments toward none other than Central Bank Digital Currencies, or CBDCs. Indeed, he expressed a vision of the future back in 2019 at the Jackson Hole Symposium, one where the great US Dollar was replaced by some sort of CBDC as the global reserve currency.

It should be noted that it’s been almost a year since he stepped down from his position of Governor of the Bank of England. Carney was there to help tackle the BoE’s problems regarding Brexit and COVID-19’s initial impact on the global economy.

Stripe Sees Former BoE Governor Mark Carney Join Board Of Directors

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Filed Under: blockchain, cryptocurrency Tagged With: Bank, Bank of England, Bitcoin, board of directors, Brexit, btc, Business, CBDC, Central Bank, crypto, cryptocurrency, Currencies, Currency, Digital, digital currencies, e-commerce, Economic Growth, economy, Hedge Funds, Infrastructure, Internet, Libra, Market, marketing, other, payments, stripe, Trading, transaction fees, us

No Libra-style digital currencies without rules, say EU finance ministers

December 6, 2019 by Blockchain Consultants

European Union finance ministers have agreed to a de facto ban on the launch in the region of so-called global “stablecoins” such as Facebook’s planned Libra digital currency until the bloc has a common approach to regulation that can mitigate the risks posed by the technology.

In a joint statement, the European Council and Commission write that “no global ‘stablecoin’ arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”

The statement includes recognition of potential benefits of the crypto technology, such as cheaper and faster payments across borders, but says they pose “multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty.”

“When a ‘stablecoin’ initiative has the potential to reach a global scale, these concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise,” they add.

All options are being left open to ensure effective regulation, per the statement, with ministers and commissioners stating this should include “any measures to prevent the creation of unmanageable risks by certain global “stablecoins.”

The new European Commission is already working on a regulation for global stablecoins, per Reuters.

In a speech at a press conference, Commission VP Valdis Dombrovskis, said: “Today the Ecofin endorsed a joint statement with the Commission on stablecoins. These are part of a much broader universe of crypto assets. If we properly address the risks, innovation around crypto assets has the potential to play a positive role for investors, consumers and the efficiency of our financial system.

“A number of Member States like France, Germany or Malta introduced national crypto asset laws, but most people agree with the advice of the European Supervisory Authorities that these markets go beyond borders and so we need a common European framework.

“We will now move to implement this advice. We will launch a public consultation very shortly, before the end of the year.”

The joint statement also hits out at the lack of legal clarity around some major global projects in this area — which looks like a tacit reference to Facebook’s Libra project (though the text does not include any named entities).

“Some recent projects of global dimension have provided insufficient information on how precisely they intend to manage risks and operate their business. This lack of adequate information makes it very difficult to reach definitive conclusions on whether and how the existing EU regulatory framework applies. Entities that intend to issue ‘stablecoins,’ or carry out other activities involving ‘stablecoins’ in the EU should provide full and adequate information urgently to allow for a proper assessment against the applicable existing rules,” they warn.

Facebook’s Libra project was only announced this summer — with a slated launch of the first half of 2020 — but was quickly dealt major blows by the speedy departure of key founder members from the vehicle set up to steer the initiative, as giants including Visa, Stripe and eBay apparently took fright at the regulatory backlash. Though you’d never know it from reading the Libra Association PR.

One perhaps unintended effect of Facebook’s grand design on disrupting global financial systems is to amp up pressure on traditional payment providers to innovate and improve their offerings for consumers.

EU ministers write that the emergence of stablecoin initiatives “highlight the importance of continuous improvements to payment arrangements in order to meet market and consumer expectations for convenient, fast, efficient and inexpensive payments – especially cross-border.”

“While European payment systems have already made significant progress, European payment actors, including payment services providers, also have a key role to play in this respect,” they continue. “We note that the ECB and other central banks and national competent authorities will explore further the ongoing digital transformation of the payment system and, in particular, the consequences of initiatives such as ‘stablecoins.’ We welcome that central banks in cooperation with other relevant authorities continue to assess the costs and benefits of central bank digital currencies as well as engage with European payment actors regarding the role of the private sector in meeting expectations for efficient, fast and inexpensive cross-border payments.”

Read more: https://techcrunch.com/2019/12/06/no-libra-style-digital-currencies-without-rules-say-eu-finance-ministers/

Filed Under: digital currency Tagged With: Cryptocurrencies, digital currency, eBay, european commission, european union, facebook, Libra, Malta, payment system, stablecoin, stripe, visa

Why each Libra members mutiny hurts Facebook

October 13, 2019 by Blockchain Consultants

There’s a strategic cost to the defection of Visa, Stripe, eBay, and more from the Facebook-led cryptocurrency Libra Association. They’re not just names dropping off a list. Each potentially made Libra more useful, ubiquitous, or reputable. Now they could become obstacles to the token’s launch or growth.

Fearing regulators’ inquiries not just into their Libra involvement but the rest of their businesses, these companies are pulling out at least for now. None had made precise commitments to integrating Libra into their products, and they’ve said they could still get involved later. But their exit clouds the project’s future and leaves Facebook to absorb more of the blowback.

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Here’s what each of the departing Libra Association members brought to the table and how they could spawn new challenges for the cryptocurrency:

Visa

With one of most widely-accepted payment methods, Visa could have helped make Libra universally spendable. It’s also one of the most prestigious names in finance, lending deep credibility to the project. Visa’s departure leaves Libra looking more like tech companies barging into payments, conjuring fears of their move fast, break things approach that could cause financial ruin if Libra runs into problems. It also could leave Libra with a much weaker presence in brick-and-mortar shops. No one will want to own a cryptocurrency that doesn’t appreciate in value and can’t be easily spent.

MasterCard

The involvement of MasterCard alongside Visa made Libra look like the incumbents adapting to modern technologies. This made it less threatening, and gave cryptocurrency an air of inevitability. MasterCard would have also brought an even wider network of locations where Libra could one day be used for payment. Now MasterCard and Visa might actively work against Libra to prevent their payment methods being made obsolete by Libra and its elimination of transaction fees through the blockchain. Two of Libras biggest allies could become its biggest foes.

PayPal

Facebook has repeatedly told regulators that its Calibra app plus integrations into Messenger and WhatsApp would not be the only Libra wallets, pointing to PayPal . Facebook’s head of Libra David Marcus told Congress when asked about the social network’s outsized power to exploit Libra through its own Calibra wallet that “you have companies like PayPal and others that will, of course, collaborate, but [also] compete with us”. Now Facebook won’t have a scaled payment method it doesn’t own to point to as a likely alternative for people who don’t want to trust Facebook’s Calibra, Messenger, or WhatsApp to be their Libra wallet. The Libra Association also loses PayPal’s enormous network of online merchants that accept it, plus the inroad to integration into its peer-to-peer payback app Venmo. PayPal convinced the mainstream public to trust online payments — the exact kind of trust Facebook desperately needs. The fact that Marcus was also the former president of PayPal but couldn’t keep it in the association raises concerns about the group’s coalition-building prowess.

Stripe

Stripe’s enormous popularity with ecommerce vendors made it a valuable Libra Association member. Together with PayPal, Stripe facilitates a huge portion of online transactions outside of China. Its ease of integration made it a top pick for developers Facebook surely hoped would build atop Libra. Stripe’s exit destroys a critical bridge to the fintech startup ecosystem that could have helped institutionalize Libra. Now the association will have to work on engineering payment widgets from scratch without Stripe’s assistance, which could slow adoption if it ever launches.

There’s a clear reason all these payment processors bailed. Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) wrote a letter to Visa, MasterCard, and Stripe’s CEOs this week explaining that “If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.”

eBay

As one of the longest standing ecommerce companies, eBay bolstered beliefs that Libra could be used to power transactions between untrusted strangers without a costly middleman. It might have also put Libra into practice on one of the top western online marketplaces outside of Amazon. Without destinations like eBay onboard, average netizens will have fewer opportunities to be exposed to Libra’s potential to eliminate transaction fees.

Mercado Pago

One of the lesser-known Libra Association members, Mercado Pago helps merchants receive payments via email or in installments. The idea of connecting financially underserved populations has been core to Facebook’s pitch for why Libra should exist. The Libra Association has been light on the details of how exactly it serves this demographic, relying on the inclusion of partners like Mercado Pago to help it figure this out later. Mercado Pago’s departure leaves Libra looking more like a financial power grab rather than a tool to assist the disadvantaged.

Who’s Left?

On Monday, the remaining Libra Association members will meet to finalize the initial member list, elect a board, and create a charter to govern the project. This forced the hands of the companies above, who had their last chance to depart this week before being pulled deeper into Libra.

Facebook

UNITED STATES – JULY 16: David Marcus, head of Facebook’s Calibra digital wallet service, prepares to testify during the Senate Banking, Housing and Urban Affairs Committee hearing on “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations” on Tuesday, July 16, 2019. (Photo By Bill Clark/CQ Roll Call)

Who’s left includes venture capital firms, ride sharing companies, non-profits, and cryptocurrency companies. They are less tied up with the status quo of payment processing, and therefore had less to lose. The blockchain-specific companies were likely hoping to piggyback on financial giants like Visa to get Libra approved and create more legitimacy for their industry as a whole.

Pegging Libra to just the $ could soothe regulators, a16z says

These partners could help fund an ecosystem of Libra developers, create daily use cases, spread the system in the developing world, and push for alliances between Libra and cryptocurrency players. Facebook will need to fight to keep them aboard if it wants to avoid Libra looking like a unilateral disruption of the economy.

For Libra to actually launch, Facebook needs to make serious concessions and divert from its initial vision. Otherwise if it continues to butt heads with regulators, more members could flee. One option floated by Libra Association member Andreessen Horowitz’s a16z Crypto partner Chris Dixon was for Libra to be denominated in US dollars instead of a basket of international currencies. That might lessen fears that Libra intends to compete directly with the dollar.

It’s become apparent that Facebook will not get its ideal cryptocurrency out the door. This is the brand tax of 100 scandals coming back to bite it. Now the best it can hope for is to get even a watered-down version launched, prove it can actually help the underbanked, and then hope to convince regulators it’s well-intentioned.

Read more: https://techcrunch.com/2019/10/12/leave-the-association/

Filed Under: digital currency Tagged With: eBay, facebook, Libra, Libra Association, mastercard, PayPal, stripe, visa

Embedded finance, or why fintech mega VC rounds have become so common

July 24, 2019 by Blockchain Consultants

Another day, another monster fintech venture round.

This morning, it was personalized banking app MoneyLion, which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this year. Brex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripe, savings and investment platform Raisin, traveler lender Uplift, mortgage backers Blend and Better, and savings depositor Acorns have also raised massive new rounds this year.

That’s all on top of 2018’s record-breaking year for fintech, which saw $52.5 billion of investment flow into the space according to KPMG’s estimate.

What’s with all the money flowing into the fintech world? And what does all this investment portend not only for the industry and other potential entrants, but also for customers of financial services? The answer is that this new wave of fintech startups has figured out embedded finance, and that it is changing the entire economics of disruptive financial services.

First, this isn’t (really) about blockchain

Let’s get one thing out of the way right away, for whenever the topic of financial services and digital disruption come together, some blatherer always yells blockchain from the proverbial back row (often with a bit of foaming at the mouth I might add).

Read more: https://techcrunch.com/2019/07/23/embedded-finance-or-why-fintech-mega-vc-rounds-have-become-so-common/

Filed Under: blockchain Tagged With: acorns, anthony noto, bain capital ventures, Better, blend, Brex, complyadvantage, Lending-Club, MoneyLion, N26, Raisin, Robinhood, Shopify, SoFi, stripe, Uplift

Facebook announces Libra cryptocurrency: All you need to know

June 19, 2019 by Blockchain Consultants

Facebook has finally revealed the details of its cryptocurrency, Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.

Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.

Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting. Your real identity won’t be tied to your publicly visible transactions. But Facebook/Calibra and other founding members of the Libra Association will earn interest on the money users cash in that is held in reserve to keep the value of Libra stable.

Facebook’s audacious bid to create a global digital currency that promotes financial inclusion for the unbanked actually has more privacy and decentralization built in than many expected. Instead of trying to dominate Libra’s future or squeeze tons of cash out of it immediately, Facebook is instead playing the long-game by pulling payments into its online domain. Facebook’s VP of blockchain, David Marcus, explained the company’s motive and the tie-in with its core revenue source during a briefing at San Francisco’s historic Mint building. “If more commerce happens, then more small businesses will sell more on and off platform, and they’ll want to buy more ads on the platform so it will be good for our ads business.”

The risk and reward of building the new PayPal

In cryptocurrencies, Facebook saw both a threat and an opportunity. They held the promise of disrupting how things are bought and sold by eliminating transaction fees common with credit cards. That comes dangerously close to Facebook’s ad business that influences what is bought and sold. If a competitor like Google or an upstart built a popular coin and could monitor the transactions, they’d learn what people buy and could muscle in on the billions spent on Facebook marketing. Meanwhile, the 1.7 billion people who lack a bank account might choose whoever offers them a financial services alternative as their online identity provider too. That’s another thing Facebook wants to be.

Yet existing cryptocurrencies like Bitcoin and Ethereum weren’t properly engineered to scale to be a medium of exchange. Their unanchored price was susceptible to huge and unpredictable swings, making it tough for merchants to accept as payment. And cryptocurrencies miss out on much of their potential beyond speculation unless there are enough places that will take them instead of dollars, and the experience of buying and spending them is easy enough for a mainstream audience. But with Facebook’s relationship with 7 million advertisers and 90 million small businesses plus its user experience prowess, it was well-poised to tackle this juggernaut of a problem.

Now Facebook wants to make Libra the evolution of PayPal . It’s hoping Libra will become simpler to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers and more long-lasting through decentralization.

“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee,” Facebook writes in its Libra documentation. That would be a big improvement on today, when you’re stuck paying rent in insecure checks while exploitative remittance services charge an average of 7% to send money abroad, taking $50 billion from users annually. Libra could also power tiny microtransactions worth just a few cents that are infeasible with credit card fees attached, or replace your pre-paid transit pass.

…Or it could be globally ignored by consumers who see it as too much hassle for too little reward, or too unfamiliar and limited in use to pull them into the modern financial landscape. Facebook has built a reputation for over-engineered, underused products. It will need all the help it can get if wants to replace what’s already in our pockets.

How does Libra work?

By now you know the basics of Libra. Cash in a local currency, get Libra, spend them like dollars without big transaction fees or your real name attached, cash them out whenever you want. Feel free to stop reading and share this article if that’s all you care about. But the underlying technology, the association that governs it, the wallets you’ll use and the way payments work all have a huge amount of fascinating detail to them. Facebook has released more than 100 pages of documentation on Libra and Calibra, and we’ve pulled out the most important facts. Let’s dive in.

The Libra Association — crypto’s new oligarchy

Facebook knew people wouldn’t trust it to wholly steer the cryptocurrency they use, and it also wanted help to spur adoption. So the social network recruited the founding members of the Libra Association, a not-for-profit which oversees the development of the token, the reserve of real-world assets that gives it value and the governance rules of the blockchain. “If we were controlling it, very few people would want to jump on and make it theirs,” says Marcus.

Each founding member paid a minimum of $10 million to join and optionally become a validator node operator (more on that later), gain one vote in the Libra Association council and be entitled to a share (proportionate to their investment) of the dividends from interest earned on the Libra reserve into which users pay fiat currency to receive Libra.

The 28 soon-to-be founding members of the association and their industries, previously reported by The Block’s Frank Chaparro, include:

  • Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
  • Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
  • Telecommunications: Iliad, Vodafone Group
  • Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
  • Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
  • Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Facebook says it hopes to reach 100 founding members before the official Libra launch and it’s open to anyone that meets the requirements, including direct competitors like Google or Twitter. The Libra Association is based in Geneva, Switzerland and will meet biannually. The country was chosen for its neutral status and strong support for financial innovation including blockchain technology.

Libra governance — who gets a vote

To join the association, members must have a half rack of server space, a 100Mbps or above dedicated internet connection, a full-time site reliability engineer and enterprise-grade security. Businesses must hit two of three thresholds of a $1 billion USD market value or $500 million in customer balances, reach 20 million people a year and/or be recognized as a top 100 industry leader by a group like Interbrand Global or the S&P.

Crypto-focused investors must have more than $1 billion in assets under management, while Blockchain businesses must have been in business for a year, have enterprise-grade security and privacy and custody or staking greater than $100 million in assets. And only up to one-third of founding members can by crypto-related businesses or individually invited exceptions. Facebook also accepts research organizations like universities, and nonprofits fulfilling three of four qualities, including working on financial inclusion for more than five years, multi-national reach to lots of users, a top 100 designation by Charity Navigator or something like it and/or $50 million in budget.

The Libra Association will be responsible for recruiting more founding members to act as validator nodes for the blockchain, fundraising to jump-start the ecosystem, designing incentive programs to reward early adopters and doling out social impact grants. A council with a representative from each member will help choose the association’s managing director, who will appoint an executive team and elect a board of five to 19 top representatives.

Each member, including Facebook/Calibra, will only get up to one vote or 1% of the total vote (whichever is larger) in the Libra Association council. This provides a level of decentralization that protects against Facebook or any other player hijacking Libra for its own gain. By avoiding sole ownership and dominion over Libra, Facebook could avoid extra scrutiny from regulators who are already investigating it for a sea of privacy abuses as well as potentially anti-competitive behavior. In an attempt to preempt criticism from lawmakers, the Libra Association writes, “We welcome public inquiry and accountability. We are committed to a dialogue with regulators and policymakers. We share policymakers’ interest in the ongoing stability of national currencies.”

The Libra currency — a stablecoin

A Libra is a unit of the Libra cryptocurrency that’s represented by a three wavy horizontal line unicode character ≋ like the dollar is represented by $. The value of a Libra is meant to stay largely stable, so it’s a good medium of exchange, as merchants can be confident they won’t be paid a Libra today that’s then worth less tomorrow. The Libra’s value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies, including the dollar, pound, euro, Swiss franc and yen. The Libra Association maintains this basket of assets and can change the balance of its composition if necessary to offset major price fluctuations in any one foreign currency so that the value of a Libra stays consistent.

The name Libra comes from the word for a Roman unit of weight measure. It’s trying to invoke a sense of financial freedom by playing on the French stem “Lib,” meaning free.

The Libra Association is still hammering out the exact start value for the Libra, but it’s meant to be somewhere close to the value of a dollar, euro or pound so it’s easy to conceptualize. That way, a gallon of milk in the U.S. might cost 3 to 4 Libra, similar but not exactly the same as with dollars.

The idea is that you’ll cash in some money and keep a balance of Libra that you can spend at accepting merchants and online services. You’ll be able to trade in your local currency for Libra and vice versa through certain wallet apps, including Facebook’s Calibra, third-party wallet apps and local resellers like convenience or grocery stores where people already go to top-up their mobile data plan.

The Libra Reserve — one for one

Each time someone cashes in a dollar or their respective local currency, that money goes into the Libra Reserve and an equivalent value of Libra is minted and doled out to that person. If someone cashes out from the Libra Association, the Libra they give back are destroyed/burned and they receive the equivalent value in their local currency back. That means there’s always 100% of the value of the Libra in circulation, collateralized with real-world assets in the Libra Reserve. It never runs fractional. And unliked “pegged” stable coins that are tied to a single currency like the USD, Libra maintains its own value — though that should cash out to roughly the same amount of a given currency over time.

When Libra Association members join and pay their $10 million minimum, they receive Libra Investment Tokens. Their share of the total tokens translates into the proportion of the dividend they earn off of interest on assets in the reserve. Those dividends are only paid out after Libra Association uses interest to pay for operating expenses, investments in the ecosystem, engineering research and grants to nonprofits and other organizations. This interest is part of what attracted the Libra Association’s members. If Libra becomes popular and many people carry a large balance of the currency, the reserve will grow huge and earn significant interest.

The Libra Blockchain — built for speed

Every Libra payment is permanently written into the Libra Blockchain — a cryptographically authenticated database that acts as a public online ledger designed to handle 1,000 transactions per second. That would be much faster than Bitcoin’s 7 transactions per second or Ethereum’s 15. The blockchain is operated and constantly verified by founding members of the Libra Association, which each invested $10 million or more for a say in the cryptocurrency’s governance and the ability to operate a validator node.

When a transaction is submitted, each of the nodes runs a calculation based on the existing ledger of all transactions. Thanks to a Byzantine Fault Tolerance system, just two-thirds of the nodes must come to consensus that the transaction is legitimate for it to be executed and written to the blockchain. A structure of Merkle Trees in the code makes it simple to recognize changes made to the Libra Blockchain. With 5KB transactions, 1,000 verifications per second on commodity CPUs and up to 4 billion accounts, the Libra Blockchain should be able to operate at 1,000 transactions per second if nodes use at least 40Mbps connections and 16TB SSD hard drives.

Transactions on Libra cannot be reversed. If an attack compromises over one-third of the validator nodes causing a fork in the blockchain, the Libra Association says it will temporarily halt transactions, figure out the extent of the damage and recommend software updates to resolve the fork.

Transactions aren’t entirely free. They incur a tiny fraction of a cent fee to pay for “gas” that covers the cost of processing the transfer of funds similar to with Ethereum. This fee will be negligible to most consumers, but when they add up, the gas charges will deter bad actors from creating millions of transactions to power spam and denial-of-service attacks. “We’ve purposely tried not to innovate massively on the blockchain itself because we want it to be scalable and secure,” says Marcus of piggybacking on the best elements of existing cryptocurrencies.

Currently, the Libra Blockchain is what’s known as “permissioned,” where only entities that fulfill certain requirements are admitted to a special in-group that defines consensus and controls governance of the blockchain. The problem is this structure is more vulnerable to attacks and censorship because it’s not truly decentralized. But during Facebook’s research, it couldn’t find a reliable permissionless structure that could securely scale to the number of transactions Libra will need to handle. Adding more nodes slows things down, and no one has proven a way to avoid that without compromising security.

That’s why the Libra Association’s goal is to move to a permissionless system based on proof-of-stake that will protect against attacks by distributing control, encourage competition and lower the barrier to entry. It wants to have at least 20% of votes in the Libra Association council coming from node operators based on their total Libra holdings instead of their status as a founding member. That plan should help appease blockchain purists who won’t be satisfied until Libra is completely decentralized.

Move coding language — for moving Libra

The Libra Blockchain is open source with an Apache 2.0 license, and any developer can build apps that work with it using the Move coding language. The blockchain’s prototype launches its testnet today, so it’s effectively in developer beta mode until it officially launches in the first half of 2020. The Libra Association is working with HackerOne to launch a bug bounty system later this year that will pay security researchers for safely identifying flaws and glitches. In the meantime, the Libra Association is implementing the Libra Core using the Rust programming language because it’s designed to prevent security vulnerabilities, and the Move language isn’t fully ready yet.

Move was created to make it easier to write blockchain code that follows an author’s intent without introducing bugs. It’s called Move because its primary function is to move Libra coins from one account to another, and never let those assets be accidentally duplicated. The core transaction code looks like: LibraAccount.pay_from_sender(recipient_address, amount) procedure.

Eventually, Move developers will be able to create smart contracts for programmatic interactions with the Libra Blockchain. Until Move is ready, developers can create modules and transaction scripts for Libra using Move IR, which is high-level enough to be human-readable but low-level enough to be translatable into real Move bytecode that’s written to the blockchain.

The Libra ecosystem and the Move language will be completely open to use and build, which presents a sizable risk. Crooked developers could prey on crypto novices, claiming their app works just the same as legitimate ones, and that it’s safe because it uses Libra. But if consumers get ripped off by these scammers, the anger will surely bubble up to Facebook. Yet still, Calibra’s head of product tells me, “There are no plans for the Libra Association to take a role in actively vetting [developers],” Calibra’s head of product Kevin Weil tells me.

Even though it’s tried to distance itself sufficiently via its subsidiary Libra and the association, many people will probably always think of Libra as Facebook’s cryptocurrency and blame it for their woes.

Libra incentives — rewarding early businesses

The Libra Association wants to encourage more developers and merchants to work with its cryptocurrency. That’s why it plans to issue incentives, possibly Libra coins, to validator node operators who can get people signed up for and using Libra. Wallets that pull users through the Know Your Customer anti-fraud and money laundering process or that keep users sufficiently active for over a year will be rewarded. For each transaction they process, merchants will also receive a percentage of the transaction back.

Businesses that earn these incentives can keep them, or pass some or all of them along to users in the form of free Libra tokens or discounts on their purchases. This could create competition between wallets to see which can pass on the most rewards to their customers, and thereby attract the most users. You could imagine eBay or Spotify giving you a discount for paying in Libra, while wallet developers might offer you free tokens if you complete 100 transactions within a year.

“One challenge for Spotify and its users around the world has been the lack of easily accessible payment systems – especially for those in financially underserved markets,” Spotify’s Chief Premium Business Officer Alex Norström writes. “In joining the Libra Association, there is an opportunity to better reach Spotify’s total addressable market, eliminate friction and enable payments in mass scale.”

This savvy incentive system should massively help ratchet up Libra’s user count without dictating how businesses balance their margins versus growth. Facebook also has another plan to grow its developer ecosystem. By offering venture capital firms like Andreessen Horowitz and Union Square Ventures a portion of the reserve interest, they’re motivating to fund startups building Libra infrastructure.

Using Libra

So how do you actually own and spend Libra? Through Libra wallets like Facebook’s own Calibra and others that will be built by third-parties, potentially including Libra Association members like PayPal. The idea is to make sending money to a friend or paying for something as easy as sending a Facebook Message. You won’t be able to make or receive any real payments until the official launch next year, though, but you can sign up for early access when it’s ready here.

None of the Libra Association members agreed to provide details on what exactly they’ll build on the blockchain, but we can take Facebook’s Calibra wallet as an example of the basic experience. Calibra will launch alongside the Libra currency on iOS and Android within Facebook Messenger, WhatsApp and a standalone app. When users first sign up, they’ll be taken through a Know Your Customer anti-fraud process where they’ll have to provide a government-issued photo ID and other verification info. They’ll need to conduct due diligence on customers and report suspicious activity to the authorities.

From there you’ll be able to cash in to Libra, pick a friend or merchant, set an amount to send them and add a description and send them Libra. You’ll also be able to request Libra, and Calibra will offer an expedited way of paying merchants by scanning your or their QR code. Eventually it wants to offer in-store payments and integrations with point-of-sale systems like Square.

The Libra Association’s e-commerce members seem particularly excited about how the token could eliminate transaction fees and speed up checkout. “We believe blockchain will benefit the luxury industry by improving IP protection, transparency in the product life cycle and — as in the case of Libra — enable global frictionless e-commerce,” says FarFetch CEO Jose Neves.

Privacy — at least from Facebook

Facebook CEO Mark Zuckerberg explained some of the philosophy behind Libra and Calibra in a post today. “It’s decentralized — meaning it’s run by many different organizations instead of just one, making the system fairer overall. It’s available to anyone with an internet connection and has low fees and costs. And it’s secured by cryptography which helps keep your money safe. This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.”

By default, Facebook won’t import your contacts or any of your profile information, but may ask if you wish to do so. It also won’t share any of your transaction data back to Facebook, so it won’t be used to target you with ads, rank your News Feed, or otherwise earn Facebook money directly. Data will only be shared in specific instances in anonymized ways for research or adoption measurement, for hunting down fraudsters or due to a request from law enforcement. And you don’t even need a Facebook or WhatsApp account to sign up for Calibra or to use Libra.

“We realize people don’t want their social data and financial data commingled,” says Marcus, who’s now head of Calibra. “The reality is we’ll have plenty of wallets that will compete with us and many of them will not be in social, and if we want to successfully win people’s trust, we have to make sure the data will be separated.”

In case you are hacked, scammed or lose access to your account, Calibra will refund you for lost coins when possible through 24/7 chat support because it’s a custodial wallet. You also won’t have to remember any long, complex crypto passwords you could forget and get locked out from your money, as Calibra manages all your keys for you. Given Calibra will likely become the default wallet for many Libra users, this extra protection and smoother user experience is essential.

For now, Calibra won’t make money. But Calibra’s head of product Kevin Weil tells me that if it reaches scale, Facebook could launch other financial tools through Calibra that it could monetize, such as investing or lending. “In time, we hope to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass,” the Calibra team writes. That makes it start to sound a lot like China’s everything app WeChat.

A global coin

Facebook got one thing right for sure: Today’s money doesn’t work for everyone. Those of us living comfortably in developed nations likely don’t see the hardships that befall migrant workers or the unbanked abroad. Preyed on by greedy payday lenders and high-fee remittance services, targeted by muggers and left out of traditional financial services, the poor get poorer. Libra has the potential to get more money from working parents back to their families and help people retain credit even if they’re robbed of their physical possessions. That would do more to accomplish Facebook’s mission of making the world feel smaller than all the News Feed Likes combined.

If Facebook succeeds and legions of people cash in money for Libra, it and the other founding members of the Libra Association could earn big dividends on the interest. And if suddenly it becomes super quick to buy things through Facebook using Libra, businesses will boost their ad spend there. But if Libra gets hacked or proves unreliable, it could cost lots of people around the world money while souring them on cryptocurrencies. And by offering an open Libra platform, shady developers could build apps that snatch not just people’s personal info like Cambridge Analytica, but their hard-earned digital cash.

Facebook just tried to reinvent money. Next year, we’ll see if the Libra Association can pull it off. It took me 4,000 words to explain Libra, but at least now you can make up your own mind about whether to be scared of Facebook crypto.

Read more: https://techcrunch.com/2019/06/18/facebook-libra/

Filed Under: blockchain Tagged With: Anchorage, ANDREESSEN HOROWITZ, coinbase, eBay, facebook, Farfetch, Libra Association, Libra Cryptocurrency, lyft, Move coding language, PayPal, Ribbit Capital, Spotify, stablecoin, stripe, Thrive Capital, Uber, Union Square Ventures, visa

Less than 1 year after launching its corporate card for startups, Brex eyes $2B valuation

June 3, 2019 by Blockchain Consultants

Brex, the fintech business that’s taken the startup world by storm with its sought-after corporate card tailored for entrepreneurs, is raising millions in Series D funding less than a year after it launched, TechCrunch has learned.

Bloomberg reports Brex is raising at a $2 billion valuation, though sources tell TechCrunch the company is still in negotiations with both new and existing investors. In response to a request for comment, Brex co-founder and chief executive officer Henrique Dubugras told TechCrunch they have no news to announce at this time.

Kleiner Perkins is leading the round via former general partner Mood Rowghani, who left the storied venture capital fund last year to form Bond alongside Mary Meeker and Noah Knauf. As we’ve previously reported, the Bond crew is still in the process of deploying capital from Kleiner’s billion-dollar Digital Growth Fund III, the pool of capital they were responsible for before leaving the firm.

Bond, which recently closed on $1.25 billion for its debut effort and made its first investment, is not participating in the round for Brex, sources confirm to TechCrunch. Bond declined to comment.

Brex, a graduate of Y Combinator’s winter 2017 cohort, has raised $182 million in VC funding, reaching a valuation of $1.1 billion in October 2018 three months after launching its corporate card for startups and less than a year after completing YC’s accelerator program.

Most recently, Brex attracted a $125 million Series C investment led by Greenoaks Capital, DST Global and IVP. The startup is also backed by PayPal founders Peter Thiel and Max Levchin, and VC firms such as Ribbit Capital, Oneway Ventures and Mindset Ventures, according to PitchBook.

The company’s pace of growth is unheard of, even in Silicon Valley, where inflated valuations and outsized rounds are the norm. Why? Brex has tapped into a market dominated by legacy players in dire need of technological innovation and, of course, startup founders always need access to credit. That, coupled with the fact that it’s capitalized on YC’s network of hundreds of startup founders — i.e. Brex customers — has accelerated its path to a multi-billion-dollar price tag.

Brex doesn’t require any kind of personal guarantee or security deposit from its customers, allowing founders near-instant access to credit. More importantly, it gives entrepreneurs a credit limit that’s as much as 10 times higher than what they would receive elsewhere.

Investors may also be enticed by the fact the company doesn’t use third-party legacy technology, boasting a software platform that is built from scratch. On top of that, Brex simplifies a lot of the frustrating parts of the corporate expense process by providing companies with a consolidated look at their spending.

“We have a very similar effect of what Stripe had in the beginning, but much faster because Silicon Valley companies are very good at spending money but making money is harder,” Dubugras told me late last year.

Stripe, for context, was founded in 2010. Not until 2014 did the company raise its unicorn round, landing a valuation of $1.75 billion with an $80 million financing. Today, Stripe has raised a total of roughly $1 billion at a valuation north of $20 billion.

Dubugras and Brex co-founder Pedro Franceschi, 23-year-old entrepreneurs, relocated from Brazil to Stanford in the fall of 2016 to attend the university. They dropped out upon getting accepted into YC, which they applied to with a big dreams for a virtual reality startup called Beyond. Beyond quickly became Brex, a name in which Dubugras recently told TechCrunch was chosen because it was one of few four-letter word domains available.

Brex’s funding history

March 2017: Brex graduates Y Combinator
April 2017: $6.5M Series A | $25M valuation
April 2018: $50M Series B | $220M valuation
October 2018: $125M Series C | $1.1B valuation
May 2019: undisclosed Series D | ~$2B valuation

In April, Brex secured a $100 million debt financing from Barclays Investment Bank. At the time, Dubugras told TechCrunch the business would not seek venture investment in the near future, though he did comment that the debt capital would allow for a significant premium when Brex did indeed decide to raise capital again.

In 2019, Brex has taken several steps toward maturation. Recently, it launched a rewards program for customers and closed its first notable acquisition of a blockchain startup called Elph. Shortly after, Brex released its second product, a credit card made specifically for e-commerce companies.

Its upcoming infusion of capital will likely be used to develop payment services tailored to Fortune 500 business, which Dubugras has said is part of Brex’s long-term plan to disrupt the entire financial technology space.

How the 22-year-old founders of Brex built a billion-dollar business in less than 2 years

Read more: https://techcrunch.com/2019/05/29/less-than-1-year-after-launching-its-corporate-card-for-startups-brex-eyes-2b-valuation/

Filed Under: blockchain Tagged With: barclays investment bank, brazil, Brex, canva, DST Global, eCommerce, economy, elph, entrepreneurship, finance, IVP, Kleiner Perkins, Mary Meeker, Max Levchin, money, Mood Rowghani, Noah Knauf, PayPal, Peter Thiel, Private Equity, Ribbit Capital, software platform, stanford, Startup company, Startups, stripe, Venture Capital, Virtual reality, Y Combinator

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