4 part series on Lightning Network Part 1: First the Rest then the West. 

Lightning Network matters; if Bitcoin is ever going to become money it needs massive scalability that will enable totally new types of transaction such as micropayments, real time payments and mobile money for the unbanked. Linear scaling is not enough. It must be the kind of non-linear scaling that powered the Internet – like 100x […]

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Bitcoin fans had a dream about Institutional money that turned out to be a nightmare

Many Bitcoin fans dreamt that Legacy Finance Institutions would lead the way to mainstream adoption of Bitcoin. This dream was the narrative that drove the last Bitcoin bull market. Now that we maybe in a Bitcoin bear market, that dream has turned out to be a nightmare. Daily Fintech subscribers were told HOW this crypto-in […]

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This Bitcoin bear market will be good for builders and bad for speculators.

Yes, I think Bitcoin (and other crypto) is in a bear market. I have no idea how low we will go or how long it will take. The previous bull/bear markets offer some guidance each bull market has been driven by different types of people: -2013 was the cypherpunks (deeply techie and anti authoritarian). -2017 […]

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How this Bitcoin bull market will end and the next one will start. 

No I do NOT know the timing or how far each bull market will go. Sorry. Anybody who tells you they can probably also has a bridge to sell you. I can tell you how this Bitcoin bull market will end and the next one will start. This Bitcoin bull market will end with two […]

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Bitcoin hoarding aka HODL is logical but prevents it becoming a medium of exchange.

Tesla Model 3 price was shown above Bitcoin on CoinMarketCap for many days. A few months ago, you needed two Bitcoin to buy one Tesla Model 3. As I look at CoinMarketCap today I can see selling one Bitcoin , buying one Tesla Model 3 for $37,990 and having lots of spare change. Or should I HODL […]

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Could the Sidetree decentralized identity protocol enable both privacy and personalization? 

I am a bit of a privacy nut. I don’t like being tracked and I don’t like anybody else controlling my identity. Yet I know that being tracked can create personalized services that are useful to me. That is why I am a fan of decentralized identity on the blockchain. (see Part 3/Chapter 6 of […]

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Ten highlights from Mainnet2020 by Messari

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I had the pleasure to attend some sessions from the Mainnet 2020 event last week. Ryan Selkis`s guitar playing as an alternative signal to wrap up the talk or the panel, was one of my favorites.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

Messari, looks like a data, news, research business in the cryptocurrency, blockchain space. But what is not evident (yet) to everyone is their vision and how they are executing on it. They are very much focused on Transparency and an open-source approach. Ryan said Messari wants to become the Edgar in the new economy.

EDGAR is the Electronic Data Gathering, Analysis, and Retrieval system used at the U.S. Securities and Exchange Commission (SEC).

The Messari Disclosures Registry has been launched already. It is an open source disclosure database that aims to become a central repository for project information, freely accessible.

Messari is API centric because the vision is to become an enabler for different players in the new economy to build tools, analyze and educate through the Messari APIs.

My Ten highlights from 4 hours of attending Mainnet2020



1-One of the top objections to cryptocurrencies – volatility – got taken care of from COVID19.

2- On top of that, in this no-yield macro-environment, another objection got taken care of. And the Irony is that staking is on the rise and we are moving towards POS (proof-of-stake) as a preferred consensus mechanisms. Staking grew 1300% in 1.5 years.

3- Stablecoins may seem at first site just an alternative to digital payments. They are actually much more. Their use case is relevant to advertising and to e-commerce.

Also, if we look 5-10yrs into the future, there will be no fees in digital payments. So, what is the business model of the Transferwise`s of the world? Digital payments will no escape the zero-fee spiral.

5- The digital assets space continues to receive endorsements and oppositions; and this will not change soon. The wealth management division of Goldman Sachs put out a presentation that advised clients to avoid Bitcoin in their portfolio holdings. Cryptocurrencies are not an asset class.

At the same time, Rentech (the hedge fund that continues to be able to charge 4/40) is stepping into Bitcoin futures; coupled with the endorsement of billionaire Paul Jones who publicly stated allocating 1% of his wealth.

6- Ark Invest, the first publicly traded ETF that allocated to Bitcoin early on, is launching a private alternative offering dedicated to cryptocurrencies. Their investment thesis is that a few cryptocurrencies will capture the majority of value.

7- Paxos is a regulated financial institution, unlike other issuers of stablecoins. PAX, is their own USD backed stablecoin that is self-regulated. Paxos wants to be enabler for others to issue stablecoins. Binance has chosen them for their own stablecoin.

8 – The smart contract market is very crowded. The current reality is that blockchain projects are competing for developers and users.

9- The Bitcoin blockchain is being continuously improved to make sure that it remains robust. The philosophy is that is should become a very simple base chain, so that it is very robust. So, that means minimizing what is on chain.

10 – And I have to finish with the reason that Market Capitalization of cryptocurrencies is NOT a reliable measure these days. Several speakers agreed on this and called for more transparency in the block creation process. There is a need to audit the ledger because in many blockchain the block creation is an opaque process.

Notes

EDGAR is the primary system for submissions by companies and others who are required by law to file information with the SEC. 

Containing millions of company and individual filings, EDGAR benefits investors, corporations, and the U.S. economy overall by increasing the efficiency, transparency, and fairness of the securities markets. The system processes about 3,000 filings per day, serves up 3,000 terabytes of data to the public annually, and accommodates 40,000 new filers per year on average.

EDGAR® and EDGARLink® are registered trademarks of the SEC.

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Square`s growth strategy and the masses

The ten-year-old Fintech that listed on NYSE exactly 4 years ago – November 2015 with the ticker symbol SQ; continues to innovate. It is best known as a B2B Fintech in the payments space that had huge success with small merchants globally. It grew with POS terminals and smart credit card readers. As a publicly-traded […]

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How to profit from the now likely failure of Facebook Libra. 

Move fast and break Facebook. It will soon be conventional wisdom that Facebook Libra will fail and you only make money before the herd catches on. In this article, Daily Fintech Subscribers learn why Facebook Libra will likely fail and who/what will win if Facebook Libra fails and how to profit from that.  Bernard Lunn […]

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The Facebook GlobalCoin stablecoin won’t kill Bitcoin but many companies should be worried.

Eras .001

TLDR. Facebook’s move into crypto enabled payments has led to hyperbolic reactions that Bitcoin will be roadkill in front of their thundering truck. This post argues that we are nearing the end of the Facebook era and that the Bitcoin honey badger is not scared of Facebook and that Facebook is moving into dangerous territory where they will be competing with other behemoths.

This update to The Blockchain Economy digital book covers:

  • What we know and don’t know about Facebook’s stablecoin
  • Bitcoin is the honey badger that is not scared of Facebook
  • Big players who will feel threatened by Facebook
  • The end of the Facebook era is coming
  • No, don’t short Facebook, yet.
  • Which companies should be most worried
  • Context & References

What we know and don’t know about Facebook’s stablecoin

The news outlets did a copy/paste on Facebook Press Release. Plus we get the salacious factoid that Mark Zuckerberg spoke to the Winkelvoss Twins.

PR also tells us that all doors are open to Facebook, telling us about conversations with:

  • Bank of England governor Mark Carney.
  • Officials at the US Treasury.
  • Western Union.

Facebook has the clout to talk to anybody on the planet, not matter how high and mighty, but talk is cheap.

What we don’t know:

  • what will be the the real name of Facebook’s stablecoin when it finally launches? PR says it is “internally dubbed” GlobalCoin but that is too close to GlobalistCoin and that does not play well in the cyperpunk/anarchist/libertarian crowd that loves Bitcoin. There is a cute sounding internal name which is Project Libra, which maybe more consumer friendly.

 

  • When Facebook will launch. PR says “first quarter of 2020”.

 

  • Where Facebook will launch. PR talks about “in a dozen countries”. Earlier PR in December 2018 talked about India as launch venue.

 

  • What Facebook will launch. It will be a cross border digital payments system aka a remittances system.

 

  • Which Fiat currencies they will peg to.

There is lots of negative sentiment. You can expect this from the privacy and crypto crowd. It must be more worrying when Bloomberg, which is hardly known for bleeding heart anti establishment ranting, has this headline:

Dr. Evil Would Love Facebook’s “GlobalCoin”. “More than 2 billion users spending one currency, controlled by one billionaire. What’s to worry about?”

Facebook’s strategy in the past with negative sentiment has been to take one step back, issue an apology, then proceed to do exactly as they had planned. However that may not work today, because Facebook’s Stablecoin is between a rock & a hard place. Bitcoin is the rock. The hard place is all the big players who will feel threatened by Facebook. 

First the rock…

Bitcoin is the honey badger that is not scared of Facebook

You cannot shut down Bitcoin. Facebook can lobby Governments all they like and Governments would love to shut down Bitcoin and do deals with Facebook, but you cannot shut down a decentralised permission less network. You need a CEO that you can pull onto the carpet and grill.

Next, the hard place….

Big players who will feel threatened by Facebook 

The hard place is all the big players who will feel threatened by Facebook.

This is a huge move by Facebook. They are moving well beyond their media comfort zone into currencies, payments, remittances and e-commerce. The big players in those markets, including Governments, will feel threatened by Facebook’s move into their territory.

The end of the Facebook era is coming

You can see trend from the chart at the top of this Chapter (based on research by Daily Fintech) – the dominance years are getting shorter. Our thesis is that decentralization won’t lead to one dominant company because dominance is a feature of centralization. In the decentralization era, dominance may go to a leaderless open source protocol (Bitcoin), with many companies thriving within the ecosystem created by that protocol.

I never got the Facebook habit. I am as addicted to social media as the next 21st century human, but my social drugs of choice tend to be blogs, Twitter, Whatsapp, YouTube, & LinkedIn. Occasionally I can only see something online if I have a Facebook account. So I set up a fake account and enjoy the recommendations I get from that fake account where I am a woman born in 1997 in Chiang Mai, who now lives in Mongolia and who studied Thermodynamics at The College of Hard Knocks. My bio says “FB algos do not deserve to know me”.

The usual way that big tech eras come to an end is a mix of:

  • Regulation. That is happening to Facebook in Europe and China and there is even political pressure in America
  • Disruptive Technology. In past eras, the regulators jump on board just when disruptive technology is doing a much more effective job. For example, IBM could manage regulators but could not control PCs, Microsoft got sideswiped by the Web, Google by Social. In the coming transition, centralized services will be replaced by decentralized services.

Facebook the service is no longer cool, even if Facebook the company controls the two biggest competitors – WhatsApp and Instagram. Soon Facebook the service will be a digital landfill populated by:

  • Institutions selling you stuff. Institutions, both political or corporate, use pinpoint personalised marketing to make sure you buy/vote what they want. My little messing with Facebook’s algos is not likely to do them much harm, but billions tuning out ads will damage them at some point.
  • People willing to view ads for a fee. Pay to view ads is desperate race to the bottom by sites with low quality content. Advertisers get the attention of the people with the least money or influence brought in by Mechanical Turk to compete with robot scam traffic.

No, don’t short Facebook yet.

Mark Zuckerberg is one is the greatest entrepreneurs of all time. He has navigated one big disruption before. When mobile threatened the Facebook franchise he solved the problem by buying into the game at great cost with the WhatsApp and Instagram deals.

So, don’t count him out. He could pull it off with GlobalCoin. The odds are against him because this disruption is different:

– mobile changed delivery front end but the core concepts of centralized data to sell advertising remained valid.

– Decentralized Blockchain networks challenge the core concepts of centralized data to sell advertising.

It is inconceivable that Facebook, which has a market cap of over 500 Unicorns (ie over $500 billion), could head into a deep decline. Look at past eras and the dominant company of the day looked equally invincible.

Although Facebook’s long term decline is inevitable, don’t try shorting Facebook stock yet as there is a big difference between inevitable and imminent. 

There are companies that should be worried by Facebook’s move into crypto-enabled payments. They could be accidental roadkill as Facebook searches for relevance in a game that they no longer control.

Which companies should be most worriedWhich companies should be most worried

A. Decentralized social media companies funding via Tokenomics such as Steem and Brave. Content creators will prefer to be paid in either Bitcoin or a reputable Stablecoin from a neutral player.

B. Remittances companies such as WorldRemit and Western Union. The latter may do OK as Facebook will need their off ramp into local Fiat, but that will be a hugely reduced role.

Context & References

Facebook Ambitions in Fintech. Note date (2014); over 4 years ago we were forecasting this move by Facebook.

The PewDiePie deal with Dlive is a big move forward for decentralized Blockchain media.

Why I am closing my Steemit account and why I am a bear on EOS.

Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO of Daily Fintech and author of The Blockchain Economy.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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