It has been a busy week in the blockchain space especially for the enterprise companies like Facebook, IBM, SWFIT and Microsoft. After months of preparation Facebook Libra was finally revealed and the crypto and blockchain space will never be the same. There are many positive technical and business design decisions and we are still to see how they will play out. One thing is sure, with one hundred nodes set of validators Facebook Libra already feels more decentralized than most of the public chains controlled by several mining pools.
Facebook’s Libra coin is a bold initiative for a new type of decentralized platform
Last week Facebook officially announced their Libra blockchain and the news took the blockchain industry by storm. Many of us were awake at 5 a.m. EST on Tuesday waiting for the details to be released and Facebook didn’t disappoint. There have already been already tons of articles written about the Libra blockchain, Calibra wallet, Move language and Libra Association, and the details from the Libra technical whitepaper have been digested by experts, but I feel like something is still missing. Facebook did not just announce yet another blockchain protocol—rather, they are aiming toward banking the 1.7 billion “unbanked” people. Providing financial services to such a large group is no easy task but if anyone can do it, it will be Facebook due to their mere scale and resources. Along the way they will completely re-imagine their data services, give new fuel to their advertising revenues, and try to make friends with privacy critics and regulators by inviting them to sit at the same table and join the Libra Association as members.
Let’s quickly digest what is about to happen, the total number of accounts between Facebook, WhatsApp and Instagram is around 2.7 billion people and each of them will be introduced to digital wallets and cryptocurrencies. What else is interesting is that Facebook gets the opportunity to step into the payments business without directly being a bank.
As a starting point, the main incentive for all the 27 founding consortium members is access to users and payments data. Facebook, WhatsApp and Instagram have struggled to find a middle ground between the users of all three platforms and the opportunity made available now is to have them all onboarded onto one unified payment channel. So far Facebook has struggled to effectively monetize the majority of their Daily Active Users (DAUs) that live in countries outside of the USA and Canada.
On another hand, due to their previous privacy issues — the Cambridge Analytica scandal still feel recent — Facebook are reaching out to cryptography and the concepts of decentralization and opting into a more secured and privacy-centered approach where data is stored on many nodes and not in a single datacenter controlled by them location.
What about the actual Libra technology? Well, reading the technical whitepaper it feels like Libra network is closer to Ethereum than to Bitcoin. Having validators in a top-down, proof-of-stake-style nodes, and the concept of gas, wallets and Move Virtual Machine (MVM) feels very Ethereum-ish. Take a quick tour of their GitHub activity and you can tell that Libra team is busy: 93 commits over the first few days tells a lot about the team commitment.
A lot of that activity was housekeeping, but still, it’s great to see the project actively maintained in its early days.
Interesting to note about Libra coin’s Move language is that it is an executable bytecode language compared to Solidity in Ethereum, which is a higher-level language. Move on its own is directly executed on the Virtual Machine (VM), where Solidity needs to be compiled first in order to run on Ethereum Virtual Machine (EVM). An open question is how feature-rich the language will eventually be and, as a new language handling millions of dollars in value transactions, how safe and protected its operations are.
Overall, it is positive to see a BFT protocol being proposed, using the HotStuff framework from VMWare Research. LibraBFT has similar consensus to PBFT and will be able to maintain consensus as long as 66 percent of the network participants are honest. Still, we need to verify the speed claim of 1,000 transactions per second with 10-second intervals between transactions being submitted and confirmed. This is on par with what other permissioned systems have. It’s still not close to Visa’s 1,700 transactions per second but far better than Bitcoin’s seven transactions. An important note to be made is that the Calibra wallet won’t be the only one available and using the protocol via the open-source repository and creating your own wallet is welcomed. For security reasons Calibra users will need to create a new user/password pair so they won’t be able to use their existing Facebook credentials. On the governance side it’s interesting to see another two-token system, where Libra Investment Token (LIT) will give access to the network in a true proof-of-stake fashion, and Libra coin will be backed by a basket of assets denominated across four popular fiat currencies: USD, GBP, EUR and JPY. In addition, the Libra Association will control and steer the protocol upgrades on one side but also be in charge of Libra coin issuance and management.
In summary, Facebook did a great job structuring their technical approach for implementing a consumer-focused cryptocurrency, but there are a few non-technical open questions that remain to be addressed. For example, why we don’t see any banks represented in the founding members and how they will face the central banks and potential regulatory clouds over them. The Bank of England and the G7 have warned Facebook that its Libra coin approach isn’t realistic and also, the U.S. House Financial Services Committee and Senate banking committee have back-to-back Libra hearings slated for next month.
IBM announced Blockchain 2.0
Few days ago, IBM announced the general availability of their new blockchain 2.0 platform. The most notable feature is the multi-cloud flexibility which gives the freedom to have your nodes in Amazon Web Services cloud (AWS) or Microsoft Azure and not necessarily hosting on the IBM Cloud. This is aimed at private consortiums and larger networks where the actors are already established companies which would prefer to use their own on-premises or cloud solution rather than migrate to the IBM Cloud. Other improvements are the updated Visual Studio Code extension which integrates with the network and can be used to effectively manage smart contracts and peers and competitive pricing.
DAML Successfully Integrates With Hyperledger Fabric, R3’s Corda and Amazon Aurora
Digital Asset, the creators of the smart contract language DAML, announced that DAML will be compatible with Hyperledger Fabric and R3’s Corda through their technology partners HACERA and Blockchain Technology Partners. This move comes as no surprise as we are already seeing most of the large enterprises not committing to only one technology provider and protocol solution. Instead they are running several projects simultaneously, experimenting and comparing results of the blockchain tests.
Digital Asset Modeling Language (DAML), which went open source earlier this year, is already available on the VMWare and Hyperledger Sawtooth platforms and now it adds the first non-blockchain to its integrations, Amazon Aurora on Amazon Web Services (AWS). This makes Aurora the second AWS database with blockchain-like features after the availability of Amazon Quantum Ledger Database (QLDB).
Microsoft Joins the Hyperledger Community
We are seeing some delayed but yet expected moves from the two largest enterprise blockchain camps, Hyperledger and Ethereum, with the announcement of the latest wave of eight new Hyperledger members which include the likes of Ethereum Foundation, Microsoft and Salesforce.
Microsoft, which is already a founding member of both the Enterprise Ethereum Alliance (EEA) and the Token Taxonomy Initiative (TTI), will be actively looking to contribute to the Hyperledger standards and code base. It’s an admirable move that will be beneficial for everyone.
Energy Web Foundation Launches World’s First Public, Open-source, Enterprise-grade Blockchain Tailored to the Energy Sector
Energy Web, a foundation which consists of 100-plus members like Total, Shell, GE and Siemens, just launched their public blockchain called Energy Web Chain. Live on the blockchain there are 17 decentralized applications (dApps) that are running enabling use cases like verification of renewable energy certificates and electric vehicle charging.
Bank of England Intends to Open Its Vaults to Tech Companies
This move from the Bank of England came out just two days after Facebook’s Libra announcement and will allow similar stablecoin cryptocurrencies to store reserve assets on deposit directly at the BoE’s vault. This is a surprising move as typically the ability to deposit funds directly at the central bank is restricted to commercial banks. Allowing blockchain companies to use similar access would be a significant change. This by itself is a great recognition for stablecoins and cryptocurrencies, which are striving for legitimization.
Cloudflare Ethereum Gateway
Cloudflare, the web-performance and security company that is responsible for around 10 percent of the Fortune 1000 internet traffic, just announced an Ethereum gateway service. Cloudflare, having history in releasing decentralized services like the IPFS gateway, which enables content to be safely hosted on IPFS nodes and served from a custom domain over HTTPs. The Ethereum gateway was welcomed by the majority of the development community because of the advancements it introduces. For example, Cloudflare Ethereum gateway uses the special Load Balancing, Argo Tunnel and Workers to cache responses for common queries which afterwards are answered from Cloudflare edge, which greatly improves the response time.
SWIFT opens GPI for DLT
Resolving the payment challenges DLT platforms face, we will enable gpi payments to be initiated within trade workflows, automatically passing them on to the banking system.
In its latest report titled “The Future of Payments”, SWFIT announced that it will allow crypto and blockchain companies to connect and use of its Global Payments Innovation (GPI) platform for near real-time payments. This will enable DLT applications and workflows to automatically sent payments onto the banking systems.
With so much happening in the enterprise blockchain space it will be an interesting summer! Expecting more details on Facebook Libra coin to be released along the way and several new consortiums and partnerships to be established between prominent players.
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