What Is It?
Facebook’s new cryptocurrency is called Libra, after the Roman unit of measurement used to mint coins. (Download the white paper here.) For blockchain investors, this is yuge news. Talk about widespread adoption: Facebook’s reach is so vast that Libra may become a new global currency overnight, on par with the dollar and the euro.
Here’s what we know.
It’s a stablecoin. Libra is a stablecoin pegged to the value of several different currencies. (Read our top-rated piece on stablecoins here.) This means its price won’t fluctuate, like bitcoin — but it won’t be tied exclusively to the dollar, either.
It’s a very big, very secret team. Over 50 engineers are working on the project, which is highly confidential, requiring special keycard access to enter the building.
They want to trade it on exchanges. The Facebook team has had discussions with digital exchanges on listing Libra. This implies it’s not tied exclusively to Facebook, but rather as a real currency that can be bought, sold, and traded.
The estimated launch is 2020. In discussions with exchanges, Facebook has indicated they plan to launch in the first half of 2020.
It will be at least partially decentralized. By partnering with exchanges, Facebook is signaling that it will not be tightly centralized. And by using blockchain, Facebook is signaling this is not an “in-game currency,” accessible only to Facebook users.
|Good for||Payment, taxes||Investing, speculating||Digital payments|
|Good long-term investment?||No||Maybe||No (but see note below on FB stock)|
How It Works: A New Kind of “Supermoney”
You can imagine Mark Zuckerberg’s exasperation: his company is under fire from governments, while governments use his company to spread state propaganda. You can understand why he might be ready to work outside the government altogether, to form a new kind of “supermoney.”
In a blog post titled A Privacy-Focused Vision for Social Networking, Mark Zuckerberg announced his intention to move the Internet toward private, secure, encrypted conversations. If those words sound familiar, it’s because bitcoin was also envisioned as a private, secure, encrypted money.
Private. While Facebook today is like a “digital town square,” Zuckerberg said that the new focus will be on a “digital living room,” where you can have private conversations with friends and family without worrying that your online comments will come back to haunt you later.
Secure. Zuckerberg said that Facebook users should be able to communicate privately, without fear of being spied on by hackers, criminals, or the government (or, I’ll add, Facebook itself). And, he said, “we all expect to be able to do things like payments privately and securely.” (Emphasis mine.)
Encrypted. How will we achieve all this privacy and security? Through “end-to-end encryption,” which he points out is already built into Facebook-owned WhatsApp. “Encryption,” Zuckerberg says, “is decentralizing.” What else is decentralized? I think you know.
In announcing his intention, Zuckerberg is paving the way for a new type of Facebook payment system, one that is private, secure, and encrypted. Done correctly, it will make Facebook a global player in financial services—and the world economy.
To see why, let’s compare Libra with other global payment methods.
Facebook vs. Tencent
China is miles ahead of the United States when it comes to mobile payments. While the US has Apple Pay, Google Pay, PayPal, Square, and a dozen other payment systems, China has two: Alipay and WeChat Pay. These two have emerged as the “Mastercard and Visa” of the Chinese payments world.
WeChat Pay is owned by Tencent, the massive Chinese conglomerate, and baked into China’s popular WeChat social media platform. Like Facebook, WeChat has a huge network of brands and publishers who host their own WeChat pages, and WeChat Pay makes it easy for them to accept payment.
Think of it this way: when was the last time you bought something on Facebook?
As you can see in this video, WeChat Pay lets you can easily buy from retailers and restaurants by scanning a simple QR code. Imagine if you could easily pay at practically any register, or any website, with your Facebook app (not to mention WhatsApp or Instagram, also owned by Facebook).
“Libra Pay” will be different from WeChat Pay if it runs on its own decentralized cryptocurrency. Then payments can truly be private, secure, and encrypted—rather than running through traditional payment rails (like Mastercard and Visa). It’s like Facebook is minting its own money: truly a “Facebook coin.”
Facebook vs. Credit Cards
Paying with credit cards online is a hassle. Each site requires you to re-enter your credit card, you have to manually pull out the credit card to check the three-digit code, you have to update credit cards when they expire, and you have to pay interest if you carry a balance.
Libra could be a massive improvement over credit cards by simply attaching to your bank account, transferring your fiat currency into Libra, then making the payment — which the recipient could immediately transfer back into dollars, or keep denominated in Libra.
Today, for example, you pay for your Uber using a credit card, with a 2% markup that goes directly to Mastercard or Visa. Using a decentralized currency, you could summon a driver using your Facebook app, then pay him directly, getting rid of both credit cards AND Uber:
This has massive implications, as both you and the driver might elect to keep more of your money in Libra, which is reportedly designed to hold its value against the dollar. As we’ll discuss below, the value is likely to accrue to Facebook (this might be a good time to buy Facebook stock).
Facebook vs. Cash
China has become an almost cashless society: Alipay and WeChat Pay are so widely used that the Chinese government has to remind merchants that they still have to accept cash. As the Wall Street Journal reports, Alipay and WeChat Pay are even used by panhandlers.
In a digital age, paper money is pretty terrible. Paper money is dangerous (you can get robbed if you carry it around). Paper money is inconvenient (if you leave it at home, you can’t buy anything). No one uses paper maps; why are we still using paper money?
Could Libra replace paper money altogether, as Alipay and WeChat Pay have done in China? Here’s how it might happen.
A user-friendly cryptocurrency. The challenge for digital currencies is making them so easy that your grandfather can use them. Given that your grandfather is pretty much the target Facebook demographic, Libra may open the floodgates of digital currency to grandpas everywhere.
A new digital payment standard. The “Facebit” (sorry, “Libra”) could be first used for payments within Facebook, but eventually as the currency that you use to buy anything online. What we’re describing is not just a payment system like Apple Pay or Venmo — it’s an actual currency that can be used instead of dollars.
A new global economic power. By creating a new Facebook cryptocurrency, Zuckerberg is giving traditional government-owned currencies a run for their money. And by pegging it to a basket of foreign currencies (not just the dollar), he is diversifying his risks.
Who would have thought that Facebook, with all its centralized power, could emerge as the new model of decentralized payments? Before long, we might be calling him Mark Zuckerblock.
How to Invest in Libra
Although details have not been confirmed, it is likely that Facebook will use its new currency to enable payments within the Facebook platform. If it is not tethered to the Facebook platform, investors will be able to invest in Libra by buying and trading it on digital exchanges.
Here’s where savvy blockchain investors can learn from the thousands of altcoins that have launched over the past few years.
Value is driven by users. The blockchain is about people: the more people who use a blockchain, the more valuable it becomes, due to network effects. Facebook is one of the most valuable networks on the planet, giving its currency a potentially massive valuation (if they can get enough people using it).
Value will likely accrue to Facebook stock. Because Libra is envisioned as a stablecoin (e.g., a digital currency with a stable value, like the dollar), the value of the new economy would likely flow into Facebook’s stock price. In other words, for every dollar invested in Libra, consider a dollar in FB stock.
Trading opportunities abound. While we are generally fans of blockchain value investing (“buy and hold”), there will be many opportunities for trading (“buy and sell”), including arbitraging against other stablecoins and other global currencies. Trading will be a rich area of opportunity, especially at launch.
Libra in your 401(k): The dream is an automated platform that withdraws, say, $100 from your bank account each month, investing $10 in Libra and $90 in FB stock. This would offer a convenient way to diversify everyday investors into digital currencies (10%) with the overall stock market (90%).
The beginning of the next wave: If the new Facebook coin takes off, expect other tech companies to follow suit with their own digital currencies. As a rule of thumb, the companies with the most network effects will be the ones that accrue the most value (think Google, Twitter, Apple).
The blockchain is about people. Facebook, with its focus on connecting people, is in a perfect position to become a blockchain leader overnight.
For the latest information on Libra, as well as great investing ideas, subscribe to our Bitcoin Market Journal weekly newsletter, because it’s free!
Unlike Dogecoin, Catecoin Gives a New Meaning to Meme Coins with Real Use case
In the present-day connected world, memes have become an integral part of our pop culture. While one can’t put a monetary value on the entertainment they provide, its creators can definitely be encouraged and rewarded for their contribution towards a lively internet.
Catecoin, the first decentralized meme-based token is trying to do just by incentivizing content creators as well as consumers. The project is the first of its kind to implement DeFi features in the content space. Fueled by the CATE token, the project offers a platform for user-generated content, quite similar to 9GAG but on a blockchain, along with content farming and staking features.
How does it work?
Using the Catecoin ecosystem is as simple as using any social network platform. Content creators can submit their creations to the Catecoin Meme Platform and once published they will start earning CATE rewards as the community likes or comments on that content. Even platform users who interact with the posts will receive rewards for their comments and likes.
Meanwhile, the posts are evaluated based on the received reactions. Any post with 500 or more likes from the community will become eligible for a transformation into an NFT and get listed on the NFT market. Catecoin refers to this entire process as Content Farming and has set aside 35% of CATE supply for this alone.
CATE is the utility token of the Binance Smart Chain-based Catecoin project. Apart from value exchange, these tokens also control the accessibility of the platform. Users should hold a minimum of 10,000 CATE to interact with any posts on the platform. Similarly, content creators will have to maintain a balance of 100,000 CATE to be able to submit their works to the platform.
While each like or comment will result in both content creators and consumers receiving 0.1 CATE each, the community can also earn additional returns by just holding the tokens. The platform shares one percent of each transaction made on the network with CATE holders, and at the same time burns the same amount to regulate supply.
Once a meme gets converted to NFT and lists on the NFT market, anyone can purchase it and start receiving any rewards the asset may generate in the future.
Get some CATE, it is simple
In just a few simple steps, one can become part of the Catecoin community early on. CATE is listed on PancakeSwap and users can acquire the tokens against BNB payment. Buying CATE will require users to download and set up Trust Wallet and MetaMask accounts and hold some BNB in their wallets. They can then visit PancakeSwap, make payment in BNB to the Catecoin token 0x118f073796821da3e9901061b05c0b36377b877e and receive the tokens in their connected wallet.
— CateCoin (@cateclub) May 13, 2021
What Makes CATE Different?
The flood of meme coins into the crypto market started long ago, and Dogecoin is the prime example. Many of these coins have a virtually unlimited supply and no real use cases. On the other hand, CATE has a definite supply of 100 trillion and a deflationary mechanism that reduces the supply by 0.5%-1% per transaction while providing a real-world use case – encouraging meme creators to monetize their content. The model adopted by Catecoin makes it the most sustainable meme project out there.
Amid Rumors Of Dumping Its BTC Holdings, Elon Musk Maintains Tesla Hasn’t Sold Any Bitcoin
Elon Musk has been dragged under the bus by countless bitcoin proponents as the price of the flagship currency continues to take a downward movement. Bitcoin dropped 20%, sending prices to $45,000 as of yesterday.
As of publication, Bitcoin imitates analysts’ predictions that the asset could continue to dip for the most part of this week, and with Bitcoin now trading at $45,065 at press time, their analysis remains valid.
The Bitcoin selloff continues
Asides from the “bearish” tweets from Musk, which to many is simply just the Billionaire’s expression of his dissatisfaction with Bitcoin, Bitcoin could sustain more losses if Tesla sold its remaining Bitcoin holdings.
Following Tesla’s announcement, onlookers spotted a Bitcoin transfer of 19,259, worth over $872 million at press time. Analyst William Clemente observed that the transfer time coincided with Musk’s tweet, hinting that Tesla may have indeed called it a day for Bitcoin.
Musk reveals Tesla’s $1.5 billion holdings still intact, prices soar
However, Musk has recently cleared the air on whether the Bitcoin holdings are still under Tesla’s belt. In what could be considered the most recent positive tweet from Musk on Bitcoin, he wrote “To clarify speculation, Tesla has not sold any Bitcoin.”
Some excited Bitcoiners are holding on to the news as a sign that Tesla has not lost all interest in Bitcoin, despite Musk’s tweets that Dogecoin is a superior asset to Bitcoin. On the other hand, skeptical Bitcoiners are convinced that in a matter of time, Tesla will pull through with its Bitcoin sale.
Recall that Elon Musk teased that this could be the case, given that Bitcoin proponents have continued to critique Tesla’s decision. Shortly after hinting that Tesla might give up its $1.5 billion Bitcoin holdings.
However, Bitcoin has since surged by 7% since Musk’s clarification on Tesla’s Bitcoin holdings.
Bitcoin doesn’t need Elon Musk
Meanwhile, analysts’ who heavily bought the dip have insisted that Bitcoiners pay no mind to the bear market.
In unison, key players agree that “Bitcoin doesn’t need Musk. Rather, Musk needs Bitcoin.” It is unclear where the market is headed going forward, but the sentiments from top Bitcoin proponents similarly claim that the bear trend is only temporary, as Bitcoin is still yet to bottom.
Elon Musk tweets BTC price bottom? 5 things to watch in Bitcoin this week
Bitcoin (BTC) is nearing $40,000 this week as “Dogefather” Elon Musk deals out pure pain to hodlers — what’s next?
After a traumatic weekend for many crypto investors, Monday is setting the stage for the next chapter in the wild 2021 bull market.
Cointlegraph takes a look at five factors which could shape what Bitcoin and altcoins do next.
Musk tweet hits key Bitcoin technical level
It’s all about one man yet again this week: Elon Musk. In characteristic fashion, the Tesla and SpaceX CEO caused uproar on Twitter when he came out bearish on Bitcoin.
BTC/USD sold off immediately on news that Tesla was halting BTC payments for its products, but for Musk, this was not enough.
Further tweets over the weekend, including criticism of Bitcoin’s decentralization and how he “believes in crypto,” added fuel to the fire.
It was a hint that Tesla may already be planning to sell its holdings, however, that caused the most misery. Bitcoin fell to near $42,000, retesting this previous all-time high level before steadying as Musk stressed that no sale had occurred.
“To clarify speculation, Tesla has not sold any Bitcoin,” he wrote on Monday.
With Musk versus the cryptocurrency community beginning to look like a full on war, Bitcoin is thus unsurprisingly volatile as all eyes remain on the Twitter battlefield.
At the time of writing, Bitcoin was trading at around $44,800, still down 8.7% over the past 24 hours.
As analyst Alex Krueger noted, however, the clarifitication tweet may be unwittingly acting as a local bottom signal, as Musk posted it just as BTC/USD hit a key 61.8 Fibonacci retracement level.
“Elon Musk must be an outstanding technical analyst,” he commented.
“His ‘Tesla has not sold any Bitcoin’ tweet was posted exactly at Bitcoin’s key technical level, the 61.8 fib ($42,845).”
BTC dominance falls below 40%
Musk’s activities have had a detrimental impact on Bitcoin and altcoins alike.
In terms of bearishness, however, nothing shows how much the average Bitcoin holder is suffering like market dominance.
On Monday, Bitcoin’s overall market cap share dipped below 40% for the first time since June 2018.
Already on the way out, dominance was dealt a significant blow thanks to the recent Bitcoin price pressure, while alts such as Ether (ETH) benefitted.
“The Bitcoin dominance is still falling,” popular Twitter trader The Moon summarized over the weekend.
“The alt season is not over yet. But my gut feeling is that the end is near!”
Bitcoin fundamentals provide calm
For all the nerveracking price action, meanwhile, nothing provides a bullish counterpoint to the current Bitcoin narrative than its network fundamentals.
Even after its $42,000 dip, Bitcoin is more attractive than ever for miners, and its network security is therefore also more solid than ever before.
As Cointelegraph reported, both hash rate and difficulty have staged a miraculous recovery in recent weeks, reclaiming all-time highs after a miner washout caused its own brief price crash.
The weekend proved to be no different, with weekly average hash rate topping 180 exahashes per second (EH/s) for the first time.
Difficulty is still on track to increase by over 10% at the next automated readjustment in 11 days’ time. The previous readjustment on May 14, at 21.5%, was the largest positive shift since June 2014.
“Bitcoin’s mining difficulty hitting an all-time high just after tesla’s announcement is a chef’s kiss,” Alex Thorn, head of firmwide research at crypto merchant bank Galaxy Digital, said last week.
Dollar bounces at support
Taking a break for crypto-specific triggers, the wider macro picture may yet provide some inspiration for price trajectory.
After plunging late last week, the strength of the U.S. dollar is returning. The U.S. dollar currency index (DXY) is bouncing off familiar support — surges in its strength tends to provide teething problems for BTC/USD.
At the same time, stocks are bullish in China but performing averagely in Europe and the U.S. Coronavirus, with localized peaks in some jurisdictions but fewer cases in others, joins the melting pot.
Among traders, however, it is inflation that is a key issue. A broad global rebound from the time of lockdowns and other restrictions creates problems for those attempting to engineer it — specifically, the U.S. Federal Reserve and other central banks.
“The global economic recovery is well under way; that’s what’s fueling the inflation fears,” Olivier d’Assier, Qontigo head of APAC applied research, told Bloomberg.
After stock markets’ rip roaring year, he added, appetite for profit taking will be understandably increasing.
Bitcoin still beats its last bull market
Is it 2013 or 2017 in terms of the Bitcoin bull market?
Among the industry’s best-known names, there is no hint of bearishness — all that remains to do is analyze the nature of the current retracement and compare it to years past.
This week, stock-to-flow creator PlanB notes that for all the Musk drama, Bitcoin is still performing better than during its 2017 run to $20,000. This despite the $42,000 dip officially being Bitcoin’s biggest this bull cycle and since the cross-asset crash of March 2020.
“It’s not a straight line to the next ATH, but a lot of volatility (multiple -30% dips). HODL.”
Calling for calm and zooming out is a key feature among seasoned Bitcoiners. As Cointelegraph reported last week, stock-to-flow remains unviolated by Musk or any other episode of downward volatility.
An accompanying survey meanwhile revealed that a majority of 35,000 respondents believe that BTC/USD will still hit $100,000 this year.
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