Facebook’s master plan revealed…
Last month, I wrote about Facebook’s plan to launch FacebookCoin… and its motivation for doing so. I predicted that it wanted to use a digital currency to share advertising-based revenue with users to deflect regulatory scrutiny.
Well, Facebook has since confirmed it is looking into enabling such a platform, and the method of payment will be its newly formed cryptocurrency. But the company is thinking about a lot more than just payments…
Facebook just established a financial technology (fintech) company in Switzerland called Libra Networks. Libra Networks will drive Facebook’s cryptocurrency plans…
Libra Networks will focus on “investing, payments, financing, identity management, analytics, big data, blockchain, and other technologies.”
Facebook clearly intends to expand beyond its existing business. I am actually surprised it hasn’t done this already. But then again, it has been so successful with social media and messaging that it hasn’t had much incentive to do anything else.
Looking at Libra Networks, there are many layers to Facebook’s expansion strategy.
It could launch a digital brokerage, like Robinhood’s popular commission-free platform…
It could get into financing by issuing small loans on its platform…
Or it could get into identity management, which is one of the biggest issues facing the blockchain industry.
Think about it. When dealing with cryptocurrency, how do you know that the other person is who they say they are?
Well, since Facebook already has 2.3 billion users, it is in prime position to become an identity management network. Any company needing blockchain verification could do so through Libra.
And that would also mean that Facebook would likely gain access to your most personal identity details. The company could scan your face on a daily basis to confirm your identity. It could keep your fingerprints on file. It could even maintain recordings of your voice.
And given Facebook’s history of mishandling user data, that alone should have us worried about the company’s ambitions.
If successfully launched, it could also mean the creation of the largest economic network connecting more than 2.3 billion consumers capable of transacting with one another with a brand-new digital currency.
The Financial Action Task Force takes a shot at crypto…
The Financial Action Task Force (FATF) is an international regulatory body whose stated purpose is to combat money laundering. And it just took a shot at the budding blockchain industry…
FATF wants to apply the “travel rule” to all cryptocurrency transactions. The rule says that anytime you send money to someone, you must also send your identifying information: full name… address… banking information… that type of thing.
Of course, this would make cryptocurrency transfers just like a wire transfer: slow, expensive, and cumbersome. Which almost entirely defeats the purpose of blockchain technology.
Now, FATF will tell you this move is for “safety.” But here’s the thing… The blockchain industry has been proactive in complying with Know Your Customer and Anti-Money Laundering regulations.
While there have certainly been some scams in the industry, the majority of projects have been professional and proactive in their efforts to maintain compliance with these regulations.
Major cryptocurrency exchanges, trading platforms, and financial institutions that provide the on-ramps to the world of digital assets all confirm the identities of their customers.
Industry trade organizations like the Chamber of Digital Commerce in Washington, D.C., of which I am a member, have been proactive in supporting policy makers in understanding the complexity of blockchain technology and collaborating on policy that’s good for the industry.
What’s ironic is that the majority of blockchain technology is a transparent transaction ledger. You can see the details of every transaction that’s ever happened. Every transaction is visible on the blockchain, and can be traced back to the exchange, and thus the individual, that sent the cryptocurrency.
So why push this new rule at all? I think I know…
The beauty of cryptocurrency is that funds can be rapidly transferred across borders at any time, for almost no cost, in a matter of seconds. There is no such thing as a bank holiday. No humans in the loop. Just an immutable ledger (a blockchain) that is cryptographically secure. Far better than any bank can provide.
Compare that to sending a wire. You have to go through a bank during business hours… provide documentation… fill out paperwork… and pay $20 or more in fees… just for the bank to basically rubber stamp your wire. International wire transfers typically take days to settle as well.
In other words, transferring funds over blockchain is far superior. And the incumbent financial institutions (the big banks) know this. They’ll spend whatever it takes to lobby government agencies and slow down the progress of blockchain adoption.
I suspect the new FATF rule might have the backing of some very powerful financial entities…
Google Glass returns…
Google launched an early augmented reality (AR) headset prototype called Google Glass back in May 2014. But the headset cost over $1,500 and its functionality was limited. And it looked really awkward.
As a result, Google Glass never caught on. And Google folded the project in January 2015.
Well, the big news this week is that Google is launching Google Glass 2.0, also called Glass Enterprise Edition 2. The new version will cost less than $1,000 and it looks a lot more like a normal pair of glasses.
Google’s Glass Enterprise Edition 2
As you can see, the only difference is that one side houses the camera, a small battery, the clear block for the display, and the semiconductors that make the headset work.
Right now, Google Glass 2.0 will focus only on enterprise applications. It will help companies help their employees do their jobs more efficiently.
This could be things like overlaying a repair diagram over a car engine… overlaying a maintenance manual over industrial parts… loading a safety checklist for a quality control worker to follow… verifying products on a loading dock… and many other commercial applications.
But that’s just step one…
From there, I expect Google to gather data and improve the product. The company will continue to work on miniaturization and then it will launch a consumer-facing AR headset… hoping to compete with Facebook, Apple, Microsoft, and Magic Leap for AR supremacy.
That’s because Google knows that this is the new battleground. AR eyewear will ultimately replace the smartphone… And that means there will be winners and losers.
Of course, Google wants to win. And we already know why.
If Google can become the dominant supplier of AR headsets, it’d have a front row seat to your daily life. After all, the AR glasses are designed to be worn all day.
Imagine the behavioral data Google could collect on its users with a Google Glass camera observing every action you take. It’s a pure gold mine, with even more exploitation of consumer information resulting in even more profits for Google.
P.S. Remember, I want to hear from you.
Would you trust Facebook to confirm your identity? Would you ever drop your smartphone for a pair of AR glasses?
Send me your questions. I’ll answer them in an upcoming mailbag edition of The Bleeding Edge. Write me here.