Recent news discussed the congressional hearings on the impact of big tech on privacy and other subtle violations of the citizens of the United States. My hope is that this post will add some clarity.
Pseudo-Cryptos :
Twitter, Facebook, and FedNow
A cryptocurrency is, by its name, a (cryptographically) secured currency. A currency is something that can be exchanged. Ergo:
a cryptocurrency transaction is its own self-secured monetary systemNone of the systems below ensure this. Bitcoin’s Lightning Network does make such a promise, while the other two system never dare to claim any type of decentralization.
For the moment, they are all still trust-based systems.
Twitter, Dorsey, Square, and Bitcoin’s LN
As far back as at least 2018, the CEO of Twitter, Jack Dorsey, has been pushing for crypto:
Indeed, his bet on crypto is paying off. This is illustrated by Square’s quarterly reported earnings of over 600% all during a pandemic economy.
Dorsey is also a funder of Lightning Labs, the organization tasked with making Bitcoin fast. Keep this in mind for the last section.
Facebook’s Libra: Still Here
If you have not heard of Facebook Libra, then maybe you’ve been sleeping under a boulder. A bit understandable considering that few Americans pay close attention to Congressional hearing like the ones that require Mark Zuckerberg's presence.
The beginning of the year had many thinking that Libra’s fate was sealed. Then Zuckerberg brought Libra into a recent board meeting. The social media’s crypto project has attracted new blood like Checkout.com.
Yes, Even the U.S. Federal Reserve
What really inspired this article was a recent announcement by the Federal Reserve. If you are not aware of FedCoin, FedNow and the U.S. agency’s 3 year timetable, check out the article published on August 7 of this year by Pymnts.com entitled: “Fed Says America Needs Instant Payments As Soon As Possible”.
Pseudo-Cryptos: Some Quick Clarity
- Twitter and Square: the Lightning Network does not settle payments
- Facebook’s Libra: limited participation restricted to large international companies
- FedNow and FedCoin: initial reports seem to indicate nothing more than a always-on payment channel
Bitcoin is the best option for secure transactions.
If only it were faster.The
Lightning Network(LN) promises to work with Bitcoin to increase its speed without compromising the integrity of the blockchain. There are many arguments against LN. There are claims that the network is subject to manipulation, tracking and even control.
Facebook’s Libra never makes the claim that it will be decentralized. From the beginning, the system has centered around licensing reputable companies to handle how money will flow through Facebook accounts.
FedCoin has been discussed to work within the Federal Reserve's digital payment portal FedNow. It will likely have similarities with Libra except in an official capacity.
Why are these pseudo-cryptos?
As Andreas Antonopolous has said,
“Not your keys, NOT your coins.”
In each of these situations, transactions are being done without user signatures. Essentially, some entity will maintain control of the keys required to move money. Just like asking mommy for a dollar out of her pocket book.
Even if the Lightning Network does prove to be decentralized and maintain the integrity of the Bitcoin blockchain, then what about Square? Will Twitter force users to use Square? Not hard to imagine that Twitter then leverages its control of all those Bitcoin keys to do what Libra failed to.
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Spread the word and create exciting opportunities.
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