The week in review: Libra backers hedge their bets
That was quite a week. Deep breath, everyone. Here are a few of the headlines, in case you missed them.
Libra backers hedge their bets
Last week we reported that Facebook was re-examining its approach to Libra. It now looks like other members of its association may also be rethinking their involvement. This week, The Celo Foundation, the nonprofit wing of C Labs, launched its ‘Alliance for Prosperity’ – and there were a number of familiar names.
The alliance includes more than 50 founding members, including Libra backers Coinbase Ventures, Andreesen Horowitz, Anchorage, and Mercy Corps, among others. Celo is also supported by a16z, Polychain Capital, Blockchain.com, and MoonPay.
The aim of the project is also similar to Libra, although perhaps one more benevolent in nature. They are looking to foster global financial inclusion for the billions of people worldwide locked out of banks, credit, and investment vehicles. Association members will play their part by building and/or deploying decentralised applications that help in this battle, using the Celo blockchain platform.
“The Alliance will use blockchain technology to reimagine the future of money and create inclusive financial tools,” C Labs founder Rene Reinsberg said in a press statement. “From sending money home across borders to donating to a humanitarian organisation, we want to make sure that money arrives in the right hands – not in the pockets of a middleman.”
The open-source Celo platform is still in the testing stage, and plans to officially launch its mainnet in April. Founded in 2017, it has already raised $36.4 million, including its Series A where Andreessen Horowitz’s a16z Crypto bought $15 million worth of Celo Gold tokens.
Bank of England issues report on central bank digital currency
The Bank of England (BoE), the UK’s central bank, has issued a 57-page discussion paper on the development of a central bank digital currency (CBDC).
The paper outlines an “illustrative model” for a CBDC designed to store value and enable payments by households and businesses.
“We’re interested in CBDC because this is a period of significant change in money and payments,” said the BoE. “The use of banknotes – the Bank’s most accessible form of money – is declining, and use of privately issued money continues to increase, with technological changes driving innovation.”
However, the report also noted that there are certain risks. “If significant deposit balances moved from banks to CBDC, there could be implications for the balance sheets of both the Bank of England and commercial banks. This could affect the amount of credit provided by banks to the wider economy, and in turn, how the Bank implements monetary policy and supports financial stability,” the central bank explained.
In the past, outgoing BoE governor, Mark Carney has appeared relatively pro-cryptocurrency (for a central banker). He’s gone so far as to suggest that a digital currency could even eventually replace the US dollar as the global reserve currency.
With coronavirus making physical cash even less appealing, is that time arriving even sooner than he thought? And will the UK be the first to release a CBDC?
Social media gaming giant looks to blockchain
Gaming company Zynga, best known for games such as Farmville, is building a blockchain-based infrastructure.
The so-called Gala network will provide a platform for developers to devise new games. It will also allow players to possess their in-game content—taking items from one game to another.
“It’s going to be a revolutionary experience for people,” Zynga co-founder Eric Schiermeyer told VentureBeat. “Unlike any other experience I’ve ever seen, when you spend money here, you actually get something, something that you can keep, and maybe even give away or give some to somebody else. You can’t do that in traditional free-to-play games right now.”
Zynga is not the first gaming company to look to blockchain. A couple of weeks ago we reported that Decentraland had finally launched its second life VR experience, built on Ethereum.
Bitcoin takes another hit
With governments around the world struggling to contain coronavirus, it was another bad week for the markets. Donald Trump’s travel ban on Wednesday set the scene for a coronavirus panic spree. On 12 March, the Dow and FTSE suffered their worst day since the Black Monday crash of October 1987, prompting the New York Federal Reserve to announce their decision to take emergency action and pump $1.5 trillion into the American financial system.
Bitcoin also took a big hit, with the cryptocurrency crashing briefly to a 12-month low of $3,867 before rebounding sharply up 40%. Altcoins followed a similar pattern.
Luno CEO, Marcus Swanepoel, commented on the matter: “In the worst-case scenario, adoption rates will be mildly affected, which will continue to impact BTCs price in the short to medium-turn. However, it’s not something that will spell significant trouble in the long-run, and Bitcoin will recover to its original value. The likely ‘middling’ scenario is that we’ll see the same level of growth we’re looking at now or back in 2017. If we look at gold – often seen as a good analogue for bitcoin – we saw a slump to its lowest rate in over six years towards the end of February, only then to stabilise and increase.”
“If we look at gold during the financial crisis,” he added, “we saw its price fall by 25% and then totally recover all losses in a very short space of time. In 4-6 months, we should have a far clearer picture.”