Crypto: Starbucks Microsoft Facebook

Some notes and observations on three brands that were in crypto news recently.

Starbucks Accepts Bitcoin?
  • The title of a recent Forbes article suggests Starbucks has begun accepting bitcoin for payments (and thus Starbucks endorses bitcoin).
  • Reading the article reveals it is Spedn, an ewallet by Flexa, that is said to be under limited testing by Starbucks. (The article later mentions Starbucks denies working with Flexa).
  • It is like if Boost (an ewallet) decides to accept Ethereum. This does not mean 99 Speedmart and KK Supermart (two grocery chains that support Boost) endorse Ethereum. Boost may simply process Ethereum and pay merchants in fiat (MYR etc), the merchants do not see or need to know about Ethereum.
  • Taking this further, this suggests payment processors and intermediaries could be a key to the practical usage of crypto. Payment processors may allow, say, bitcoin (which charges about USD 4 and may take from 10 minutes to hours to confirm a transaction), to be used for quick micro transactions (eg. pay for a cup of milk tea in MY for around USD 0.50) by consolidating transactions and storing details (time stamp, payer, payee, amount, item description etc) off-chain (ie. in a database rather than a blockchain).

Microsoft Picks Bitcoin
  • Wired reports Microsoft has picked the bitcoin blockchain to further its digital identity initiative together with the Decentralized Identity Foundation (DIF, post image) whose members include IBM, Aetna, R3, WeBank and NEC.
  • The purpose of the initiative is provide digital natives with a digital identity which is 'self sovereign', that is not dependent on, say, a Google, Facebook or Twitter account (which could be withdrawn by the principal).
  • How is the bitcoin blockchain used? Here's how it might happen. Essential data eg. name, nationality, identification number (or a hash thereof) will be stored in the bitcoin blockchain to secure it. Larger data eg. photos, will be stored encrypted in the Inter Planetary File System (IPFS). a new decenralized file system that is torrent like.
  • The decentralised nature of the bitcoin blockchain and IPFS makes the identity more secure and harder to take down. Note that the emphasis here is on blockchain not bitcoin. Nevertheless, to commit a transaction, a bitcoin transaction fee needs to be paid, so at first glance, the identity system may not be free (Microsoft says it has yet to figure out the business model and other chains might be supported in the future).

Facebook's Cryptocurrency
  • Facebook's hypothesized cryptocurrency has been given the code name 'Libra' by media because Facebook recently registered a Swiss company named Libra Networks amidst other possible cryptocurrency ramp-up measures.
  • Traditionally, Libra denotes justice, fairness and balance, and the higher aspects of law and order.. This might hint at the crypto ambitions of Facebook. Libra is also phonetically close to the word Liber, as in Liberty.
  • Since Whatsapp is increasingly a medium of P2P and B2C transactional communications ('deliver an impossible burger to me at my office for lunch'), it is natural for Facebook to want to add a payment option for the convenience of users.
  • To ponder: Will it be crypto or fiat? If crypto, will it be a stable coin or a free floating coin? Will it be an alternative to PayPal, the current de facto global consumer payment platform? Will long-time, active Facebook members get an air-drop (free coins on launch)?
  • Facebook is already very powerful and encompassing. Going into payments could potentially lead to corporate power overreach, more data mining, and increased regulatory scrutiny and oversight. Or perhaps Facebook will do something out-of-the-box and carve out payments into an independent entity to be governed by an august board of directors and/or advisers, as what a Libra-ian approach might suggest.