Former CIA Cryptographer Says Bitcoin Is Perfect Vehicle for ‘Entire Shadow Banking System’

Bill Barhydt, a former cryptographer at the Central Intelligence Agency, and the founder of cryptocurrency investment platform Abra, maps out how cryptocurrency can operate outside of the current regulatory environment to power a crypto bank.

In a new Off the Chain interview with host Anthony Pompliano of Morgan Creek Digital, Barhydt notes that is collective experience is various industries – from intelligence to the internet to finance – has all come together, allowing him and his team to lay the groundwork for a radically different banking model for everyday people.

In addition to the CIA, Barhydt worked as a quantitative analyst in fixed income research at Goldman Sachs and as the former technical director at Netscape where he focused on e-commerce and banking projects.

Barhydt says he’s well-versed in money service business rules because of his work on Dodd-Frank where he joined a group of tech leaders to address and refine the policy language regarding remittance rules.

His extensive knowledge base led him to strategize and figure out the best way to leverage cryptocurrencies to reinvent modern banking. The key to a new model is recognizing the capabilities and the power of Bitcoin, a worldwide currency with a global user base, as programmable money.

Barhydt says:

“When you’re putting fiat into your Abra wallet, the experience looks like Venmo, like a Venmo deposit, but what you’re really doing is you’re depositing money at an exchange which then automatically buys Bitcoin for you, and then, in the case of Ripple, enters into that multi-sig contract where you effectively short Bitcoin versus Ripple. And Abra takes the long position on that contract versus Ripple. All of that happened in the background without you having to know.”

The end game is to use cryptocurrency in a new paradigm – beyond the regulators. The long play for Abra is to develop a crypto bank.

What does a crypto bank mean?

“From my perspective, it reverses the model of a central bank-based custodianship model to one where the consumer is in control of their own funds – whether it’s for investing, which there are lots of examples beyond just investing in crypto, credit or person-to-person money transfer and remittances, which is one of the big reasons I started Abra in the first place.”

You can actually do all of those transaction types in a model where you’re in control of your own money for the first time, without having to understand the nuances of how the crypto works, or Abra having to be licensed in 175 countries to execute those transactions.

We’ve developed a model which is free of, effectively, SEC, CFTC or European e-money style regulation because of the fact that we’re not a custodian of consumer funds. We’re not developing swap execution facilities or other security-based products doing this. We’re entering into very simple crypto contracts which are effectively able to roll over either daily, weekly, monthly, whatever system we set up.

And that also gets around a lot of the nuances of CFTC regulation as well. For people who say these look a lot like CFDs which are illegal in the US, that’s true, but we’re not actually implementing them the same way that a leveraged European-style CFD is implemented. These are zero-leverage, instant capability for roll over. Abra is always the counterparty, which, again, gets around a lot of those regulations.

So the point is, I can effectively develop a legal, crypto-based bank in every country in the world, minus the OFAC-sanctioned countries, with zero licensing that puts the consumer in control of their own money – that’s not hackable from Abra’s perspective, because if you hack me, yes, you might be able to steal my crypto, but you can’t steal the consumer’s crypto.”


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Author: The Daily Hodl
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Abra Now Lets You Invest in a Cryptocurrency Index Fund Token

Cryptocurrency wallet and exchange Abra have unveiled their collaboration with Bitwise Asset Management, allowing Abra customers to invest in a cryptocurrency token that tracks Bitwise’s large-cap crypto index.

Abra, Asset Manager Collaborate on Cryptocurrency Index Token

Users of the Abra app now have the ability to buy and sell the Bitwise 10 Crypto Index Token (BIT10). BIT10 is a cryptocurrency token based on the Bitwise 10 Large Cap Crypto Index run by Bitwise Asset Management. The BIT10 token enables customers to own tokens whose value tracks an index of 10 different large cap cryptocurrencies. Professionals at Bitwise oversee the index the token is based on, ensuring that the combination of crypto assets is up to specifications.

BIT10 is only available on the Abra app, with each token representing price action based on the above-mentioned index of 10 separate crypto assets. The 10 assets are picked by Bitwise, according to their status as high market cap assets. The chosen assets are managed and adjusted on a monthly basis, so as to provide the most effective combination of criteria.

There is only a $5 minimum investment in the BIT10, with no limitations as far as time periods for buying and selling. The index token provides the public with an accessible way to become involved in cryptocurrency markets, and gain exposure to the price movements of many different significant crypto assets, without the need for time-consuming research and constant portfolio management.

Matched with Simplicity and Accessibility

Source: Abra/Twitter

Pairing BIT10 with the Abra platform may prove to be an optimal combination for gaining further mainstream interest — which the crypto space needs more of at the moment, based on a report showing that only 8% of Americans and 9% of Europeans owned some type of cryptocurrency as of March 2018.

The Abra app is a place where individuals can go to easily buy or trade 28 different cryptocurrencies via 50 different fiat currency options. Abra envisions “an open, global financial system that is easily accessible to everyone.” Abra also utilizes the ability for users to control their own private keys — unlike many cryptocurrency investing apps — giving them added security and control.

Cryptocurrencies are complicated, with much of the public seeing the whole sector as confusing. Abra places importance on simplicity, with a greater likelihood of public involvement if things are clear and straightforward. Abra Founder and CEO Bill Barhydt explained, “We created the BIT10 token to allow greater access to cryptocurrency investing by making the experience simple and accessible.”

If there’s one thing that’s certain, it’s that simplicity helps market growth. Apple, for example, has heartily shown the effectiveness of simplicity time and time again, taking a potentially confusing device like the smartphone, and making it mainstream, achieving a profit share of four times the size of its closest smartphone competitor.


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LTC Recovers as Litecoin Smart Contracts Set to Go Live

Speed-focused cryptocurrency Litecoin has experienced a volatile Q1 2018 run and was significantly impacted by the recent general market downtrend catalyzed by an uncertain regulatory horizon. Recent announcements from Litecoin founder Charlie Lee, however, have caused the value of the token to stabilize after a swift late March descent attributed to the cancellation of Litepay.

Litecoin rallied significantly in mid-February this year due to an announcement that the platform’s merchant payment processing system would go live on the 26th of the same month.

An email sent to customers on March 5th, however, stated that card registration for the Litepay system would be placed on hiatus “due to the negative perception and drastic actions card issuers have towards cryptocurrency companies.”

The Litepay delay saw LTC drop in value from over $180 down to almost $110 over the course of March, but recent news has seen the token halt its rapid descent, recovering to the $129 level based on positive market sentiment caused by the announcement of a partnership between Aliant Payment Systems and Litecoin.

Aliant will be using the Litecoin platform to provide merchants with a cryptocurrency payment acceptance method, which could potentially function as a de facto replacement for the Litepay solution.

Litecoin founder Charlie Lee commented on the partnership, stating that merchants will be able to accept LTC through a range of different methods:

“The Litecoin Foundation is pleased to partner with Aliant Payment Systems for Litecoin payment processing. Aliant offers a well-rounded solution for merchants to accept Litecoin easily with physical point of sales terminal (via Poynt), virtual sales terminal, and custom API integration. Merchants also have the flexibility to keep the payments they receive in LTC or convert them immediately into fiat currency.”

Litecoin Smart Contracts?

While the partnership has provided Litecoin with a much-needed credibility boost, it’s not the biggest news to be announced by Lee over the last month. Abra, a digital wallet app, announced in mid-March that it would be using the Litepay platform as the core of their application protocol.

The most interesting element of this partnership, however, is that Charlie Lee has referenced smart contracts on the Litecoin network as part of the announcement.

The Litecoin development team hasn’t made any significant statements regarding smart contract implementation on the Litecoin network since a mid-2017 tweet from Lee referencing the possibility of smart contracts facilitated by RSK’s two-way peg solution, so the announcement of Litecoin smart contracts has many crypto community members scratching their heads.

In a Reddit AMA conducted on the 2nd of April, Abra CEO Bill Barhydt highlighted the reasons why the platform chose Litecoin:

“We went with Litecoin as the second asset class, after bitcoin, for our smart contract investing solution for 3 primary reasons: 1. commitment to bitcoin compatibility: core roadmap, p2sh support, lightning support, etc; 2. slightly better scalability than bitcoin in short term (block size and block times); 3. mining fees.”

The smart contracts referenced by both Charlie Lee and Bill Barhydt, however, are dissimilar to smart contracts in the Ethereum sense. Instead, they are unique to the Abra platform and are used by Abra to create synthetic digital assets.

Wait — What is Abra?

Image result for Litecoin Abra

Abra is a smartphone app that aims to streamline the cryptocurrency investment process, allowing users to invest in 20 different cryptocurrencies. Abra makes it possible to fund accounts with either bank transfers or American Express and allows users to trade in over 50 fiat currencies.

A unique element of Abra, however, is its smart contract based investment platform. Abra uses a multi-sig smart contract-based investment system that allows the platform to create synthetic digital assets based on either Bitcoin or Litecoin.

This mechanism essentially allows users to access instant exposure to both cryptos and fiat currencies without holding physical currency.

Abra smart contracts are based on P2SH scripts, and simulate investment contracts in the same way a gold ETF is a contract based on USD. In the case of a gold ETF, if the value of gold goes up, the user gains more USD — or if it goes down, loses USD. Abra smart contracts work the same way, but use Bitcoin or Litecoin instead of USD, with Abra itself acting as the counterparty.

The Future of Litecoin

Although the indefinite hiatus placed on the Litepay project may have negatively impacted the value of LTC, Litecoin’s recent partnership with Aliant alongside its integration with Abra has allowed it to recover its position in the top coin rankings.
With smart contracts set to launch on the Litecoin blockchain on the 13th of this month, Litecoin is set to experience a strong resurgence as one of the most valuable tokens by market cap.


 

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Author Sam Town 

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