Crypto Articles

Is Facebook planning to become a competitor to Coinbase?


The executive in charge of blockchain research at Facebook, David Marcus, has resigned from his position on the board of a major cryptocurrency exchange in order to avoid a conflict of interest.


At a time when the trend is people leaving their jobs to find employment in the cryptocurrency industry, this move seems to go against the grain. However, it can be interpreted as confirmation that Facebook is serious about its cryptocurrency-oriented plans.

Time to buy the dip?Said Marcus in his announcement: “Because of the new group I’m setting up at Facebook around Blockchain, I’ve decided it was appropriate for me to resign from the Coinbase board.”

Appropriate to resign

David Marcus has worked at Facebook since August 2014, and his role has been listed as  ‘exploring blockchain at Facebook’ since May 2018. He joined the Coinbase board of directors in an advisory capacity in December 2017.A quick summary of his pre-Facebook career: David Marcus is a computer programmer and entrepreneur.

He founded a communications company called GTN Telecom in Geneva in 1996, a “mobile monetization” company called Echovox in 2000, also in Geneva, and a mobile payments company called Zong in California in 2008. Zong was purchased by PayPal in 2011, and Marcus joined the latter as vice president before taking the reins in 2012.

There had been rumours of Facebook buying Coinbase; Marcus’ presence at both was one of the reasons. His departure may signal that the rumours were not founded.

Conflict of interest

Mark Zuckerberg, founder and CEO of Facebook, announced his company’s interest in blockchain technology in January 2018, ostensibly to “take power from centralized systems and put it back into people’s hands.

” This is important for the $524.61 billion business because it has suffered from some image problems after it was discovered to be selling people’s information to a company specialising in targeted, clandestine marketing.

This happened despite Zuckerberg’s assurances to users that their information was safe; he was called to testify before Congress in April 2018.Interestingly, Facebook banned all cryptocurrency-related advertising from appearing on its website shortly after the aforementioned announcement.

This was its response to the epidemic of scams, but it was a blow to the legitimate cryptocurrency industry, especially when other major networks followed its example. The ban lasted for six months before being relaxed – this move came shortly after Marcus was sent off on his exploration.

Coinbase is the Californian company that runs the US’ biggest cryptocurrency exchange, Coinbase Pro.

 This venue has millions of users and handles $132.3 million in cryptocurrency a day, according to coinmarketcap.com, and has been becoming increasingly institutionalised with its political lobbying, acquisitions and licence applications. In April is valued itself at $8 billion – a small meal for Facebook.

However, Coinbase is not behaving as if is about to be gobbled up. In the second quarter of 2018 alone the company hired more than 60 people to key positions (‘Head of Business Development’,’VP of Financial Planning & Analysis’, ‘Head of Data Engineering’), acquired several companies and invested in twelve others, according to the company’s official blog.

The cryptocurrency industry has been poaching employees from other industries on a fairly widespread basis for over a year now. In this context, Marcus cutting ties with Coinbase implies that Facebook is going to become a cryptocurrency company itself.

One possible hypothesis is that Facebook is planning to become a competitor to Coinbase by opening a cryptocurrency exchange.

A research which studied user data leaks from cryptocurrency exchanges has revealed that Americans are the main targets for cryptocurrency hacks.The study was conducted by Group-IB, a Russian based computer forensics and information security firm, who revealed their findings in a report titled “2018 Cryptocurrency Exchanges-User Accounts Leaks Analysis.

”The firm revealed that in 2017, the number of “compromised login data” increased by 369 percent in comparison to 2016, while in January 2018 alone, there were 212 leaks of login data, which represented an increase of 689 percent to the monthly average experienced in 2017.




The report credits the excitement about cryptocurrencies as a significant factor in the increase of incidents “against the monthly average of 2017.” According to the study, the three major countries that are targeted the most by hackers are the United States, Russia, and China. It also revealed that one in every three victims were Americans.

Cryptocurrency Exchanges

The report says cryptocurrency exchanges have suffered series of hacks due to the sophistication of the tools used. Hackers have now “adapted patterns of attack” used on banks on digital asset platform, which makes them quite vulnerable.

According to the researchers, crypto exchanges have suffered cyber attacks that have resulted in financial losses totaling $80 million through “account leaks” on exchanges. Group-IB says it has identified “at least 50 active botnets” responsible for the leaks and it says the hackers infrastructure spreads across the globe, with the majority based in the United States and the Netherlands.  

It names popular malicious software such as Pony Formgrabber—a malware that works by retrieving authorization and login credentials.According to Group-IB, the compromised accounts used in their study featured users of popular exchanges such as Bithumb and CEX.io.

Crypto Interest Related to Increase in Hacks

There is a direct relationship between the growing interest of cryptocurrencies and the number of crypto hacks, claims the experts at Group-IB. Towards the tail end of 2017, the second most popular topic in Global news was ‘Bitcoin’ and the search query ‘How to buy bitcoin’ made it into the TOP-3 most searched query in Google.



The Experts of Group-IB believes the sudden interest in bitcoin contributed to the increase in compromised accounts from December 2017 to January 2018. While exchanges such as Binance were struggling to keep up with registration, the focus shifted away to customer onboarding, as information security was neglected.




The report cited the lack of two-factor authentication (2FA) options on the platforms and the use of basic passwords as reasons why the hacks were possible. Director of Special Projects at Group-IB Ruslan Yusufov, however, believes the industry needs to learn from its mistakes and do more to protect itself.

“Increased fraudulent activity and attention of hacker groups to crypto industry, additional functional of malicious software related to cryptocurrencies, as well as the significant amounts of already stolen funds,  signals that the industry is not ready to defend itself and protect its users,” Yusufov noted.

Recommendations for Safety

Group-IB recommends the use of separate passwords for different exchanges and enabling the 2FA option. The company also warns against using public Wi-Fi for carrying out exchange transactions. Cryptocurrency exchanges, on the other hand, are advised to make 2FA mandatory for users, conduct regular security audits and create more awareness internally concerning personnel security.


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Bitcoin was recently called a combination of a bubble, a Ponzi scheme and an environmental disaster by one of the world's leading authorities on finance and economics.

But underneath that sensational description, cryptocurrencies are saddled with underlying technological flaws that will likely prevent them from living up to the hype or merely becoming a more commonly used currency.

Hyun Song Shin, head of research at the Bank for International Settlements in Switzerland, discusses the topic with Bloomberg News economics editor Scott Lanman.

Listen here... https://www.bloomberg.com/news/articles/2018-08-09/bitcoin-s-big-problems

The Commonwealth Bank of Australia (CBA) is claiming the world's first bond transaction delivered solely using blockchain, having been charged with the honour by the World Bank.

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CBA said it is the sole arranger of the first bond globally to be created, allocated, transferred, and managed using blockchain technology.The "$AUD Kangaroo bond", Blockchain Offered New Debt Instrument (bond-i), which uses a private Ethereum blockchain, has been developed alongside the Northern Trust, QBE, and Treasury Corporation of Victoria.

See also: Queensland Treasury uses CBA blockchain for 'cryptobond' prototype

It is expected that once launched, the bond will be issued and distributed on a blockchain platform operated by the World Bank and CBA in Washington and Sydney, respectively."We take a collaborative approach to innovating, and have a track record of partnering with other leading financial institutions, government bodies, and corporates to innovate through blockchain.


We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants," CBA executive general manager of Institutional Banking and Markets International James Wall said.

There's also a social good element to the initiative, with Wall touching on the World Bank's plan to use tech such as blockchain to end poverty. As part of its mandate to reduce poverty and promote lasting development, the World Bank annually issues between $50 billion and $60 billion in bonds for sustainable development.

The global financier is increasing its focus on helping countries transition to sustainable economies that are technology-led, CBA explained, while exploring the benefits of "disruptive" technologies such as blockchain. "We are delighted to have partnered with the World Bank, and fully support its vision of making innovative use of technology such as blockchain to increase the efficiency of financing solutions to better achieve their goal to end extreme poverty," Wall said.

"Our goal is to continue to harness innovation for the benefit of markets and our mission of ending poverty and boosting shared prosperity," World Bank Treasurer Arunma Oteh added.

Must read: Cheat sheet: Blockchain (TechRepublic)The announcement follows the bank's head of blockchain Sophie Gilder revealing in December that CBA was expecting to be the first to implement the issuance of a bond on the blockchain.

At the time, Gilder said the world's first bond issuance would be in partnership with a "very large" world issuer.

"We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state," Gilder said in a statement on Friday.

"By working collaboratively with the World Bank, we were able to find solutions to technical and legal considerations to make this groundbreaking transaction a reality.

"The blockchain platform was designed and developed by the CBA Innovation Lab's Blockchain Centre of Excellence. An independent review of the CBA blockchain platform's architecture, security, and resilience was conducted by Microsoft, and law firm King & Wood Mallesons acted as deal counsel on the bond issue and advised on the legal architecture for its implementation. While the bond uses Ethereum, CBA said it is open to other options in the future.

The bank last month announced completing a global trade experiment, shipping nuts overseas that were tracked via blockchain. The new blockchain platform, underpinned by distributed ledger technology, smart contracts, and the Internet of Things (IoT), was used to facilitate the trade experiment that saw 17 tonnes of almonds sent from Sunraysia in Victoria, Australia to Hamburg in Germany.

At the end of 2016, CBA, alongside Wells Fargo and Brighann Cotton, also claimed the first interbank trade transaction combining blockchain technology, smart contracts, and IoT.