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Facebook will only build its own Calibra cryptocurrency wallet into Messenger and Whatsapp, and will refuse to embed competing wallets, the head of Calibra David Marcus told the Senate Banking Committee today.
Calibra will be interoperable so users can send money back and forth with other wallets, and Marcus committed to data portability so users can switch entirely to a competitor. But solely embedding Facebook's own wallet into its leading messaging apps could give the company a sizable advantage over banks, PayPal, Coinbase, or any other potential wallet developer.
Other highlights from the "Examining Facebook's Proposed Digital Currency and Data Privacy Considerations" hearing included Marcus saying:
The US should "absolutely" lead the world in rule-making for cryptocurrencies
"Yes" Libra will comply with all US regulations and not launch until the US lawmakers' concerns have been answered
"You will not have to trust Facebook" because it's only one of 28 current and potentially 100 or more Libra Association members and it won't have special privileges
"Yes I would" accept his compensation from Facebook in the form of Libra as a show of trust in the currency
It is "not the intention at all" for Calibra to sell or directly monetize user data directly, though if it offered additional financial services in partnership with other financial organizations it would ask consent to use their data specifically for those purposes.
Facebook's core revenue model around Libra is that more online commerce will lead businesses to spend more on Facebook ads
But Marcus also didn't clearly answer some critical questions about Libra and Calibra.
Chairman Crapo asked if Facebook would collect data about transactions made with Calibra that are made on Facebook, such as when users buy products from businesses they discover through Facebook. Marcus instead merely noted that Facebook would still let users pay with credit cards and other mediums as well as Calibra. That means that even though Facebook might not know how much money is in someone's Calibra wallet or their other transactions, it might know how much the paid and for what if that transaction happens over their social networks.
Senator Tillis asked how much Facebook has invested in the formation of Libra. TechCrunch has also asked specifically how much Facebook has invested in the Libra Investment Token that will earn it a share of interest earned from the fiat currencies in the Libra Reserve. Marcus said Facebook and Calibra hadn't determined exactly how much it would invest in the project. Marcus also didn't clearly answer Senator Toomey's question of why they Libra Association is considered a not-for-profit organization if it will pay out interest to members.
Senator Menendez asked if the Libra Association would freeze the assets if terrorist organizations were identified. Marcus said that Calibra and other custodial wallets that actually hold users' Libra could do that, and that regulated off-ramps could block them from converting Libra into fiat. Buthis answer underscores that there may be no way for the Libra Association to stop transfers between terrorists' non-custodial wallets, especially if local governments where those terrorists operate don't step in.
Perhaps the most worrying moment of the hearing was when Senator Sinema brought up TechCrunch's article citing that "The real risk of Libra is crooked developers". There I wrote that Facebook's VP of product Kevin Weil told me that ""There are no plans for the Libra Association to take a role in actively vetting [developers]", which I believe leaves the door open to a crypto Cambridge Analytica situation where shady developers steal users money, not just their data.
Senator Sinema asked if an Arizonan was scammed out of their Libra by a Pakistani developer via a Thai exchange and a Spanish wallet, would that U.S. citizen be entitled to protection to recuperate their lost funds. Marcus responded that U.S. citizens would likely use American Libra wallets that are subject to protections and that the Libra Association will work to educate users on how to avoid scams. But Sinema stressed that if Libra is designed to assist the poor who are often less educated, they could be especially vulnerable to scammers.
The hearing is ongoing and we'll continue to update this article with more highlights
July 16, 2019 / 0
Quirk, a YC-backed company, is looking to bring cognitive behavioral therapy (CBT) to more people suffering from anxiety or depression.
CBT aims to lessen or stop harmful behavior by changing the way people think, stopping them from falling into established patterns of negatively distorting their reality to justify or account for unhelpful habits.
"CBT has 40 years of research behind it," says CEO and founder Evan Conrad. "I've had severe panic attacks my whole life and saw different therapists who tried what I now know is CBT. I assumed it was a pseudo science. It wasn't until 10 months ago that I re-discovered CBT on my own and learned about its efficacy. It's the gold standard."
The app helps users practice one of the most common exercises in CBT: the triple-column technique.
Users jump into the app whenever they have anxiety or a depressive thought to record it. They then identify any distortions that apply to that thought, such as Catastrophizing, Magnification of the Negative, Fortune Telling, or Over-Generalization, among others. From there, the user can challenge the thought with reasons why that thought might have been illogical to begin with. Finally, the user replaces the thought with something more reasonable.
For example, if I was worried about not getting a response to a text, I might believe (irrationally) that it has something to do with how that person feels about me, rather than the more obvious explanation: they're just busy.
The hope of CBT is that identifying thought distortions, and manually replacing them with beliefs grounded in reality retrains the brain to experience the world in a realistic way and relieves patients from their depression and/or anxiety.
Conrad says that he went from having two anxiety attacks a week to two every six months.
The problem that Quirk is trying to solve is two-fold. First, people may not know the benefits or the empirical data supporting CBT. Secondly, the process of manually recording this on pen and paper can be more tedious and feel less private out in a public space.
Quirk's attempt to solve these problems is to make CBT accessible to more people and to make the process of doing CBT slightly more private.
We asked Conrad about the potential negative affects of practicing CBT without the oversight of a mental health professional.
"As for self-administered CBT, we've run this by a number of therapists and all of them have said it's generally a net-benefit," Conrad said via email. "What would be harmful is if someone with a severe condition decided that they should use Quirk instead of seeing a therapist. But in practice we've seen the opposite effect. People who would have otherwise done nothing about their condition use Quirk as 'first step' towards therapy or will use Quirk when they would otherwise have no option (either because their isn't a treatment in their country/area or because they can't afford it)."
Dr. Daniel A. Fridberg, a practicing CBT psychiatrist from the University of Chicago, says that the triple-column technique is a great CBT exercise, but that it's just part of the whole package of Cognitive Behavioral Therapy. He also said that the only way to know if a product like this can do harm is through a study, but that CBT itself is an evidence-based psychotherapy and has been proven effective.
"CBT is an effective, time-limited, reasonably cost-effective psychotherapy for things like depression, anxiety, substance abuse, etc," said Dr. Fridberg. "The problem is that finding a good CBT therapist who delivers evidence-based treatment isn't always easy in smaller communities where there isn't easy access to a research hub. In some respects, an app that is packaged in an attractive way, gets people's attention and promotes CBT as effective is a good thing."
Dr. Fridberg also stated that anyone suffering from an issue that's disrupting their day-to-day functioning should seek professional help.
Conrad says that he hopes Quirk can be a jumping off point for folks suffering from anxiety and depression, with the app suggesting that those suffering seek professional help in conjunction with using the app. He also shared that Quirk hopes to be able to connect users to professionals in their area as soon as they have the scale to do so.
Quirk costs $4/month for users.
Is Facebook preparing to launch a serious competitor to TikTok? If so, the company just picked up some key talent to make that happen. Last week, Facebook announced plans for a new division, called the NPE Team, which will build experimental consumer-focused apps where it will try different ideas and features, then see how people react. Now, Facebook has picked up former Vine GM Jason Toff to join the NPE team as a Product Management Director.
Now that we've moved to CA, I suppose it's a good time to share what I'm up to next! In two weeks, I'll be joining Facebook as a PM Director starting up a new initiative under the recently formed NPE team (https://t.co/HzK6Bjqzqx)
— Jason Toff (@jasontoff) July 15, 2019
Toff's experience also includes time spent at Google, most notably as a Product Lead for YouTube before exiting to Vine in 2014. At the short-form video app maker, Toff worked as Head of Product for a year, then became Vine's General Manager.
Vine, of course, was later snatched up by Twitter — and there, Toff moved up to Director of Product Management before boomeranging back to Google, where his initial focus was on AR and VR projects.
Most recently, Toff worked as a Partner at Google's Area 120, Google's in-house incubator where employees work on experimental projects.
That's not all that different from what Facebook appears to have in store with its own NPE Team ambitions. Similar to Area 120 or Microsoft Garage, for example, the NPE Team plans to deliver apps that will "change very rapidly" in response to consumer feedback. It will also be quick to close down experiments that aren't useful to people in fairly short order.
That's not how Facebook itself operates. Its more experimental apps have had longer runs, as the company used them to gain feedback to inform its larger projects. For example, its photo-sharing app Moments ran from 2015 through early 2019, and its TrueCaller-like app Hello for emerging markets ran for several years, despite fairly limited adoption.
Facebook has also tried and failed with a number of other offshoots over the past decade, like Facebook Paper, Notify, a Snapchat clone called Lifestage, and others, as well as those it picked up through acquisitions, then later shut down like tbh or Moves. It also previously ran an internal incubator of sorts called Facebook Creative Labs, which birthed now-failed projects like Slingshot, Riff, and Rooms.
Many of these efforts were fairly high-profile at launch, which made their eventual shut down more problematic for Facebook's image. With NPE Team — as with Area 120 or Microsoft Garage — there's a layer of separation between the test apps and the larger company. Many of the apps that the NPE Team puts out will bomb, and that's the point — it wants to get the failures out of the way faster so others can find success.
While Toff can't yet say what he'll be working on at Facebook, there's a lot of speculation that NPE Team will try to come up with some sort of answer to TikTok, the Beijing-based short-form video app that sucked up Musical.ly in 2018 and now is a Gen Z social networking hit with some 500 million-plus monthly users. Toff's background with Vine could certainly be helpful if that were the case.
Facebook, of course, already tried to get a TikTok clone off the ground with Lasso, but the experiment didn't take off and the app lead, Brady Voss, left Facebook soon after its launch. It
Toff says he's hiring for NPE Team, including both UX designers and engineers.
I can't talk project specifics but can share that I'll be HIRING. I'm looking to assemble a diverse and mighty 2-pizza dream team full of creative can-doers, so if you're a UX designer or engineer (or both) and thrive in zero-to-one environments, HMU!
Facebook's testimony to congress: Libra will be regulated by Swiss
The head of Facebook's blockchain subsidiary Calibra David Marcus has released his prepared testimony before congress for tomorrow and Wednesday, explaining that the Libra Association will be regulated by the Swiss government since that's where it's headquartered. Meanwhile, he says the Libra Association and Facebook's Calibra wallet intend to comply will all US tax, anti-money laundering, and anti-fraud laws.
"The Libra Association expects that it will be licensed, regulated, and subject to supervisory oversight. Because the Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA)" Marcus writes. "We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association. The Association also intends to register with FinCEN [The U.S. Treasury Department's Financial Crimes Enforcement Network] as a money services business."
Marcus will be defending Libra before the Senate Banking Committee on July 16th and the House Financial Services Committees on July 17th. The House subcomittee's Rep Maxine Waters has already issued a letter to Facebook and the Libra Association requesting that it halt development and plans to launch Libra in early 2020 "until regulators and Congress have an opportunity to examine these issues and take action."
The big question is whether Congress is savvy enough to understand Libra to the extent that it can coherently regulate it. Facebook CEO Mark Zuckerberg's testimonies before Congress last year were rife with lawmakers dispensing clueless or off-topic questions.
Sen. Orin Hatch infamously demanded to know "how do you sustain a business model in which users don't pay for your service?", to which Zuckerberg smirked, "Senator, we run ads." If that concept trips up Congress, it's hard to imagine it grasping a semi-decentralized stablecoin cryptocurrency that took us 4000 words to properly explain, and a 6-minute video just to summarize.
Attempting to assuage a core concern that Libra is trying to replace the dollar or meddle in financial policy, Marcus writes that "The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena. It will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy. Monetary policy is properly the province of central banks
Marcus' testimony comes days after President Donald Trump tweeted Friday to condemn Libra, claiming thaat "Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra's 'virtual currency' will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International."
TechCrunch asked Facebook for a response Friday, which it declined to provide. However, a Facebook spokesperson noted that the Libra association won't interact with consumers or operate as a bank, and that Libra is meant to be a complement to the existing financial system.
Regarding how Libra will comply with US anti-money laundering (AML) and know-your-customer (KYC) laws, Marcus explains that "The Libra Association is similarly committed to supporting efforts by regulators, central banks, and lawmakers to ensure that Libra contributes to the fight against money laundering, terrorism financing, and more" Marcus explains. "The Libra Association will also maintain policies and procedures with respect to AML and the Bank Secrecy Act, combating the financing of terrorism, and other national security-related laws, with which its members will be required to comply if they choose to provide financial services on the Libra network"
He argues that "Libra should improve detection and enforcement, not set them back" because cash transactions are frequently used by criminals to avoid law enforcement. "A network that helps move more paper cash transactions—where many illicit activities happen—to a digital network that features regulated on- and off-ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will present an opportunity to increase the efficacy of financial crimes monitoring and enforcement."
As for Facebook itself, Marcus writes that "The Calibra wallet will comply with FinCEN's rules for its AML/CFT program and the rules set by the Office of Foreign Assets Control (OFAC) . . . Similarly, Calibra will comply with the Bank Secrecy Act and will incorporate KYC and AML/CFT methodologies used around the world."
These answers might help to calm finance legal eagles, but I expect much of the questioning from Congress will deal with the far more subjective matter of whether Facebook can be trusted after a decade of broken privacy promises, data leaks, and fake news scandals like Cambridge Analytica.
That's why I don't expect the following statement from Marcus about how Facebook has transformed the state of communication will play well with lawmakers that are angry about how those changes impacted society. "We have done a lot to democratize free, unlimited communications for billions of people. We want to help do the same for digital currency and financial services, but with one key difference: We will relinquish control over the network and currency we have helped create." Congress may interpret 'democratize' as 'screw up', and not want to see the same happen to money.
Facebook and Calibra may have positive intentions to assist the unbanked who are indeed swindled by banks and money transfer services that levy huge fees against poorer families. But Facebook isn't acting out of pure altruism here, as it stands to earn money from Libra in three big ways that aren't mentioned in Marcus' testimony:
It will earn a share of interest earned on the Libra Reserve of traditional currencies it holds as collateral for Libra that could mount into the billions if Libra becomes popular.
It will see Facebook ad sales grow if merchants seek to do more commerce over the Internet because they can easily and cheaply accept online payments through Libra and therefore put marketing spend into those efficiently-converting channels like Facebook and Google.
It will try to sell additional financial services through Calibra potentially including loans and credit where it could ask users to let it integrate their Facebook data to get a better rate, potentially decreasing defaults and earning Facebook larger margins than other players.
The real-world stakes are much higher here than in photo sharing, and warrant properly regulatory scrutiny. No matter how much Facebook tries to distance itself from ownership of Libra, it started, incubated, and continues to lead the project. If Congress is already convinced "big is bad", and Libra could make Facebook bigger, that may make it difficult to separate their perceptions of Facebook and Libra in order to assess the currency on its merits and risks.
Below you can read Marcus' full testimony:
For full details on how Libra works, read our feature story on everything you need to know
Waze now shows road toll prices along your driving route
Navigation app Waze is making getting to where you're going even easier – or at least more transparent. A new feature rolling out today will show you any tolls along your route, including the actual amount you're going to pay, across both the U.S. and Canada.
This is above and beyond what you'll get in most navigation apps, where you might get a visual or text indicator that there is a toll on one of the roads in your path (and you can opt to avoid them if possible) but you won't know what you're actually paying. With Waze, you'll get the amount – sourced from its community of user drivers, rather than direct from the official toll road operators, however, but Waze's crowd-sourced navigation data often has a leg up on the official source in other cases.
Waze will show you the toll prices up front, too, before the navigation actually gets under way, which is great because that's when you actually have the opportunity to do something about it, whether it's scrounging seat cushion change or just choosing to drive a different way.
This will be rolling out beginning today, so keep an eye out if you're trying to get somewhere in the U.S. or Canada.