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Big bad Libra: Do we really need (or want) Facebook to reinvent money?

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How to build trust in cryptocurrency
Bill Barhydte, founder and CEO of ABRA, tells Tonya Hall why it’s important to build trust in cryptocurrency in order to improve access to global financial markets with cryptocurrency.

Are you kidding me? Facebook, the company that thinks privacy is a challenge to be overcome rather than an essential right to be protected, is launching its own currency. Good lemmings that we are, we’re all supposed to transfer our hard-earned dollars or euros or rupees or yen into Zuckerbucks?

Okay. Okay. Let’s back up a second. What exactly is Facebook doing? Let’s break it down.

Facebook has announced it will be launching a new cryptocurrency called Libra sometime next year. The company is going to integrate payment and currency transfer capabilities right into Facebook’s mobile app, Messenger, and WhatsApp. Presumably, we’ll see it show up in the Facebook-owned Instagram app sometime later.

Libra, according to Facebook, is like Bitcoin in that it’s a blockchain-based currency. But it’s not like Bitcoin because Facebook claims it’s put a structure in place to stabilize the value of Libra.

Also: Facebook debuts Libra cryptocurrency: a Bitcoin killer?

Libra is also not like Bitcoin because you can’t mine Libra. Although cryptocurrency mining rigs are hugely expensive these days, you can still mine Bitcoin. But you have to buy Libra. In that way, getting Libra is a lot more like buying in-game currency in World of Warcraft by spending real money than it is like Bitcoin, where you at least have the option to apply prodigious computing power and get cryptocoin in return.

Look, I’m going to say “Facebook claims” a lot. Normally, when we say Company X claims, it means we’re not entirely sure we can fully trust what the company is saying. Whenever we say Company X claims, it’s kind of code for a mix of we-can’t-verify-it with it-smells-like-BS. But in this case, when we say “Facebook claims,” um, yeah, that’s what we mean. It’s got that used car that lived through Hurricane Katrina smell to it.

Also: Key takeaways from damning UK report on Facebook’s world of “digital gangsters”

In any case, Facebook claims that Libra will be separate from Facebook, so you don’t have to worry about Facebook sucking down all your financial information along with everything else it’s already gathered up. The foundation for this claim is that Facebook has created a subsidiary company called Calibra which will manage the transactions.

Facebook also claims that it’s not in control of Libra, because there’s an independent, not-for-profit association running the “reserve” and Facebook only has one vote in that association.

Stay with me. This gets confusing fast, but I’ll try to unwrap it as we go.

The Libra Association

The Libra Association is made up of member organizations who have each bought into it by forking over $10 million. In megalomaniac terms, ten million is chump change. The roster of organizations looks impressive, but when you really think about it the motivation of most of the members is obvious.

Members include VISA, Mastercard, PayPal, and Stripe. These organizations would pay ten mil simply to keep an eye on what Facebook is doing with payments. Their buy-in gets them a vote, and potentially some income if Libra winds up screwing with their national currency-based business models. eBay is part of it because eBay owns PayPal and hey, making it easy for someone in another country to buy Cabbage Patch Kids is right on mission for the company.

Next you’ve got Uber and Lyft, who are spending so much, another few million doesn’t matter. Plus, they’re all about mobile payments since they’re pretty much mobile incarnate. In-car-nate. Get it? Fine. That’s my Dad Joke for the day. No more. I promise.

There are a bunch of blockchain startups participating, because of course they are. The same with the lineup of venture capitalists, who really, really want to make cryptocurrency a financial boom as big as social networking was.

Finally, to lend a taste of credibility, there are a few non-profits who are members of the Libra Association. This is part of the spin that Libra is good for the world, because it will enable the billion or so smartphone owners who don’t have bank accounts to spend and store money in their phones. It’s “empowering” – unless, of course, these financially challenged folk lose their phones or they get stolen.

The Libra Reserve

That chump change $10 million buy-in to the Libra Association isn’t just about doing good or keeping your enemy closer. There’s potentially big money to be made by the Association shareholders. That’s because of the Libra Reserve.

When you transfer real national currency into Libra in return for digital fake money, the real money has to go somewhere. That’s the Libra Reserve. On one hand, it’s there to back up the value of the Libra, in much the same way that the gold reserves at Fort Knox are there to back up the value of our paper money. The value of the Libra will be based, claims Facebook, on the value of real currency like the dollar, yen, and euro.

But it’s also there to make money for the Libra Association members, in the form of interest. They’re planning on investing that money and each – according to the amount they put into the Libra Association – gets a share of the interest.

There will also be transaction fees for money going in and out of Libra, along with every Libra transaction. Those fees also go into the reserve.

Here’s the elevator pitch. Facebook has more users and reach than any single organization has had since the beginning of time. If this works, the majority of those users will put their money into Libra. You, if you sign up, can get interest on that money. Ooh. Shiny.

Notice that Google, Apple, Amazon, and Microsoft are not part of this Libra cabal. Neither are any banks.

Don’t worry. That slightly nauseous feeling is normal. It’s just a side effect of the rational response to yet something else in our world beginning to go terribly, terribly wrong.

What could possibly go wrong?

Facebook has claimed that it will be separate from Calibra, and the data gathered by Calibra won’t be used by Facebook. So, yeah, your privacy is golden. Riiiiight.

Facebook hasn’t said anything about Calibra not using your financial data, so there’s that nerve-wracking omission.

Facebook has also claimed that there will be the equivalent of an opt-in to allow some level of data sharing. Users won’t be opted in by default. But Facebook and its partners are going to bang the drum really, really hard to get you to convert your cash to Libra, so they’re going to offer tasty incentives.

Wanna bet giving up some of your privacy rights will be buried in the terms and conditions for accepting those incentives? I’ll take that bet.

Then there’s the whole decentralized blockchain so no one can get to it all thing. The idea of the blockchain came from Bitcoin and it’s a way to store encrypted unique information in a decentralized form.

Except Facebook expects Libra to be so big that it would take too much time to do decentralized transactions. There will be some centralized management of all that Libra currency. If you don’t think that’s already a target for hackers, you’re not paying attention.

Speaking of rotten smelling eggs, Facebook intends to allow Libra to be baked into apps other than those owned by Facebook. It’s going to start promoting an API so anyone with access to a good pizza delivery service and a tendency to stay up all night can incorporate Libra transactions into their apps.

Do you think there might be some spammy, scammy apps out there? Sure you do.

Then there’s the government. Which government? Any government. Libra is specifically designed (like Bitcoin) to be government agnostic. But since each government likes to govern how money flows through its economy (and its sticky tax-collecting hands), many governments are likely to weigh in on Libra. The odds are they’re not going to like what they see.

The good news, from the point of view of Facebook and the Libra Association, is that it doesn’t take a lot of money to influence a senator or congresscritter.

According to the New York Daily News, it now costs about $10.5 million dollars (total!) to win a senate seat. Does that number look familiar? Yep, it costs $10 million to buy into the Libra Association. Now, I’m not going to say that any of these companies are buying votes. That’s illegal. But it’s not illegal to hire lobbyists and fund them reaaal well.

Oh, and for the company who wants to influence policy on a budget, it costs about $1.7 million for a seat in Congress. Let’s put this in big business perspective. It cost $5 million for a 30 second TV spot in Super Bowl 2018. The cost of a single Super Bowl ad is enough to fund the campaigns for almost three members of congress.

Also: Facebook asked by lawmakers to pause Libra cryptocurrency project

Again, I’m not saying our elected officials will do anything illegal. I’m just saying that you shouldn’t expect them to be the bulwark against Facebook’s new currency scheme.

Is it really that bad?

Put in a historical perspective, not really. Our society has reinvented money a bunch of times in just the last century. Paper checks, electronic fund transfers, credit cards, services like PayPal were all fundamental rethinks on how money is transferred.

Libra is just another take on smoothing the movement of money between hands. Think of it this way: Amazon wouldn’t work if we didn’t have credit cards.

Rethinking money transfer opens up new doors of possibility. But it also has chilling effects. From my perspective as a very busy consumer, Amazon is wonderful. But from the perspective of the many businesses that Amazon has put out of business, it’s is the grim reaper.

Most of our modern technological powerhouses are really double-edged swords. They provide some real value, but they do so at a cost. Sometimes that cost is obvious and shows up in monthly subscription fees. Other times, that cost is insidious and just sucks away at us behind the scenes, to the detriment of us all.

Facebook is clearly in that second category. The Libra will undoubtedly generate value and a following. But do we need it?

Some would say that the disadvantaged without access to banks do, and that’s true. But Facebook? Facebook???

Also: Quitting the five tech giants: Could you really flee Facebook?

What do you think? You probably already trust Facebook with knowledge of your preferences, locations, interests, friends, and political opinions. Are you going to trust Facebook with your money, too? Let us know in the comments below.


You can follow my day-to-day project updates on social media. Be sure to follow me on Twitter at @DavidGewirtz, on Facebook at Facebook.com/DavidGewirtz, on Instagram at Instagram.com/DavidGewirtz, and on YouTube at YouTube.com/DavidGewirtzTV.



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Security

Key Criteria for Evaluating Security Information and Event Management Solutions (SIEM)

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Security Information and Event Management (SIEM) solutions consolidate multiple security data streams under a single roof. Initially, SIEM supported early detection of cyberattacks and data breaches by collecting and correlating security event logs. Over time, it evolved into sophisticated systems capable of ingesting huge volumes of data from disparate sources, analyzing data in real time, and gathering additional context from threat intelligence feeds and new sources of security-related data. Next-generation SIEM solutions deliver tight integrations with other security products, advanced analytics, and semi-autonomous incident response.

SIEM solutions can be deployed on-premises, in the cloud, or a mix of the two. Deployment models must be weighed with regard to the environments the SIEM solution will protect. With more and more digital infrastructure and services becoming mission critical to every enterprise, SIEMs must handle higher volumes of data. Vendors and customers are increasingly focused on cloud-based solutions, whether SaaS or cloud-hosted models, for their scalability and flexibility.

The latest developments for SIEM solutions include machine learning capabilities for incident detection, advanced analytics features that include user behavior analytics (UBA), and integrations with other security solutions, such as security orchestration automation and response (SOAR) and endpoint detection and response (EDR) systems. Even though additional capabilities within the SIEM environment are a natural progression, customers are finding it even more difficult to deploy, customize, and operate SIEM solutions.

Other improvements include better user experience and lower time-to-value for new deployments. To achieve this, vendors are working on:

  • Streamlining data onboarding
  • Preloading customizable content—use cases, rulesets, and playbooks
  • Standardizing data formats and labels
  • Mapping incident alerts to common frameworks, such as the MITRE ATT&CK framework

Vendors and service providers are also expanding their offerings beyond managed SIEM solutions to à la carte services, such as content development services and threat hunting-as-a-service.

There is no one-size-fits-all SIEM solution. Each organization will have to evaluate its own requirements and resource constraints to find the right solution. Organizations will weigh factors such as deployment models or integrations with existing applications and security solutions. However, the main decision factor for most customers will revolve around usability, affordability, and return on investment. Fortunately, a wide range of solutions available in the market can almost guarantee a good fit for every customer.

How to Read this Report

This GigaOm report is one of a series of documents that helps IT organizations assess competing solutions in the context of well-defined features and criteria. For a fuller understanding consider reviewing the following reports:

Key Criteria report: A detailed market sector analysis that assesses the impact that key product features and criteria have on top-line solution characteristics—such as scalability, performance, and TCO—that drive purchase decisions.

GigaOm Radar report: A forward-looking analysis that plots the relative value and progression of vendor solutions along multiple axes based on strategy and execution. The Radar report includes a breakdown of each vendor’s offering in the sector.

Solution Profile: An in-depth vendor analysis that builds on the framework developed in the Key Criteria and Radar reports to assess a company’s engagement within a technology sector. This analysis includes forward-looking guidance around both strategy and product.

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Key Criteria for Evaluating Secure Service Access

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Since the inception of large-scale computing, enterprises, organizations, and service providers have protected their digital assets by securing the perimeter of their on-premises data centers. With the advent of cloud computing, the perimeter has dissolved, but—in most cases—the legacy approach to security hasn not. Many corporations still manage the expanded enterprise and remote workforce as an extension of the old headquarters office/branch model serviced by LANs and WANs.

Bolting new security products onto their aging networks increased costs and complexity exponentially, while at the same time severely limiting their ability to meet regulatory compliance mandates, scale elastically, or secure the threat surface of the new any place/any user/any device perimeter.

The result? Patchwork security ill-suited to the demands of the post-COVID distributed enterprise.

Converging networking and security, secure service access (SSA) represents a significant shift in the way organizations consume network security, enabling them to replace multiple security vendors with a single, integrated platform offering full interoperability and end-to-end redundancy. Encompassing secure access service edge (SASE), zero-trust network access (ZTNA), and extended detection and response (XDR), SSA shifts the focus of security consumption from being either data center or edge-centric to being ubiquitous, with an emphasis on securing services irrespective of user identity or resources accessed.

This GigaOm Key Criteria report outlines critical criteria and evaluation metrics for selecting an SSA solution. The corresponding GigaOm Radar Report provides an overview of notable SSA vendors and their offerings available today. Together, these reports are designed to help educate decision-makers, making them aware of various approaches and vendors that are meeting the challenges of the distributed enterprise in the post-pandemic era.

How to Read this Report

This GigaOm report is one of a series of documents that helps IT organizations assess competing solutions in the context of well-defined features and criteria. For a fuller understanding consider reviewing the following reports:

Key Criteria report: A detailed market sector analysis that assesses the impact that key product features and criteria have on top-line solution characteristics—such as scalability, performance, and TCO—that drive purchase decisions.

GigaOm Radar report: A forward-looking analysis that plots the relative value and progression of vendor solutions along multiple axes based on strategy and execution. The Radar report includes a breakdown of each vendor’s offering in the sector.

Solution Profile: An in-depth vendor analysis that builds on the framework developed in the Key Criteria and Radar reports to assess a company’s engagement within a technology sector. This analysis includes forward-looking guidance around both strategy and product.

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Security

Key Criteria for Evaluating Edge Platforms

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Edge platforms leverage distributed infrastructure to deliver content, computing, and security closer to end devices, offloading networks and improving performance. We define edge platforms as the solutions capable of providing end users with millisecond access to processing power, media files, storage, secure connectivity, and related “cloud-like” services.

The key benefit of edge platforms is bringing websites, applications, media, security, and a multitude of virtual infrastructures and services closer to end devices compared to public or private cloud locations.

The need for content proximity started to become more evident in the early 2000s as the web evolved from a read-only service to a read-write experience, and users worldwide began both consuming and creating content. Today, this is even more important, as live and on-demand video streaming at very high resolutions cannot be sustained from a single central location. Content delivery networks (CDNs) helped host these types of media at the edge, and the associated network optimization methods allowed them to provide these new demanding services.

As we moved into the early 2010s, we experienced the rapid cloudification of traditional infrastructure. Roughly speaking, cloud computing takes a server from a user’s office, puts it in a faraway data center, and allows it to be used across the internet. Cloud providers manage the underlying hardware and provide it as a service, allowing users to provision their own virtual infrastructure. There are many operational benefits, but at least one unavoidable downside: the increase in latency. This is especially true in this dawning age of distributed enterprises for which there is not just a single office to optimize. Instead, “the office” is now anywhere and everywhere employees happen to be.

Even so, this centralized, cloud-based compute methodology works very well for most enterprise applications, as long as there is no critical sensitivity to delay. But what about use cases that cannot tolerate latency? Think industrial monitoring and control, real-time machine learning, autonomous vehicles, augmented reality, and gaming. If a cloud data center is a few hundred or even thousands of miles away, the physical limitations of sending an optical or electrical pulse through a cable mean there are no options to lower the latency. The answer to this is leveraging a distributed infrastructure model, which has traditionally been used by content delivery networks.

As CDNs have brought the internet’s content closer to everyone, CDN providers have positioned themselves in the unique space of owning much of the infrastructure required to bring computing and security closer to users and end devices. With servers close to the topological edge of the network, CDN providers can offer processing power and other “cloud-like” services to end devices with only a few milliseconds latency.

While CDN operators are in the right place at the right time to develop edge platforms, we’ve observed a total of four types of vendors that have been building out relevant—and potentially competing—edge infrastructure. These include traditional CDNs, hyperscale cloud providers, telecommunications companies, and new dedicated edge platform operators, purpose-built for this emerging requirement.

How to Read this Report

This GigaOm report is one of a series of documents that helps IT organizations assess competing solutions in the context of well-defined features and criteria. For a fuller understanding consider reviewing the following reports:

Key Criteria report: A detailed market sector analysis that assesses the impact that key product features and criteria have on top-line solution characteristics—such as scalability, performance, and TCO—that drive purchase decisions.

GigaOm Radar report: A forward-looking analysis that plots the relative value and progression of vendor solutions along multiple axes based on strategy and execution. The Radar report includes a breakdown of each vendor’s offering in the sector.

Vendor Profile: An in-depth vendor analysis that builds on the framework developed in the Key Criteria and Radar reports to assess a company’s engagement within a technology sector. This analysis includes forward-looking guidance around both strategy and product.

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