Facebook plans cryptocurrency debut
techcrunch.com
techcrunch.com
One thing it does _not_ get you is censorship resistance. If the central authority wants to take away coins from a wallet, all it needs to do is to simply state that it will not honour the peg for coins originating from that wallet. This can be tracked by FIFO, dilution or any other stated accounting principle, and renders the balance in that wallet worthless.
How does using a blockchain/cryptocurrency make it easier to sidestep regulations compared to a regular old database?
But again - it's not about regulations. It's about interoperability. Centralised money transfer stuff is not new (PayPal? Banks?), the problem with it was always integration with other systems.
Also, if it's a centralised database, it's hard to build real startups on top of it. Look at what happened to startups building on top of Twitter APIs when Twitter decided to change them. If you build some parts on top of a public blockchain, it gives guarantees related to accessibility of those parts in the future.
I guess you could claim some sort of providence of money movements using a git like system but realistically I think it's likely the marketing department had far more to do with the decision than the engineering dept.
You only have to look at wechat's dominance thoughout Asia to realise whatapp could get absolutely blown away by the all-in-one messenger/payment system if it took off in the West.
You cannot compare blockchain with a regular database. A blockchain is more like an append-only store, or a WORM drive where each "file" or "record" is digitally authenticated and signed/hashed in a way to make undetectable modifications extremely difficult and/or expensive.
Yes, you can. That it is different, and the resulting difference in utility, is the exact point of such a comparison.
Actually yes.
From Switzerland to my brother in Belgium. It was transferred on the same business day at no expense to him or me. Look up SEPA[1] for details.
Just because the American banking system is the complete shits this does not necessarily apply to the rest of the world.
Do you think it's as easy for those in India, China, or Kenya, for instance?
It's probably easier to transfer funds via M-Pesa then from a bank account in Delaware to a bank account in Detroit
And, at least in theory, America is a wealthy country without any borders.
I can easily pay a street seller from my US bank account, directly to his/her phone, in seconds.
Pains me to say this because I had this international bank/credit card to M-Pesa transfers idea a decade ago, a professor dissuaded me from pursuing it.
5 years later, a bunch of services launched and many are thriving.
Actually yes. Take a look at xoom.com and it's competitors for example (flat rate money transfers at a fraction of swift fees). Only issue is getting money out of those countries. But that is a political and national issue.
Or for people without a bank account?
> Or for people without a bank account?
I'm having strong doubts that you actually understand how the world banks. There are hundreds of millions of people who don't have bank accounts, and use electronic payments through their cell providers.
Venezuela barely has a functioning electrical grid, so cryptocurrency would not seem to be a foolproof solution there.
Check out IBM world wire.
Also the SCT inst scheme has started being rolled out.
edit: also, those banks are UK ones. I'm not inclined to open accounts there with Brexit going on. Foreign accounts are also a pain for tax admin.
On another level, why should the state have a list of my accounts at all? It already sees all the accounts at banks within their territory. They don't need to concern themselves with accounts outside their jurisdiction.
In the context of income taxes, it should be enough to report total earnings, regardless of which specific account holds them.
Yes, the SEPA scheme is old and working only during business days according to the TARGET2 calendar, but you definitely can process a transfer within a couple hours (my online stock broker does).
Wetern Union, HiFX, PayPal, MoneyGram,Azimo work just fine.
Yes, frequently. Using TransferWise or FairFx, depending on where the recipient was, but inclusive of Thailand, USA, Ecuador, and Canada. The process was entirely painless, fast, and the transfer was cheap as chips, while bringing to bear the full weight of European bank regulations to protect me as a customer.
I wish more people on HN would understand the importance of this. I've said it here before but I think it's worth repeating. Banks want to send your money internationally and, as you've said, are more than capable of sending your money quickly and cheaply. Any time an international bank transfer is a pain in the ass it's by design to protect consumer interests and/or to protect government interests. There's a reason you can't just rock up to the teller at Wells Fargo and send $1,000 to North Korea the same way you can if you needed to send $1,000 to Canada.
I don't care about the reason that banks have for sabotaging their own service. That is not my problem.
I used TransferWise once a few years ago from USD to CAD and it cost ~1.4% all-in. That's cheaper than my bank but still very expensive if you're transferring your whole salary every pay period like I was. I ended up using Bitcoin instead.
Is it cheaper now?
Sending money across borders is historically super complex and expensive, you're right. The WorldBank estimates that it costs an average of 8% in total fees (transfer fees + exchange rate mark-up) to transfer money internationally.
For international transfers with banks and cash-based money transfers, this is still true.
But, in the last 10 years, we've seen hundreds of new online money transfer operators innovating in the field (way before crypto) starting with Xoom in the first wave and then TransferWise, Remitly, WorldRemit, InstaRem, Azimo and hundreds of others...
Sending $300 to Mexico to any agent location to pickup cash will cost you $2 with the cheapest option: https://www.monito.com/send-money/united-states/mexico/usd/m...
$1000 from Canada to a bank account in the Philippines in minutes? $6 https://www.monito.com/send-money/canada/philippines/cad/php...
etc...
These new innovative services are up to 10x cheapers than banks or traditional cash-based money transfers, often faster and much more convenient.
In this case there wouldn't be a single issuing entity: "the cryptocurrency would indeed be pegged to a basket of currencies". I had written about the idea of a stablecoin tied to a basket of currencies, e.g. J M Keynes' Bancor and the Word Currency Unit, a few years back.
> why not just have your balance be an entry in a regular database maintained by that entity? What exactly does the blockchain gain you here?
If it is controlled by a centralised organisation there would appear to be little point of "blockchain", but maybe as the article says "By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency".
With that said I can imagine one reason why users would care for USD stablecoins. The US has made owning and dealing with USD directly an absolute horrendous nightmare for international users and US citizens abroad following FATCA et al. And this way you can claim you never owned or touched USD which means whoever is holding stablecoins for you instead of USD doesn't have to file truckloads of paperwork for you to open the account. That's a regulatory loophole though one could imagine the US would start complaining about if this really took off.
There's one remote reason I can think of that people would flip to stablecoins vs fiat if they had some tax view that that wasn't a constructive sale and it could benefit from some likekind kind of treatment since its a "crypto" and not a "fiat". It's obviously a silly argument and there's no way the IRS would fall for it (nor do they even accept it between regular cryptos) but i can't speak for other jurisdictions.
Tether has got hundreds of millions of dollars worth of funds seized from their banks.
I would disagree, using a central authority to sign transactions and exchange crypto back to fiat is fine, but the real power of a cryptocurrency is the ability to generate wallets and create transactions without having to register a profile with a central authority. Whether facebook allows that or not would really determine whether they are a cryptocurrency or just a normal bank.
It sounds more like an ETF than a checking account since the coins are directly tied to a "basket". If the SEC agrees, they'll likely eventually require that the dividends and interest from the basket go to the coin owners.
Seriously. I don't see the fundamental difference in a digital widget that is used to transfer value backed by hard currency from transferring money between accounts by wire. It's like leaving a box on your doorstep by drone instead of truck and saying you're not delivering packages because the mechanism is different.
This sounds to me like they're opening bank accounts and debit payment services by a different name with the added bonus they can devalue your account at will and you have no FICA protection or chargeback mechanism.
The IRS have already made explicit that crypto to crypto is taxable and treated as capital gains/loss. Some stay in stablecoin so that they can be more liquid in the ecosystem. Simply, there are more exchange pairs for stablecoins, and some stablecoin allow storage in personal hardware wallet rather than exchanges.
What was the point of arcades taking your quarters and issuing you tokens for the machines? Why not just allow the machines to take your quarters?
The idea is for the issuer to take real money from you and issue you Monopoly money which the issuer can track and control. In a worst case scenario the issuer can make up new rules (change their terms and conditions on you) or declare bankruptcy/dissolve and not honor the redemption of your stable coins at all.
Once the actual use case/function of the token is know then one could answer if there is a benefit to users and if a Blockchain token makes sense over a database.
It means most people using it won't even realize it's a Blockchain token. It'll be like "Facebook Bucks". But then it also offers the flexibility of a blockchain token to more advanced users (withdraw to your own wallet, send to an exchange, etc).
Things which would matter are “can transfer real money to a friend with less markup than Apple/Google/PayPal”, “can sell things online at better terms than PayPal”, “can make transactions at a low enough rate that a business model requiring micro-payments is viable”, etc.
Facebook has a few wrinkles where that could be interesting - micropayments for games and content in particular - but it’s unclear what a blockchain adds to that since you’re already centralized on a single massive company which negotiates on take-it-or-leave-it terms.
- is cash you can email
- prevents hostile monetary policy from stealing your wealth (inflation, negative interest rates, haircuts, etc)
- keeps working when you travel (unlike Paypal / credit cards which often get frozen)
- uncensorable transactions that ignore borders
- can send large $ amounts anywhere for ridiculously cheap
- more vertigo than a theme park
“hostile monetary policy” is especially dubious in this context where it's supposedly pinned to the USD but even in other cases it's a hard sell for most people: do you a) put your money into a bank account, investment, or other asset you expect to do better than inflation or b) put everything into a complex system with no guarantees that it'll be operating in 5 years, fraud protection, etc. and hope that the conversion fees you pay on both sides will be lower than the difference?
“keeps working when you travel” could potentially be an area where it could match the credit card system except that it either means that you're traveling with a ton of cash and no recourse if someone steals it or, if like most people you use a managed service somewhere else, hoping that you don't trip the same kind of security measures which banks use for the same reasons. Given that most people do not travel that frequently and most travelers do not have significant issues using credit cards while abroad, it's unclear to me that this will be enough of a compelling advantage.
Case in point: I bought a new phone from overseas a few weeks ago. Paypal / wire fees were expensive, and after three days TransferWise (suggested by the seller) still couldn't make my new account work. I wound up paying in crypto, took about 5 minutes and cost me less than a buck. So yeah: cash I emailed.
It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.
So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.
Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.
You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.
I doubt this will be the case, even if the “scaling issue” is solved.
I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.
A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.
The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.
This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.
That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.
For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.
Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.
Crypto currency has two properties competing digital currencies lack.
True peer to peer transactions and censorship resistance.
They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.
But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.
When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.
Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.
They will be subject to as many regulations as PayPal, Apple, Venmo, etc.
They will also have the same need for security and fraud protection.
That is an absolutely horrible trade-off for anyone who wants a democratically run currency.
That and the irreversibility in cases of fraud make crypto a complete non-starter for me. I want to be able to reverse transactions if someone starts siphoning off my coin; and I want to be able to use the force of law to do so, if I win a lawsuit or even just don't want thieves to steal my money.
What is the crypto answer to "someone stole your private key and is stealing your money"?
There's a really big difference between your potential losses being capped zero to a few hundred dollars vs. “everything you own and half of the community will say it was your fault”.
There’s no free lunch, and the minimal security provided with crypto currencies is provided at a high cost.
There is _some_ inherent value in this. Decoupling the currency rate from a unit of time play provides an entrypoint for the store to incorporate value models that aren't captured by currency alone.
In the volume discount case, this allows them to incorporate fixed overhead models into the pricing scheme for game time.
I don't dispute the point, however, that the model does allow for abuse along other lines, and is often used that way in practice.
I think at the point of discounts of a USD stable coin...a good arguement could be made that is an investment contract/security that needs to be registered.
If that were true, it would highlight how SEC is treating cryptocoins differently than say gift cards (which are often sold with discounts).
Of course either way FB could in theory probably register their coin with the SEC anyway without much difficulty.
Because it's cool and everyone is doing it.
Look at Paypal USD Balance. It's really just a "token" issued by PayPal, an IOU where 1 PaypalUSD = 1 USD Debt from Paypal. But PayPalUSD can only be used within Paypal.com. The only way to bring PayPalUSD outside of Paypal is to call in your debt to PayPal and withdraw the money to your bank.
PayPal has always said that their success relies on people holding PayPalUSD. People who keep their money in PayPalUSD are the ones making PayPal bank. First of all, it costs Paypal next to nothing if that user sends their PayPalUSD to another user. Yet they collect transaction fees. Furthermore, PayPal can throw this money into low-risk investments and earn 3-4% on it.
Facebook tokens are PayPalUSD 2.0. They can be used within the Facebook.com ecosystem. But on top of that, people can withdraw them and use them outside of Facebook.com. Basically, any website can start integrating these FacebookCoin. It means less people will need to cash out, and will instead keep their money in FacebookCoins.
You can convert PayPal directly into US dollars at your bank, so I don’t think they would see any benefit to supporting such a distributed token system unless the could make a cut on every transaction.
I’m having a hard time seeing Facebook being able to support a stable coin without being subject to the same regulations and cost as any other system.
Perhaps they will get a competitive advantage through data mining and could charge smaller transaction fees.
Clearing takes less time than FedWire or ACH.
Settlement, on the other hand, still has to go through the Federal Reserve.
Until Quantum Computing comes of age, this is theoretically much harder with DLT / blockchains.
On a decentralized, trustless blockchain you have no such thing. So you either end up hard-forking like Ethereum did after their DAO debacle (but then are you a decentralized trustless system anymore?) or you continue normally and basically the people who lost their money are screwed.
Most of the time is spent managing risk. Sure, that includes persistence, but that is also marginal. You also have to validate integrity, authenticity, cross-reference against legal requirements (eg. enforce rates, detect fraud — including internal fraud, apply sanctions lists, estimate AML-CFT risk, …). You have to make sure all accounting rules are followed. You have to abide by the procedures that you and the regulator determined. All that with no downtime.
All of this takes time. Historically, a large part was manual. While automation has helped, there are quite a few clearing houses where an army of programmers is spent battling the chaos.
A system least tolerant to inconsistencies and most tolerant to failure, increases reliability while reducing risk. The cryptographic properties of a distributed blockchain help there, regardless of whether the system has open membership (which is not Facebook’s case, unlike most cryptocurrencies).
A different ledger design can be equally powerful or more. In fact, I expect that a lot of the compliance and accounting logic can be expressed elegantly in a custom design.
Generically, we have seen instances where centralized ledgers/databases are manipulated and permit double spend. Even in the case of multi billion dollar publicly traded companies going Private, during due diligence we have seen upward of double the issued shares of stock than actually exist. In such a case we have the corporation with a centralized stock ledger, stock trusts with their own centralized ledgers, etc... but the mistake of double spend still happened. In those cases Blockchain would have never allowed those errors, one such case cost the buyer $150M personally post acquisition. Not to say that is in anyway applicable here, but without even knowing the token function we can’t say, but it just goes to show Blockchain does have some use cases and benefits where centralized ledgers have failed costing hundreds of millions.
Take the current status of publicly traded companies, they require a lot of middlemen to manage these centralized stock ledgers, including, the corporate general counsel, underwriters/investment banks, stock trust, stock exchanges, and stock brokers/trading apps.
Each one of those middlemen takes a significant slice of the pie, whereas Blockchain would allow corporatations to bypass all these middlemen and allow stock to be issued and traded P2P.
Is there a reason you believe the existing centralized stock ledgers of public companies and system of middlemen is more advantageous than having P2P stock on a distributed ledger/network?
Unask the question and ask who benefits instead.
Number two, they want to get in ahead of other cryptocurrency. They don't want to wait around for Bitcoin or Ethereum to become an expected form of payment, because by that time they won't be able to cash in. If they have their own cryptocurrency, they can take advantage of the hype for bitcoin etc., but still control and profit from it directly.
The only potential advantage of such a system over an RDBMS is the inability to reverse transactions without people taking serious notice, simple git-style hash chains generally solve this too, often with reduced overhead.
Real currencies (USD, EUR, ..) are stored by visa / mastercard in regular databases, so why not facebook's currency ?
It's why you didn't see anyone actually supporting Venezuela's Petro.
That plus cryptocurrencies is still a buzzword that generates interest and speculation (especially since they've rebounded a bit these past few months).
A blockchain can be implemented in a very simple way when operated by a centralized authority. What adds complexity to it is the consensus protocol required for decentralization when you cannot trust all parties in the network.
Beyond that many also use it as a way to introduce inflation and take a cut right off the top so instead of $1 getting your 4 tokens they can say make it so $1 only gets you 3 tokens and most people don't even notice. Now when you start pumping tokens in the machines in your mind you still feel like you're spending 25 cents when in reality you're spending 33 cents. Instant markup for increased profit.
Because it has a completely stable value, from the standpoint of someone who always uses that currency. Let's say it's pegged to USD. Boom, if I'm in the US and everything I do is in USD, this cryptocurrency can suddenly be the same as actual dollars from my standpoint. There's virtually no difference.
The USD has an almost completely stable value to the standard person in the US. Everything they do is in USD. They don't care about some fluctuations vs other currencies vs EUR etc. I'm not saying there are zero affects, of course there are, but there's really nothing they can do about it. EUR goes up 10% to the USD, ok something they buy which is imported from europe is maybe 10% more expensive in USD.. there is nothing they can do about that, so the USD is still completely stable from their perspective. It's not like most people are saying "Oh 1% of my purchases this year are coming from Europe, so I'm going to hold 1% of my assets in EUR to mitigate this affect".
>What exactly does the blockchain gain you here?
Given the above, that means that the crypto currency is now 100% the same as holding USD. I'm not holding cyrpto as a diversifier, or to get magically rich by a big crypto move. I would actually hold crypto TO USE IT.
Maybe I want to send my brother $50 who lives in a different place. Wouldn't it be cool to just send some crypto knowing that it's virtually exactly $50 when I send it and always after that? Open the phone on some app, click a button and boom. Without having to worry about any intermediary bank etc.
This whole notion that crypto SHOULD NOT be pegged is looking at some dystopian future where a currency like the USD is not stable anymore. And hey, I'm not saying that could never happen.. but the world will have pretty much exploded if that ever happens so I'm not sure your cryptocurrency will help much in that case.
Crypto right now is a get rich quick scheme with extremely little actual use cases. Pegging one to the USD would make it usable- which should be the whole point...
Stable coins are really what bitcoin should have been: digital money! Now bitcoin is just a big casino owned and run by dubious entities/exchangers/trading platforms with no oversight.
edit: If you want to listen to the explanation in more detail, Meanhash explained it on a recent episode of the Hashr8 podcast: https://h4shr8.libsyn.com/meanhash
https://www.reddit.com/r/CryptoCurrency/comments/bx9dik/face...
"required to opt into" doesn't count as freely given consent, so it doesn't change anything; GDPR-wise doing this is exactly the same as simply using the data without asking for the opt-in.
If they're "required to keep the data from every transaction for 10 years for tax purposes" means that they're allowed to use that data for that particular purpose only; GDPR-wise taking data gathered for tax purposes and using it for ad targeting is just as forbidden as "simply" taking data without permission and using it for ad targeting.
No one has figured out how to do it at scale using USD. Cryptocurrency theoretically offers a solution, but is still mostly unproven.
Whoever figures it out could potentially save the news business.
As for the value of blockchain here, there is absolutely none. Facebook is creating a currency and labeling it a cryptocurrency which denotes the use of a blockchain, when in reality considering they're the central issuing authority of the currency and are the ones who determine it's value/inflation rate (i.e. pegging as you rightly described). Therefore using a blockchain for decentralized settlement and provenance here serves absolutely no real purpose and you are correct in pointing out that they can just keep everything in a database (which is likely what they will actually do).
A pegged "cryptocurrency" can just be designed as a centralized service (e.g. a REST API backed by a traditional database) without losing any of its properties. The "crypto" and "blockchain" bits are marketing.
A good rule of thumb is this: could someone have come up with this pre-Bitcoin? If the answer is yes, it's not a (decentralized) cryptocurrency.
Git is a Blockchain. Do you think that git is useless?
No I don't think a "blockchain" is merely a public database nor that git is a "blockchain". The term "blockchain" was initially defined as the proof-of-work data structure that Bitcoin uses to store transactions and its definition was later slightly expanded to describe that same data structure used in other cryptocurrencies. If it now just means "public database" then we've lost a useful word.
> Git is a Blockchain. Do you think that git is useless?
Git also uses merkle trees but the similarity pretty much ends there.
There are many forms of consensus algorithms.
> Git also uses merkle trees
Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
People try to make these concepts way more complicated than they actually are. A lot of this crypto stuff is actually quite simple.
> Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
I wouldn't say so, the block chain is a chain, not a tree. Actually, the use of merkle trees to represent transaction data is an implementation detail. Bitcoin would have worked fine without them (though "lightweight" clients would have suffered a bit).
I second that it's a simple concept though.
Today, when PayPal or Patreon shuts down an account, we only find out if that person complains and anybody pays attention. I imagine creators might prefer a platform that doesn't have obvious ways to easily shut them down, and where Facebook can claim to a court that doing so requires fundamentally compromising the security of the system.
A borderless stablecoin will be a gamechanger. It can fuel commerce but above that it will kill many middlemen and rightly so.
Centralized stablecoins should be illegal, because the issuer can print money from thin air without collateral, unlike banks which are regulated and the money supply is controlled with interest rates.
What is it about cryptocurrency that people still don't get?
- you can get transparency (the entire ledger must be public, so you reduce the risk of many kids of internal fraud and manipulation.)
- you can use these coins outside the facebook ecosystem -- I can't think of immediate value here, but I can see a long play where Facebook can turn into a bank
It is simultaneously the case that FB can't build this and then magically be exempt from each jurisdiction's laws related to cross-border transfers. It's not like a real decentralized coin where there's no real enforcement mechanism, each government will know exactly where to knock and FB will play ball with reporting requirements, etc.
I think the right analogy is that they want to be to the rest of the world what AliPay is to China -- ubiquitious, so that it will very quickly be the case that you know everyone supports it in the world so you don't need to carry around your credit cards. Sort of like what Apple and Google Pay would want to be but with a larger incentive for retailers to adopt it as it has instantly higher penetration among users. It also might be more likely that messaging payments to a retailer becomes the norm instead of NFC (like how everyone in China pays for a restaurant check with AliPay by simply sending payment via message to the address, usually on the table in a QR code).
I'm not sure that it needs to be a blockchain but I assume it's about making the economics work by cutting out middlemen. If FB gets everyone to use this in their daily lives, however, it'll be a huge win for FB even if they don't make money on it directly -- because purchase data is very valuable, but also because you can't feasibly get rid of FB once it becomes your normal payment method.
I also have a sneaking suspicion that, in conjunction with point (1), many of these modern finance plays also totally fail to comprehend the vast investment into technology that traditional finance companies have made. They see a shitty iOS app, think "wow Old School Bank is never going to understand computers, let's disrupt them", so they start with an amazing iOS app, then struggle to reliably implement the rest of the stuff that matters (process automation, scalability, government relationships, customer support).
Point being, the world turns, time goes on, the players might change, but the game doesn't.
But that doesn't mean something better can't come up. People don't hate banks for the monolith but their monopoly like nature that had stifled innovation and displayed outright criminal behavior. Don't forget 2008 recession was triggered by banks. Recent libor scandal..
About the technology investments. I would argue against this. Banks are more regulatory and defend my turf play than a technology play. Have you ever worked for a bank or any finance facing institution. There's layers and layers of clutter. Whole party is one big monolith, sucking money from places that it doesn't deserve.
Biggest benefit banks provide as in traditional banks is the account and trust that, that money in the account will remain on the name of holder. That trust as well was breached multiple times during withdrawal limits and freezes.
We all need better alternative. May be FB won't be the one. May be bank themselves will become more open and lean. But someone needs to push. There's a lots of money to be made and quite frankly FB deserves it for trying.
Why do you think this is? Do you think its just because "hur hur they're evil"?
I'm not saying there isn't some of that. But I am saying:
1. The big banks have discovered something that the small, modern banks haven't. YET. They will. Its that banking sucks, and we need the regulatory hurdles.
2. If you think these small banks don't have the potential to be just as evil as the big ones currently are, you're delusional. Money corrupts everything. Google and Facebook used to be the darling of the tech community, and look at them now. If they can turn so suddenly, anyone can.
Maybe we need a better system. Maybe we dislike the system we have, but we can't have a better one. Maybe we need better people. But, you can't change human nature.
Healthcare is a similar industry. Its ridiculously huge. Everyone needs it. There's trillions of dollars in it. Plenty of money. Then Theranos comes along and thinks that the old way of doing things is overrated. And then they die. Because, fun fact, agility and leanness works in some industries, but its mostly industries that don't actually matter.
Do you have some sort of evidence for that? "We can't have a better (system)" is a pretty bold statement to make without some kind of supporting evidence. Absolute truths require absolute evidence.
Everything is easy when you're small. Look at Simple in the US; they have an awesome iOS app, a few interesting features, they gained customers, became more popular, and... feature development stopped. Their pace of externally-facing innovation has DRAMATICALLY slowed over the past three years. They've done automated expense allocating w/ recurring goals, family accounts, and protected savings accounts with a high interest rate, and that's, like, it. In three years. They don't even have 2FA w/o SMS.
Why is that? I don't know. But I have a suspicion: Banking is fucking difficult. Its insane. There's regulation and red tape everywhere, you make one mistake and you instantly not only lose customers but could ruin their lives. Its fundamentally not an easy industry to operate in. So, they have to allocate a ton of engineering effort into the back-office side of things, which is exactly what every other bank does. Simple even contracts with BBVA to handle the accounts, which should make some things easier.
Crypto doesn't change anything at all. Again, its easy and awesome when its small, and Crypto also has an advantage that regulation has been slow to catch up, so in some ways they can just shrug their shoulders and say "its not real money, you can't have the same expectations." For now. As it gets bigger it'll become subject to the same regulations that fiat is subject to, and years later it'll look exactly the same. The underground networks, including Bitcoin, can maybe escape some of this due to the lack of centralized corporate backing, but Facebook can't.
Venmo/Paypal seem to have no problem achieving this without a blockchain.
Comments like this devalue the entire conversation being had here by pushing people either towards twitter style shitposting/flamewars, which are terrible ways to have conversations, or simply causing those who would like to comment to not engage. Either way, can you not?
- some pegged currencies are still decentralised (e.g. MakerDAO) - they rely solely on smart contracts - even with a centralised peg, you have to trust an organisation to keep the collateral, but the contract can state that anyone can move the funds around, so the managing organisation cannot just remove funds at will
Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?)
I'm pretty sure its much easier to make a single request to a single well defined server, as opposed to connecting with a swarm of peers, downloading the entire blockchain, verifying it, and computing your balance by traversing the entire history.
Its not like there is some universal "blockchain API" that computers come from the factory ready to understand. Specialised code has to be written to deal with every new cryptocurrency.
That aside, the main problem isn't centralization but rather the trust level. The point is to not have to trust someone isn't serving you the false data. Contracts must be created and ran only when the data can be cryptographically verified to be true.
There are no trustless oracles if any of the required data are outside of the settlement system (e.x. blockchain). Even when the data are inside, you still have cases of collusion that make things problematic.
People are trying to sell something that's close to impossible. Especially when they try to add infinite flexibility on it. Even with the currently low stakes there have been incidents of "oracles" getting compromised. There are several strategies to try and camouflage a centralized oracle to a faux decentralized entity but eventually if stakes get high enough, your entity will become a target and it'll become once again obvious what's happening.
To provide another example besides the ICO: you can use a pegged blockchain-based coin to trade on Uniswap or any other decentralized exchange. This would not work with the database based coin. The idea is not to gain efficiency, the idea is to gain interoperability with the blockchain ecosystem.
Unlike most other currencies, Facebook's new currency will be readily available to and easily usable by virtually everyone everywhere, and it will likely have very low transaction costs -- much lower than those of most financial intermediaries. You will be able to use it as easily from New York as from Timbuktu, bypassing the inefficiencies and high fees of the legacy financial system.
Why use traditional nation-backed money when you can click a button on your phone instead?
Facebook seems to be gradually morphing into a sort of planet-wide nation.
Wait, you can't do that with your nation-backed currency? In Australia, I can literally open my bank app and send money to any Australian account with just a phone number and they receive it in 30 seconds or so with no fees...
Yeah, international transfers are a little harder, but for domestic transfers it's super easy.
Private party transactions up into the thousands of dollars (say, buying a used car) generally require cash.
It's incredibly archaic.
reminds me of the classic "If You're Not Paying For It, You Become The Product"
edit: the prototypical crypto (bitcoin) has fees as the final (after there's no more new btc) incentive for miners to process transactions. but this doesn't?
probably we'll have to look at their white paper but if Facebook is the only actor running this network why make it a cryptocurrency at all?
Marketing.
They're selling a seat at the governance table for $10 million. I suspect in an effort to put this new token in the decentralized/not a security bucket the SEC views ETH. That allows them to avoid registration and the enforcement headache Kik is currently dealing with. Quite clever on Facebook's part. Zuckerberg is smart enough to give up a bit of control and toe the line ("decentralized"... among his Wall Street friends) rather than retain complete control and run head-first into a regulatory brick wall. FTA:
> Facebook is in talks to create an independent foundation to oversee its cryptocurrency, The Information reports. It’s asking companies to pay $10 million to operate a node that can validate transactions made with its cryptocurrency in exchange for a say in governance of the token. It’s possible that node operators could benefit financially too. By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency.
Stablecoins, where you explicitly state that it's never ever going to appreciate and make you richer by just holding it, don't meet that criteria so SEC doesn't (and isn't allowed to) regulate them.
IRS/tax issues, and AML/KYC (anti money laundering/know your customer) laws still are a potential issue, but that's not handled by SEC.
I don’t know what use case this solves that isn’t fairly competitive already although it will probably have a bitcoin style valuation bubble. It’s also sort of capped in its utility. If it overshadows national government currencies... the governments will be incentivized to block it. That was true of Bitcoin but it’s doubly true of Facebook. And Facebook has to abide by laws so it can’t just quietly work regardless of regulations like other crypto.
And what can I buy with this? If I need to convert to dollars, is an easy facecoin swap plus a facecoin to dollars swap really be more convenient?
Edit: on Apple Pay, I’m pretty sure you can send cash. But I don’t know, because I haven’t ever had the need to do this... which is I suppose my point.
It's a stable coin so it can't have such a bubble. It's main utility will probably only be cross border p2p payments for countries that allow it.
Git also supports signed commits.
In git you use other external signals to determine which fork to select in the case of diverging histories.
With blockchain, all participants are untrusted, so you just go with the longest chain by convention, and rely on the fact that it’s extremely difficult to build such a chain.
(By the way, I often see these two points in the same thread: "blockchains should be replaced with centralized SQL databases" and "Git repositories are just like blockchains" which makes me wonder if Git repositories also ought to be replaced with centralized SQL databases.)
Blockchains whose tokens are subject to the authority of a central issuer anyway should be replaced with centralized SQL databases. Bitcoin/namecoin/etc. can't be replaced with centralized databases. FBCoin can, as can any blockchain that is supposed to track meatspace resources(since physical resources are subject to the authority of the local government/men with guns anyway).
> Git repositories are just like blockchains
Nope, I don't consider this to be true. Blockchains are supposed to have decentralized consensus and allow arbitrary nodes to propose changes.
Turning it into a Blockchain makes it public, which is a significant advantage.
Which is oe of the reasons my eyes roll so hard when "business types" and "idea guys" decide they need to explain "blockchain" to me, but have never heard of Merkel Trees...
Git repos are absolutely Blockchains!
People don't understand how simple the concept of Blockchain is.
Whatever Facebook comes up with will be the antithesis of censorship resistant. There is no point to buy or use it because it solves no problems for regular people.
Which brings us to why Facebook is bothering. For the simple reason that governments print currencies. Control (through censorship) and self enrichment ( through inflation).
This only works by compelling people to use the currency. My prediction is that Phase 2 of this ridiculous plan is to force people on Facebook to use the token while gradually cutting third party payment processors out.
I disagree with that statement. It does solve the problem of getting paid through facebook (which a lot of people do and use). It surely promotes and carves Facebook deeper into their lives, but it solves a problem.
Im not for this offering, but its not hard for me to see why it has a chance of mass aadoption. Hopefully it fails.
Seems that FB is just riding the buzzword wave.
Also my guess is informal trading markets will form using this facebook currency. If everyone is using the same form of payment then cross boarder trade becomes much easier. No more foreign exchange hassles. I've already seen it happen with stuff like amazon gift cards but recently amazon removed the ability to check the balance of amazon gift cards. I have already moved away from accepting amazon gift cards for this very reason. If facebook's coin is widely used and can be used to buy a lot of different stuff then I would definitely shift my informal trading to the facebook coin.
Why is it that people still use the service? Is convenience really that powerful?
So, no you individually using fb or not doesn't really matter other than on principle. I don't use it because I find them morally reprehensible, but I also understand my boycott is purely symbolic unless another 100m or so people join me (probably won't happen).
More likely a boycott will prove unnecessary; the biggest threats to Facebook are (a) fashion and (b) facebook.
... but not using Facebook makes me feel better.
I think Facebook will slowly decay into irrelevance.
One thing that really surprises me is how few startups are taking on Facebook. Obvious strategy is to work at the edges; there are so many opportunities abound to undermine them. Don’t build a new Facebook, instead just carve off their features incrementally and be the Instagram of events, classifieds, chat, video, news sharing, interest groups... huge scope for innovation. Facebook is the SAP of social networks, it’s time to move on.
The main aspect I'm considering these days is that I'm not important in the grand scheme of things so there's no rational reason to increase difficulty in things that do really matter such as having memorable experiences while I can in exchange for privacy or to make some statement. In a sense, I will have privacy anyway out of just being a data point out of billions.
It's not that Facebook is convenient but rather that not having it can be inconvenient depending on your context.
Considering how many veritable snake oil products gets advertised the platform, not to mention political propaganda pushed as "promoted posts", I can't help but wonder if this push to crypto is FB's way of hiding who its ad buyers are in the future.
don’t get me wrong, i’m no fan of facebook and their data practices, but i don’t agree with what you said above.
If they were going to use the "for tax purposes" data for ad targeting or something else, then that's a GDPR violation - if they're going to intentionally violate GDPR, then they might as well simply store and use the data without permission and lie that it's been deleted; there's no need to bother with the charade.
E.g. “Facebook’s market abuse could easily extend to coercing its millions of ad customers to use its cryptocurrency, enabling nefarious ad campaign spending for political causes without a way to trace the source.”
Meh, this feels like the Jordan Peterson "Set Your House in Perfect Order First" fallacy. Plenty of very flawed people (and presumably companies) have literally driven humanity forward.
Not sure I think Facebook's payment processing system is going to drive humanity forward, but insisting people clean up their shit first -- or even be generally reasonable human beings or companies -- excludes most artists, civil rights leaders, and technology companies.
For the record I doubt that will work. The early adopters will be scammers and people duped into thinking this is their get rich quick opportunity.
It's a stablecoin. There's no get rich opportunity.
However, it is not going to damage Bitcoin in any way. Main use case for Bitcoin is buying drugs. No one is going to be paying for drugs with a currency tied to their real-world identity.
If Bitcoin fails as a currency but succeeds as a store of value, that's still a win.
People built on top of Bitcoin.
Yes you can. On BSV which is the legacy bitcoin
Let me know when Craig Wright actually signs the genesis block, and cryptographicly proves that he is Satoshi, and does so publicly in a way that I can personally verify.
When that happens, I will give you 1000$ worth of BSV.
It won't happen though.
Doesn’t Transferwise already fill this niche? These days you can send several hundred dollars to and from the US for around $2-4 in fees, whereas the fees used to be $40-60 from traditional banks or Western Union.
As Keynes apparently did not say: "The market can stay irrational a lot longer than you can stay solvent."
If you hit your trading / credit limits you could lose a lot of money despite being right in the long run.
And as Keynes definitely did say, "In the long run, we are all dead."
- Create a global currency that can only be used by FB users and through FB apps.
- Invest a billion in pegging the currency to make it stable and position it as the unchallenged WorldMoney™, but it will eventually carry its own weight in the long term.
- Collect direct purchase information like crazy, their ultimate wet dream (I know GDPR is not circumvented by the taxes thing, but it's as simple as asking "Can I track your purchases?" and people will simply say yes.)
- Implement this scheme as a blockchain to dodge antitrust laws (or whatever applies when you become a worldwide financial entity) by distributing the operation/management/governance among interested parties.
- Even receive some millions from said companies to hold that power in the first place.
- Still hold the real power over the implementation at the end of the day, but not the accountability.
- Dodge taxes like crazy wherever you can, charge fees whenever you want, etc.
- Make users comply to whatever conditions you want because at some point it will become mandatory to have a FB account.
Am I missing something?
EDIT: - Pay their employees and finance their worldwide operation with monopoly money.
Facebook: hold my beer
Any other post about crypto is a scam. Any other tech than react is immature. Etc etc.
Have fun at FB guys, I hope your share vest soon
FB has made me good money, and I don’t get shaken by what I see on the news. At the end of the day, FB still does more good things than bad, and I am more likely to take them seriously when they set out on a new venture.
I don't think this is a claim you can make these days without a good argument behind it. It certainly seems false to me.
> I am more likely to take them seriously when they set out on a new venture
This is real, though. Whatever FB are, they're not dumb and whatever they do should be taken seriously.
† Before anyone points out that FB contribute to open source… they've about, what, 50 projects, Google has over 2,000 and has been running that Google Summer of Code project for many years which supports 1,000s of projects outside Google.
The entire top 10 are entirely negative of Facebook.
So please don't do that, and please don't post unsubstantive comments in general. We're hoping for thoughtful conversation here, not flames.
> Third, corporate directors are not required to maximize shareholder value. As the U.S. Supreme Court recently stated, "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." (BURWELL v. HOBBY LOBBY STORES, INC.) In nearly all legal jurisdictions, disinterested and informed directors have the discretion to act in what they believe to be the interest of the business corporate entity, even if this differs from maximizing profits for present shareholders. Usually maximizing shareholder value is not a legal obligation, but the product of the pressure that activist shareholders, stock-based compensation schemes and financial markets impose on corporate directors.
https://www.lawschool.cornell.edu/academics/clarke_business_...