Facebook’s New Cryptocurrency Gets Big Backers
wsj.com
wsj.com
Missed opportunity to call them "Marks", although maybe only German speakers will get the joke.
Germans use cash much more than the average Western European. The memory of hyperinflation and bank system collapse is one of the explanations why people prefer to store value in currency (often foreign currency) and not trust so much a bank or card issuer.
I've listened to people from the world bank, the IDB and at least one representative of a central bank explain to me with enthusiasm how their pet crypto and blockchain projects were creating new opportunities for their organizations. There's always some crypto consultant lurking in the background of these conversations.
Especially after learning all the downsides you get with these kind of distributed systems (slow finality, low throughput, limited in capabilities, inefficient, open to new attack vectors).
I've talked to economist and political scientist that understood the implications of trading without central banks very well.
In general, who cares how Chase keeps track of my checking account? It might have this feature or that feature but when it is being used as it is there isn't much to be excited about. If you're Chase it might make life a little easier to choose one thing or the other but the rest of the world probably doesn't care.
What's more Chase charges $25 per month to keep an open checking account, keeps only a small portion of your funds on hand and may both lock you out of your account and freeze your funds on a whim whereas Bitcoin won't.
I don't care what Chase does with my dollars because the promise isn't that there's a vault somewhere that a banker can point to a pile of bills and say "that's Cole's money right there." The promise is that at any time I can withdraw any amount of money, and o have no problem believing that promise.
As for locking my account on a whim, that's what I signed up for. Every time so far I have had a financial account locked it has been because someone who wasn't me was trying to use my money. As for avoiding being punished for crime well I'm not too into money laundering so I think I'll be ok. Otherwise it's balancing the risk that the bank will make a fixable mistake with the existing system which has the ability to fix errors and reverse thefts.
The public audit trail has yet to return thousands of my dollars from mtgox. I bet if there was massive fraud and or theft of the reserves at Chase that I would have had my money back immediately.
(I don't actually have a checking account at Chase)
This is just a ""feature"" of the backwards American system, plenty of countries still mostly have free current accounts. Although the very low interest rates are definitely putting pressure on banks to try to find ways to charge people.
If cryptocurrency is, for you, a way to get away from the abusive dominance of banks, why would you use such a service?
If you want to use a bitcoin bank you can. If you don't then you don't have to and can self custody.
You have the choice to do either. Which is not the case with electronic claims on fiat money, as they require a bank counterparty.
Then try looking at the post I responded to?
Your responses to me seem kinda pointless here.
"Crypto is great because banks suck" "I'm ok with banks, therefore this isn't a need I have"
Then you come along and tell me crypto can maybe act like a bank. So what?
Bingo! Social credit system with verified ID.
The crypto part is just to make sound hip.
Of course "deaf ears" is nowadays support emails being handled by copy-pasting bots.
Cryptocommunication might be nothing but HTTPS/TLS. Cryptocurrency could very well be something similar, without involving Blockchain technology.
What is decentralized about a handful of Chinese miners controlling all supply?
Same for open source software, the best pieces are generally run by a no-nonsense autocrats.
Take away decentralization (which I would be more comfortable calling "aspirational decentralization" to reflect actual practice) and cryptocurrency is indistinguishable from conventional electronic currency.
Just like with the OpenOffice, LibreOffice fork. Everyone was free to use one or the other. The community chose.
The "community" chose to roll back a $40 million transaction that was very inconvenient for Vitalik. If he had instead said "code is law, and we stand by it" then ETC would never have existed in the first place. My point is, it was Vitalik's prerogative to reverse a million dollar transaction that he didn't like, a privilege reserved for the elite.
Beyond that, the community didn't really have a choice either way. By definition of owning ETH you are incentivized to (primarily) support whichever chain the creator says he will continue to support. What kind of choice is that? There is no "market" in the sense you speak of, ETH users are a captive audience.
It's especially problematic for a project that was supposed to be PoS, where the coin holders are also the miners, with the privileges that brings.
Unfortunately, it's going to sell just because it's the big old facebook, your non-techy friend probably don't know the difference between crypto and food stamps all they know it's points for money, one is a boring piece of paper and the other is cool futuristic out of the matrix Bitcoin like super numbers
I wonder how this is different, besides the whole "blockchain" bit, because otherwise it's just a rehashed idea with makeup on it.
Let's be honest, most of the hype around cryptocurrency is for speculation and not as a legitimate means of exchange. Normal money works fine for means-of-exchange barring a few exceptions e.g. capital flight, money laundering, generally escaping regulation so the only value left is hype.
As such, stablecoins have entirely different requirements and properties than regular cryptocurrencies; for one, you usually want one big well-known entity backing them, because for the stablecoin to be stable, someone needs to back the coin with liquidity.
“Liquidity” is something Facebook obviously has more of than most others, so they’re an obvious party to build a stablecoin.
(Really, though, the best stablecoin for USD, would actually be run by the US government. There’s no reason for them not to do so, and no reason for people to reject them doing so. One could even interpret running a wrapped-USD stablecoin on any popular-in-the-US blockchain as being an obligation of the US Mint, given their mission. They’re currently failing to “print money” for these US markets!)
Since it's water based, it will always flow smoothly, because Cathio will "provides the tools necessary to increase donations and connect with both local and global Catholic communities" to maintain a large frothy supply.
https://gizmodo.com/rick-santorum-is-a-cryptocurrency-guy-no...
Facebook’s main product has likely peaked, in terms of users and advertising unit economics. The brand is tarnished, it’s not cool for younger people, its value proposition has been heavily eroded by short sighted decisions.
Instagram is doing really well, but by its nature is no substitute for Facebook. It’s too specialised, too narrow a demographic, and doesn’t have the same appeal all round. It can’t pick up the slack from a declining Facebook.
There are real regulatory dangers that Instagram etc will be separated off anyhows.
This is a bet on something that could be big. I’d bet against it working out, but a series of bets like this are probably the best strategy to hedge against decline. We know payments dovetails well with messaging apps (hence perhaps the attempt to unify them, conveniently making it more difficult to break up the company). Payments is a no brainer, the “crypto” spin original but probably irrelevant. For Facebook it does have the advantage of enabling them to accumulate a large fund of “deposits” they can invest.
If the above is right, we should see a few other big bets being placed soon.
Instagram has a billion users. What's narrow?
Cryptocurrencies right now have a trade off between scalability and decentralization. Bitcoin is theoretically decentralized even though the reality is more complex. But theoretically anyone with a computer can randomly decide to mine the coin and participate in the network. This whole process is made possible by Proof of Work, which was the key brilliant idea that made bitcoin secure and possible. The problem right now is this algorithm doesn’t allow very many transactions per second.
Other currencies have experimented with something called Proof of Stake to solve the scaling problems but it’s not known if it can be as secure as proof of work. Facebook’s currency will probably use this method. The basic idea is that the holders of the currency vote for what happens on the network. It’s an interesting idea but it’s a very different direction than the key idea of bitcoin.
Another issue is that governments rely on setting interest rates to manage their economies. If an internet currency starts to take off that will limit their ability to do this. At that point you can expect major pushback.
And also, the cryptocurrency ecosystem is a huge target for hackers. Millions of dollars have been stolen over the last decade. Brilliant attacks have been created to exploit the tiniest flaws in code. The phone numbers of crypto enthusiasts have been hacked and their wallets drained. Hackers have even embedded malware on websites or servers to mine cryptocurrency on computers they don’t control. Facebook will need an iron clad security process if it wants to succeed.
Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.
or
Mark
on second thought, no it doesn't
What are you basing this assumption on?
From everything Facebook has ever done to date, I expect Zuckcoin will use the method of "what FB says goes, and if you don't like it, you can pound sand."
Such a stablecoin still requires a regulatory approval process before roll-out.
Just as a reminder that there are open alternatives, GNU Taler would offer a more privacy-oriented stablecoin with an already clear specification, but has not yet been adopted by banks that require the regulatory approval. On the mailing list, the developer wrote that they work on the two missing features needed for approval (cross-device synchronization and an integrated backup solution).
They could have made their own boring but extremely well positioned WePay / Paypal alternative ages ago, and instead they waited until cryptocurrencies are past peak hype to launch this. Puzzling.
I guess the only thing they have to sell here is the privacy aspect of crypto, but I doubt you'll get effective privacy from Facebook on any Facebook platform, crypto or not.
A block chain will make it easier to build trust because (some) third parties can audit it.
To replicate that level of success, Facebook must create a mechanism to convert tokens back to cash.
So the tokens are basically just used to get past regulations. Facebook will then gather some hard numbers to show that crime is negligible. Sensible governments will tolerate the tokens because it's replacing physical cash where crimes like tax evasion are rampant.
Facebook Inc. has signed up more than a dozen companies
including Visa Inc., Mastercard Inc., PayPal Holdings Inc.
and Uber Technologies Inc. to back a new cryptocurrency it
plans to unveil next week and launch next year.
The term "cryptocurrency" is applied a bit too liberally in the space, but what are the odds that Facebook's coin is censorship-resistant? Will Facebook help enforce US monetary imperialism, or will it thumb its nose at US sanctions? (e.g. allow a US Facebook user to send Libra to Iranian Facebook users)
Now, there could be a surprise plot twist in which these megacorps stand up for individual liberties. There have been stranger things.
And why would they? Adding two extra steps to paying someone -- the buyer converting local currency to bitcoin, and then the seller converting bitcoin to local currency -- can never compete with just transferring local currency directly. Cryptocurrency was meant to be much more than just a payment system.
Cryptocurrencies will not succeed until they close the loop: people receive their wages in cryptocurrency, which they use to pay for consumer goods in retail stores that accept only cryptocurrency (because their suppliers would pay their employees in cryptocurrency).
This is where cryptocurrency would shine, ie. by creating a global credit market, since the unit of account could be the same for e.g. Turkey, Nicaragua and Vietnam. A global cryptocurrency-credit market could arise, in which savers finance e.g. consumer goods on the shelves of retail shops. This would incentivize savers to purchase cryptocurrency in order to earn a low-risk return on their money -- something which is not possible to do in most Western economies with short-term interest rates at zero or below.
PS: If anyone is interested in creating the software infrastructure to make this happen, please let me know.
Unfortunately, bitcoin's utility in that respect seems to have gotten worse since I was playing around with it 5 years ago. I haven't been following recently so maybe it's changed, but during the bubble there was a move towards high fees and less liquidity, with plenty of horror stories of exchanges locking people out of their wallets during big price moves.
IMO bitcoin would be much more useful if it had remained a niche tool for people to buy drugs on the internet rather than the pure speculative instrument it seems to have turned into.
I can do that immediately on one of the challenger bank platforms. And yes, the rates seem to be the same ones as what I used to trade institutional FX.
You're not looking for a new currency, you're looking for a regular currency exchange. Whatever fees your currency exchange charges for going from EUR to USD (and back) can only increase if you need to involve another exchange (for the bitcoin-conversion).
I don't see why this would be the case. Neither when talking blockchain-fees nor exchange-fees.
Macroeconomics doesn't work in diverse economies if you can't partition off areas of the globe and create friction at the borders for trade (with monetary policy).
The same products and services need to have location based costs to ensure local economies can function.
Now complete isolation is worse that perfect free trade, but there must be a balance. Lack of balance brings wealth concentration, poverty, starvation, and war.
Kind of like this startup founder who wanted to buy property with a SAFE. I told him get a bank loan. He said: "That's risky!"
> in order to earn a low-risk return on their money
How does the economics of this work - you're claiming lower risk and higher return, but cryptocurrency does nothing to help with default risk?
Correct. However, the fact that the Federal Reserve can underbid everyone (with regards to interest) on short term credit causes a destabilization of interest rates (which is why they've been falling for the past ~40 years). There's no point in saving dollars when you can't protest against a too-low rate of interest -- a bank can always tap into the Fed's credit and underbid you. This can't happen with non-centrally produced money.
So the "killer app" here is money for which no central party can control the interest/discount rate.
> How does the economics of this work - you're claiming lower risk and higher return, but cryptocurrency does nothing to help with default risk?
I'm not claiming lower risk. I'm claiming a higher return by not competing with a party (the Fed) that can always underbid you on short-term credit.
The low risk comes from financing consumer goods in high demand sitting on the shelves of retail stores (ie. Bills of Exchange). Unless people suddenly stop eating food, you ought to get your money back (plus the prevailing discount rate).
As cryptocurrency investors keep finding out the hard way, you can create credit in bitcoin very easily, every exchange balance is a credit; what the lack of a central bank means is that when there is a bank run or "liquidity event" you definitely can't get your money back. The Tether people have been very effective at centrally producing decentralised money too.
> I'm claiming a higher return by not competing with a party (the Fed) that can always underbid you on short-term credit.
OK, so what does the other side of this equation look like: what's the advantage to the borrower in taking out more expensive credit? Even worse, they're taking out credit in a currency that's appreciating against the dollar?
With regards to bank runs, they are not a problem if the deposited money is invested in something sufficiently liquid (like the Bill of Exchange). After all, a bank run just means you sell into the market whatever instrument you've purchased for the deposited money, and this will only be a problem if this instrument isn't liquid enough. Bonds, for example, are not sufficiently liquid to sell into the market in case of a bank run. The lesson here is to not invest demand deposits in bonds (or anything else of insufficient liquidity).
> OK, so what does the other side of this equation look like: what's the advantage to the borrower in taking out more expensive credit?
The advantage to the retail credit borrower is that they don't have to compete with businesses who are good friends with the commercial banks (who have access to the Fed's cheap credit). All savers, world-wide, become lenders, instead of just a few huge banks, who don't really care to lift a finger unless there are huge profits in sight.
Also, a reasonable, market-based 3% discount rate compared to, say, a cheaper Fed-funded 1% rate, is relatively insignificant in the context of retail credit with a maximum duration of three months. For goods that take three months to clear, the retail shop will pay three fourths of a percent instead of one quarter of a percent. That's a very small additional price to pay for widely available retail credit (ie. not having to rely on big banks to give you a credit line).
> Even worse, they're taking out credit in a currency that's appreciating against the dollar?
Taking out credit in a currency that's not stable against the dollar is only a problem if your income is dollar-denominated. After all, millions of people take out non-dollar denominated debt every day, which is fine since their income is denominated in that same currency.
Also, with a distributed ledger and billions of transactions a day, how is anyone supposed to actually index and understand all the transaction data? I like how Bitcoin I can actually sync all the data and (potentially) see stuff, but that was GBs of data and no where near as widely used.
Cryptocurrencies have a place, but they are a solution to a small subset of problems while creating others. There's a reason why people still use cash over cards.
Disclaimer: I hold a lot of stock in FB and no positions in other crypto.
now i too am unsure what the advantage is.
The biggest hurdle to Bitcoin adoption are on-ramps / off-ramps. Businesses and individuals dealing with Bitcoin frequently get de-risked by banks and suppressed by regulators (e.g: China & India).
Libra if (a) can be interacted with via API, (b) can itself be acquired via bank transfers / credit cards & (c) not geo-fenced, will eventually be adapted into one of the many exchanges and will contribute greatly to solving Bitcoin's on-ramping issues.
Whether consumers want Bitcoin once they've tasted Libra, well that's an ideological choice. It'll be interesting to see how it plays out.
If your national government cares at all about sovereignty, it will force you to use bitcoin by rule of law / force. Countries like Venezuela, Turkey, and Argentina with struggling currencies are under the mercy of the US petrodollar. A move to BTC would end their hyper inflation.
Most people are too self centered to realize the political/ economical implications of BTC. The most likely case will be that nothing changes in our day to day, except that our currency is now backed by BTC instead of US debt.
This combined with Whatsapp for Business is going to be game changing for SMEs in developing markets.
Do I want to keep my savings in it? Probably not...
It might be a great project, it just has very little to do with actual cryptocurrencies. It's great to be excited about it, the issue many people in this thread have the project being called a cryptocurrency.
What's the rationale?
It's a sick joke.
As the sign of balance, symbolized by scales, Libra is certainly relevant to money. But the name is also a riff on liberty/liberation aka freedom. And that's the sick joke, because Libre will be totally under Facebook control.
This reminds me of what WeChat is doing in China, where most purchases are made and tracked by the government from this app. I don't even know if you can use cash there anymore.
With the amount of information Zuckerberg has on the US population, he shouldn't ever be allowed to run for president while still running Facebook.
"The financial and e-commerce companies, venture capitalists and telecommunications firms will invest around $10 million each in a consortium that will govern the digital coin, called Libra, according to people familiar with the matter. The money would be used to fund the creation of the coin, which will be pegged to a basket of government-issued currencies to avoid the wild swings that have dogged other cryptocurrencies, they said."
i'm seeing it like all the in-game currency, controlled by the entity convert your local currency to this platform bucks to use it ONLY inside that platform
Every time I see this kind of news, I wonder, how do journalists get so much information when "an official spokesman declined to comment". Is this mainly just buzz so FB is in the headlines?
IIRC the Winklevoss twins have a Bitcoin exchange called Gemini
Surely a coincidence
brb going all in on tokenized cults
Gemini = "sign of the twins" (And, according to Wikipedia, is Latin for "twins" https://en.wikipedia.org/wiki/Gemini_(constellation))
It's probably just narcissism in that case.
I'm guessing "Libra" in this case is probably a variation of Libre -- free -- rather than an astrological reference. But that's totally a guess and could be completely wrong.
If anyone actually knows why they named it Libra, I would love to hear the explanation. A quick search isn't turning up answers.
I just find how things get named interesting. I did realize it was a joke, but that doesn't preclude actually discussing why these things got the names they have.
P2P distributed architectures such as Holochain which actually decentralize data and control are far more positive paradigms for humanity.
Right now it seems: If you don't have central consensus you can't have digital currency. Since everybody needs to be on the same line regards to who owns what. This is different from cash in the current world. Where nobody needs to agree to how much I have because I can physically store it and it's impossible to copy my dollars.
Try buying something you are not allowed to buy. Personally I use it a lot while traveling abroad.
> If you don't have central consensus you can't have digital currency.
From what I can tell, the Holochain developers agree with this: you can't have a single global currency without global consensus. Their approach seems to be: rather than having a single global currency, have a network of IOUs, trusted and enforced locally: https://medium.com/holochain/beyond-blockchain-simple-scalab...
Personally, I have no opinion on their approach, other than welcoming experiments, since that's what I find interesting in Bitcoin and the rest of the crypto space (and frankly wish it hadn't passed that stage yet).
> ## Order of Operation Matters
> It turns out when you focus on distributing process first you end up with even more greatly distributed data. This is because each participant holds only their own data. In contrast, blockchains store everybody’s transactions in a single database that every node verifies and copies. The underlying foundation of distributed process enables deeper distribution of data and parallel architectures. Ethereum and smart contracts, are doing this the other way around — layering processes on top of a global ledger.
> By distributing process at the foundation, and leveraging Intrinsic Data Integrity, our approach results in massive improvements in throughput (from parallel simultaneous independent processing), speed, latency, efficiency, and cost of hardware. There is no need to wait 10 minutes to see if your transaction gets committed. This architecture can facilitate huge volumes of even extremely “low value” transactions permitting creative uses for coordinating shared activities that wouldn’t merit the cost or energy of implementing on a blockchain. You also don’t need to incent people to hold their own record — they already want it.
This is all true but the section heading "order of operation matters" - and how holochain deals with this - is simply not addressed. Given HN is a technical community feel free to link to actual research papers or more technical content that actually explains how Holochain solves the problems. This piece looks like a PR piece to me, one that doesn't really have any answers.
There you go...
https://edition.cnn.com/videos/tv/2019/02/16/exp-gps-0217-ga...
> Bill Gates explains how no one knows how to stop bovine flatulence, a major contributor to climate change.
I doubt we need to prevent cows from farting. As I understand it, all we need to do is stop killing naturally occurring methanotrophic[1] fungi[2] with pesticides and chemical fertilizers.
(In case you're not old enough to remember the Fartergate Scandal...)
https://twitter.com/SarahJamieLewis/status/11394299139229573...
Do you think he’d start a currency he wouldn’t be able to use to spy on every user?
My interest is in who controls issuance of the currency itself and if that control is decentralized or controlled by a central entity, like Facebook.
Currently most of the governments share the data with various corporations(usually US based such as Visa and Mastercard, SWIFT, plus various national or foreign banks) and US gov agencies so the level of privacy is not that great.
Crypto currencies could also provide transparency and open protocols so I believe a gov backed crypto would be successful in many areas(i.e public procurement)
They've wallpapered the DC Metro system with ads for it... calling it the first safe regulated Bitcoin exchange.
Facebucks?
Zuckbucks?
Cuckbucks?
Facecoins?
And all the issues people talk about here - like solving micropayments - are already being successfully solved by Lightning Network. Quietly.
It's very much like the Linux Desktop - it exists, some people love it, it's never going to disappear, but it is very much a niche interest that will never be mainstream, for a multitude of reasons.
Also it hasn't gone up consistently, it's still at around 50% of its peak almost two years ago.
Any asset that doesn't crash back to a penny likewise goes up astronomically from the day trackable value is first created. Bitcoin's chart appears to have outperformed the market so dramatically, percentage-wise, because its chart tracks price from effectively zero (depending on how you would price a 1/10000th slice of pizza) or a dozen or so pennies (if you're starting from the first BTC-E numbers). But this is really not any different from what happens to shares in a private company, which also start at effectively zero as well.
Publicly-traded share values aren't visible to the public until they have already risen a hundredfold or more from their inception (in terms of percentage gains). Sure, Bitcoin was visible to "the public" but only if you happened to be in the right place at the right time and knew the right people - which in practice are opportune circumstances no different than those available to people who happen to be close to the founders of a privately owned company.
No, it hasn't, unless you've got some sort of alternative definition of "consistently".
Granted this is about the worst way this future could come about....
And like any good crypto "expert", he spent his time sharing opinions and copying other peoples source code versus building anything real.