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Comment by tetrisgm | Hacker News Reader

It’s going to be interesting. “Unlike previous stablecoins, Libra will not be issued by a central party. Instead, Facebook has enlisted 27 fellow Silicon Valley titans—among them PayPal, Visa, Spotify, Mastercard, Uber, and eBay—to operate as preliminary “validator nodes” who will each share a transparent copy of a vast ledger of transactions reflecting all the activity on the network.”

That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design.

I understand people trust these services ( to the extent they keep using them), but the playing field should be flatter in crypto. Unlike the article’s suggestions that Ripple is toast, I can imagine it’s putting such coins in a position to be very competitive, more open, and not run by the companies above.

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> That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design.

IMO, it's a small step towards a better direction. The "validator" consensus (oligarchy) is a much more transparent/inclusive solution compared to the closed financial ecosystems of Wechat/Alipay/Paytm/Grab. If Libra is an oligarchy, closed financial systems are dictatorships

It really does feel like cryptocurrency is how the technical industry will learn/is learning about the financial industry.

Stripe and Paypal are examples of tech companies that already appear to have learned quite a lot about the financial industry.

Retail payments is just a teensy tiny, eency weency bit of "finance".

I would have loved to see any company besides the players mentioned here. For me, this coin almost disqualified already. Their association maybe shouldn't be judged but I nevertheless remain very skeptical.

I agree about classical closed financial services like visa and mastercard being financial dictatorships. That is why their involvement doesn't really build trust.

Nearly all companies are blatantly authoritarian by design. This is not new.

And existing non-corporate democracies are... democracies.

> If Libra is an oligarchy, closed financial systems are dictatorships

Given the global financial system is not controlled by one individual, it isn't a Dictatorship (power of one) but is more like a form of Oligarchy (power of the few). As for which form of Oligarchy each are, I'd argue that the existing financial system is more of a Technocracy (i.e. you need to know what you are doing to be one of the few) whereas Libra is a Plutocracy (you need to be wealthy to be one of the few) or even possibly a Kleptocracy depending on how they actually run it and what their true motives are.

> whereas Libra is a Plutocracy (you need to be wealthy to be one of the few)

Agreed. The same way governments require a large amount of capital to be a bank to ensure depositors of liquidity. You need to have capital to back the Libra tokens, otherwise it can get pretty scary, just like USD Tether shenanigans.

> or even possibly a Kleptocracy depending on how they actually run it and what their true motives are.

Banks, Central Banks, Governments, etc. whatever. Their motives are exactly "secret" when it comes to managing currencies. They all gear towards enriching their currency and making it more valuable. So yeah for this "oligarchy", I'd bet it's the same, Kleptocracy it is.

I think this may be conflating individuals with corporate entities. Certainly from a corporate entity perspective both have significant capital requirements. But from an individual perspective, to be an influential figure at a central bank you will have had to have undergone years of relevant training, passed regulatory exams, and typically have proved yourself in a related position over a long period of time, hence considering it more of Technocracy. However, to be an influential figure in something like Libra, you just need a shed load of cash, and can have precisely zero understanding of modern finance, hence my seeing it more of a Plutocracy, or even Kleptocracy. Broadening this out beyond Libra, if you want to be a leading figure in one of the more cult-like cryptocurrencies, you also need a lot of blind faith and be good at rousing your followers, so there is an element of Theocracy in there too. I know in the early days anyone with a bit of technical knowledge could set one up without having access to large amounts of capital, and there was talk of this "democratising money", but those days are long gone.

The main central banks usually have a monetary policy clearly defined by their governments. Typically this will include things like "target of keeping inflation at 2%"[0]. This is not exactly secret. It can however be very difficult for people without the necessary backgrounds to fully understand. But I guess we are living in an era of short attention spans and distrust of experts, which provides a fertile breeding ground for cryptocurrency conspiracy theorists to exploit for personal profit.

[0] https://www.bankofengland.co.uk/monetary-policy

could you expand on why you see an aggregator like Paytm a closed financial ecosystem?

I mean, technically better than majority-hijackable crypto, but it's still just corporate scrip.

Sixteen Tons is applicable.

> If Libra is an oligarchy, closed financial systems are dictatorships

You are on the right path, don't stop there :-)

> That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design.

Then W3C and the USB-IF are also "oligarchies" and dystopian?

A bunch of institutions working together is presumably a lot more trustworthy and less prone to abuse by anyone individually than a single institution, which maybe you would call a "monarchy"?

Really not sure what's dystopian about this at all. Do you think MasterCard and Visa networks are dystopian too, or that national currencies themselves are dystopian?

> Do you think MasterCard and Visa networks are dystopian too, or that national currencies themselves are dystopian?

There is a major difference between settlement being operated by a democratic government, which will therefore handle the payments market with the public’s interest in mind…

…and it being operated by a for-profit.

Monetary policy (eg. target inflation rates) can be driven by investors, at the expense of social stability.

It's hilarious that they say they want to setup a payment network that omits rent-seeking middlemen.... and proceed to immediately recruit PayPal, Visa, and Mastercard, which are the biggest rent-seeking middlemen that exist. Seriously, those 3 companies alone have more control over the US economy than the US Federal Reserve does. I've just been waiting for the day when the Federal Reserve says 'we need more liquidity in the market' and prints more money, and the 'payment processor' mafia respond with 'we disagree' and jack up their per-transaction fees.

The corporate dystopia cometh. It won't be long before they are disrupting the inefficient legacy government.

You won't even need to vote, they will already know how you feel about the candidates.

I only really have 1 question about this payment system they're setting up. Will transaction fees be flat rate, or will they be percentage-based? I have never understood why society tolerates percent-based charges on payment processing. It does not cost more in any way to transfer a larger number over a wire. If the costs to provide the service don't scale, then the price to use it shouldn't either. I find it hard to believe that Visa and Mastercard would sign on unless they got to maintain their ability to levy taxes on the majority of the economy.... but there's a chance they might. They've been very scared of WePay and AliPay in the East. The idea of that kind of payment system terrifies them in their bones. This cryptocurrency might be seen for them as last-ditch insurance from getting cut out of the picture entirely. Or... they'll just drive things such that they can maintain the same profit level while acting as an oligarchical 'reseller'.

I'm just wondering at what point does the whole 'only the federal reserve is legally permitted to mint currency' thing kick in. With Bitcoin you can make an argument that it's too different... but with this, they're literally setting up a reserve banking system but putting gigacorps in the place of Congress in terms of deciding fiscal policy.

Exactly. What this does is create a wide open space for a "anti-establishment" crypto payments system. But one that people actually understand and trust. Fiat will likely be UOA for stage one of the transition to crypto. But as more people get educated we'll move to fully Open payments. Many will use Libra. But many will use other services. It's not binary. Multiple winners will emerge. Brand identity will be huge here. Think Patagonia v. Walmart v. Nike. How you pay for things will become part of how you present yourself to the world. It's about to get very interesting.

if governments weren't already on Facebook's back this will certainly get them there. Governments, read : politicians, already are incensed at Facebook and similar because they cannot control the message. Now Facebook wants to give people security in their funds?

This is dumb branding that masquerades control with false decentralization. The biggest opportunity it has is to become a fad amongst teens for a month, or a leech on the poor who don’t have banks. It’s going to fall on its face.

I'm confused at the part of how is Facebook "Anti-establishment?"

No. FB is the establishment. Now that they've "opened" the crypto door a little wider, it creates the opportunity to build crypto payments that revolt against FB. Solution will likely involve privacy, responsibility, inclusiveness and charity.

After talking to “normal people” I don’t think they care about any of those things as much as rewards points and fraud prevention/remediation.

Yup, agree. A low-fee payments app with crypto rewards would be interesting. But just like how Patagonia serves certain consumers I think different payments apps will appeal to different people who have different priorities and goals when it comes to their money. It opens up the landscape to massive competition in designer currencies and payments apps. I think it will come down to trust, security and brand identity

Yes but could be a dystopian positive for the people...

How long until someone uses this against the “oligarch“ validators?

E.g.: an AdBlock browser extension is on unless they send some microfunds to your account / transfer Libra funds to you.

If you’re not familiar with display ads it’s a literal bidding war per space per user by the advertiser. Platforms don’t care they just get a cut.

Now, I could see this: turn it around and have this “central authority” by having them bidding for you to turn on your ads based on their data’s understanding of likeliness to click.

>That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design.

You can already kind of do that with other crypto currencies. For e.g. > 70% of bitcoin mining happens inside China, and the currency is susceptible to a 51% attack (in theory anyway). This site calculates the cost of executing such an attack.

https://www.crypto51.app/

I think there's an argument to be made that Bitcoin is oligarchical, but saying that 70+% of mining happens in China doesn't support the statement.

Nor is susceptibility to a 51% attack relevant to that point.

You're right, the fact that they're in China might be irrelevant. I should have mentioned that a very large percentage of mining happens on a handful of pools.

> saying that 70+% of mining happens in China doesn't support the statement

I think the implication is that since China does not have meaningful rule of law, that 70% of mining could in practice controlled by one entity: the Chinese state.

> That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design.

What's actually far more dystopian is the power that Visa, Mastercard and Paypal already have. It's not getting worse with this new thing, it's getting better.

Nobody has to use Libra, but getting by without access to Visa/Mastercard/Paypal is a real problem for businesses.

Isn't it just getting one instance more of the bad stuff?

tbd

I'm all for equalling the playing field. But Libra doesn't expand the choices on the menu: Would I rather eat curry that tastes like shit, or eat shit that tastes like curry? Sorry for my lack of enthusiasm.

Ripple has an extremely flawed design, do your research before investing.

As someone who is currently invested in XRP, I would appreciate if you could elaborate on this flawed design instead of just posting a vague comment. I've done my research and thought the design was genius so I'm curious why you wouldn't like it.

Large premine, excessive centralization, supply of XRP far outpaces demand for consumptive use. The most interesting use cases only need small amounts of XRP, so it's unclear to what extent XRP value will remain correlated to Ripple Network usage growth.

Ripple can freeze accounts, and has done this before to prevent an early founder from selling their XRP, which I think exemplifies the level of control the team has over the network. [https://insidebitcoins.com/news/not-so-decentralized-ripple-...]

Ripple I think would be more appropriately called a "centrally-managed cryptocurrency" rather than "decentralized". This is not to say it's doomed, but rather just that many XRP proponents misunderstand the technology and claim it shares technical properties with Bitcoin which it actually lacks. A known team controlling any cryptocurrency to this extent puts the entire currency at risk of rubber-hose and insider attacks.

> supply of XRP far outpaces demand for consumptive use.

This is a laughably meaningless statement in the context of a cryptocurrency. For which currency could someone possibly say that the supply does not outpace demand? What would that even mean? The precise amounts of supply or demand are irrelevant since the market will naturally find an equilibrium at wherever the current market price is.

There are many orders of magnitude difference between Bitcoin's and XRP's consumptive use:

Bitcoin: $0.30 per transaction

XRP: $0.43 per 100,000 transactions

What's laughable is your inability to understand. Outpace means go "faster". It means that The level of supply rises up faster than demand so that you will observe a price change. If demand and supply rose at an equal rate, you will observe no price change.

I hope this educated your mind. The education system in many parts of this country has huge problems and I'm glad that uneducated people from deficient areas that lack basic math programs for people with special needs come to Hacker news too learn more. I applaud you for taking the initiative to learn!

Other than that, what I really didn't like about your response is your insulting tone. The parent poster did nothing to deserve such a response. "laughably meaningless statement" is a vile and disgusting statement in itself. There are other ways to critique someone's statement. The way you did it is highly immature.

Seems like a way to further entrench the status quo in Silicon Valley.

Also, what happens when they decide you're "alt-right" and block your wallet?

That's more decentralized than Bitcoin is - there you have 6 pools in control. Global financial systems are expensive and high-reward (not to mention technically challenging since there is not a single proven cryptocurrency that could handle Visa's current TPS - AFAIK). Decentralization makes very little economic sense (at least all the models I've heard so far).

True believers forget that normal people have zero interest in spending energy thinking about their financial system. Just give me a card backed by a company whose name I've heard of and who I can sue if I have to and then let me focus on my life.

No, a pool is not a single entity. That's some bad misinformation.

A mining pool is a group of people coming together to share resources and share rewards. Just like a public corporation. And just like a public corporation, decision making/power is concentrated. Who controls the pay-in/pay-out system? Who decides who can join the pool? Who sets prices? Who gets the pool fees?

Many mining pools have models extremely similar to Uber's business model. Others (including one of the major players) are completely private.

Pools are very fluid, large numbers of miners move from one to another to avoid centralization. And it's not like they can decide one day that transactions from address X are banned. That doesn't happen, there's not even a mechanism. And if some pool were to implement it, they would lose most miners very quickly.

Corporate censorship, on the other hand, is abundant and is widely accepted. Lots of left-leaning people even proudly support it these days (for obvious reasons).

So no, pools are not like corporations, and generally crypto currencies have attracted more libertarian crowds.

Transaction acceleration exists and was built by the largest pools in cooperation with 'several leading Bitcoin pools'. This is literally a mechanism to tell a mining pool what transactions to focus on (and therefore which transactions are low priority^). And yet BTC.com is still the largest pool and Antpool the second largest. I mention both because they are both operated by the Bitmain company (33% of all Bitcoin compute is in those two pools), which also sells the ASIC.

Bitcoin is decentralized in theory alone. Fundamentally Bitcoin has structural flaws due to its design that create a self-reinforcing cycle of centralization. The corporation with the deepest pockets can survive the sparse rewards. They can reinvest in hardware, reducing the value of everyone's hardware. This runs people out of business (or forces them to join the largest company). Once they have enough market share they can set transaction prices as they like.

Transaction prices have grown 20x in the last 3 years. Even more than that considering you need to pay for accelerated transactions to have a good chance of the payment going through within an hour (a requirement for most real currency use-cases).

I'd be happy if you could explain how this is wrong, but in years of asking this to crypto enthusiasts, I still haven't found a convincing argument of how cryptocurrencies can truly be decentralized while serving real-world use-cases.

^Corporations don't generally censor by banning - that would be stupid because they'd lose the lawsuit. They prioritize some things and allow unprioritized things to be buried (ask Yelp).

"That sounds amazingly dystopian. I mean, that’s literally a money built on an oligarchy. By design."

To be fair, the Fed is kind of that.

It's a cabal of bankers who decided that the USA would be better of if they did the central banking.

In practice, it's not too-too far off how other central banks works, but technically it is a private entity, owned by the banks.

FB's new coin doesn't really have any real use other than basically dropping all of the ugly limitations of the regular financial system.

Though there are a lot of regulations there 'for our safety' - in reality, the flow of consumer money is just a huge pile of tangled cobwebs of stupidity.

This is will be a really great opportunity to do '21st century currency'. If it works, there's going to be a whole new way of doing money. The banks, in a way, should be afraid.

That said, there are huge privacy concerns as well which might very well kill the ostensible improvements to be had just by doing things in a new, clean, way.

Its not mandatory to use it. Its an option in a market.

The one that uses a coin backed with violence is the State. How can you even begin to compare that?

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