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Facebook will make the money now

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82 pointssamsgro77 comments

There's a bunch of problems in current banking system, and unfriendly user interfaces, obscure rules with many gotchas and transaction times are some of them. However, to think that I will trust Facebook more with my money than I trust my bank is, on the current stage, I think plain insane.

Also, does using Facebook currency for paying your bills means if you get in trouble with Facebook (which anybody now could by posting a wrong joke, having wrong political ideas or upsetting wrong people) you can not pay them anymore? Would Facebook control the transaction processing (i.e. via Messenger or otherwise)? If yes, then definitely not with a ten foot pole.

There is something better than your bank. My bank sir sure. I’ve been using Revolut to transfer some money between borders and I did save couple of £k thanks to it. It’s really not difficult to be cheaper than “your bank”.

Honestly, I'm pretty confident that the sec teams at Facebook are better staffed and more skilled than at my bank.

It's not so much the security teams as it is the society-destroying beliefs of Facebook's upper management. Doesn't matter how good your security team is when they take marching orders from people who aren't aligned with improving society's health.

And why should we trust random Internet commenters to know anything about the beliefs of Facebook managers?

No one asks or expects that of you. The amount of negative press FB has managed to generate over the last few years, however, is more than enough to question the beliefs of FB managers.

No, it's not. You're basically just saying this is common knowledge, and as far as I can tell, common knowledge of how Facebook works internally is pretty poor.

And why would it be otherwise? People have read a lot of different articles of varying accuracy and there are also a lot of myth-making. There's no reason to believe average knowledge of Facebook is any more accurate than average knowledge of global warming or nutrition.

The details of internal Facebook procedures may be not known (though honestly, how secret can they be if most of the people in SV, for example, either know somebody who works for Facebook or somebody who used to work there?) but the public pronouncements and public actions of Facebook management can be readily observed. Nothing in these actions suggests Facebook as an organization values privacy, freedom of speech, thought diversity or robust public discourse.

In Sweden I think the bank system have really stepped up with their apps and our transfer times are pretty fast. We also have things like Swish, https://en.wikipedia.org/wiki/Swish_(payment) , which is great as well.

A really fascinating scenario is this:

Let's say something like Libra gets adopted worldwide. Let's say there's a huge financial crash at some point in the future, with lots of currencies, including some in the Libra basket (the stuff pegging it to the real world), going off the rails.

What would Libra's powers-that-be do then? They can tweak the parameters of their system any way they like. They could throw any currency out of the basket. Or do whatever they like.

Throwing a failed currency out of a currency basket is like the proverbial tree falling in the proverbial forest. It would not change the value of the Libra at all. The value would already be gone as the value of each stablecoin is computed roughly by taking the entire value of the currency reserves, and dividing it by the number of coins. A good analogy is what happens to the value of a mutual fund when an underlying security becomes valueless.

Let's say all meatspace currencies in their basket go off the rails. What would Libra do?

You are positing a catastrophe of such magnitude that "well, the value of my Libra has gone to shit" is the least of your worries. More appropriate concerns in such a scenario include "How can I acquire enough BDSM gear to wear and skulls with which to adorn my car to survive in the forthcoming Mad Max apocalypse."

> does using Facebook currency for paying your bills means if you get in trouble with Facebook (which anybody now could by posting a wrong joke

Their official site says Libra has been set up as a subsidiary of Facebook and that it has it's own privacy policy, ToS, etc so I think there is some degree of separation there (not that I'd necessarily take FB at their word when it comes to this kind of thing).

That would really be tested when Al Qaeda opens the account there (and why won't they?) and start using it for money transfers. Imagine the press and the political pressure.

And once they have the solution to stop Al Qaeda, the same solution also works for stopping people from donating to a politician that Facebook doesn't like.

It's still a legitimate concern. If a person or entity does something that flagrantly violates Visa's terms of service, Visa can refuse to process payments to them. If that same entity gets 86'd by 2/3rds of the Libra Alliance, they could be blocked from participating in transactions, which would make their Libra balance essentially worthless.

It's not just Facebook but it's also backed by Visa.

These are the sworn enemies of cryptocurrency and privacy.

They are trying to cash in on the hype and supplant real cryptocurrency with their own mechanism of control and profit.

Many of the gotchas and pain points are caused by regulatory factors (which I would add may be heavy handed or painfully implemented but are usually there for good and important reasons). Facebook or any alternative payment system will hit these same pain points once they reach a scale that matters.

Libra is right next to Gemini in astrology and guess who knows Gemini.com?

Alright, this is just a prepaid access system built on top of crypto. I strongly believe the need for a prepaid access system to lower transaction fees for moving money digitally, but the companies backing this are some of the most vile. This consortium are never going to do anything in the users' interest. If they're making bank on interest from deposits, that's never going to flow back.

As well, all these companies (sellers of prepaid access) are going to need to be registered as Money Service Businesses (MSB) in the US. That puts them under all the AML/KYC laws. So we don't even get our libertarian wet dream of money without the red tape. We'll see what their privacy protections look like.

I want this technology to exist. I would rather pay 5 cents per news article I read than being prompted for a 10 dollar per month subscription. However, I want this to fail miserably due an extreme lack of faith in the companies behind it. All these companies will fight for regulation that cements their position and prevents others from entering the market.

Hey, anyone remember the last time companies printed their own money? Man, the return of company scrip. I don't see at all how this can turn out bad.

Yeah, if I remember correctly, a company called Paddy's Pub tried it a few years ago: https://www.youtube.com/watch?v=cyxxE1AcUSM

Yes. Perfect execution of a Self-Sustaining Economy.

Paddy's Dollars had numerous problems, biggest of which was seigniorage. Because of the expensive print colors used on on the bills (then justified as an 'old poor' move), it cost more to issue Paddy's $ than what the tokens themselves were worth.

And this time it's stored digitally on their servers, so they can just steal it whenever you violate some vague ToS clause.

Like Apple and Google's behaviour? Ah I see.

Tons of companies print their own money. It's just called "miles", "points", "coupons", "credits", etc. - but it is a medium of exchange that can be used to buy stuff at this company, i.e. money. Of course, airline workers would never agree to be paid entirely in miles, but probably would not mind getting their hands on some more of them.

Those programs are at least honest in the way they bill themselves: "loyalty programs".

IMO this is worse than Canadian Tire money

Even Canadian Tire's going digital with their money: https://en.m.wikipedia.org/wiki/Triangle_Rewards Though for now the actual Canadian Tire Money still exists alongside their new digital reward system.

I think those are called gift cards and they still exist.

Actually, HSBC prints Hong Kong Dollars (shared with Bank of China and another bank). https://en.wikipedia.org/wiki/Banknotes_of_the_Hong_Kong_dol...

Also Standard Chartered and Bank of China

All of these cryptocurrency experiments eventually point out the reason centralized banks were invented in the first place. Usually through major thefts and loss of assets.

> All of these cryptocurrency experiments eventually point out the reason centralized banks were invented in the first place. Usually through major thefts and loss of assets.

Yeah. Central banks are actually a kind of technology, which I don't think a lot of people recognize.

But even with software and silicon technology, lots of people are hasty to throw out the old without really understanding it, so they can build something "new." It's seems even harder to get such people to recognize value of technologies that aren't made from computers.

It's so much more complex than "young naive devs want to throw out the manual". Extremely valid criticisms towards central banking have existed since before central banks even existed. Just ask my man Thomas Jefferson what he thinks about central banks.

> Just ask my man Thomas Jefferson what he thinks about central banks.

Appeal to authority.

No- they just told you to read Jeffersons musings on the topic of central banks.

Yes, but why Jefferson? Why not Arglebargle? Or me? I have musings on the topic of central banks, would you like to hear them?

It seems like OP just thinks Jefferson has written some "extremely valid criticism" of central banking, from before the US had the system. Who knows? I think central banking is probably fine and cryptocurrencies are stupid and I don't see where the appeal to authority is.

> Yes, but why Jefferson

Because they thought Jeffersons thoughts on the matter were relevant.

> Why not Arglebargle?

Because I know what that word means.

> Or me?

Because "lisper central banks" doesn't produce any meaningful results in a search engine.

> I have musings on the topic of central banks, would you like to hear them?

Sure.

OK: there are two fundamental problems that have to be solved in any monetary system: how to keep the records, and how to control the money supply. With regards to the latter, there are only two options:

1. Let the money supply be controlled by the laws of physics, e.g. use a scarce material as money.

2. Let the money supply be controlled by some policy.

The second option subdivides into two further sub-options:

2a. Let the free market produce money competitively like any other product.

2b. Let the government (or a private entity acting on behalf of the government) do it as an artificial monopoly.

That last option is a central bank.

Those are all the possibilities. All of them have been tried at one time or another in human history. Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b. And there isn't really much more that can be said about it.

Oh, almost forgot:

> > Arglebargle?

> Because I know what that word means.

Arglebargle is the name of an obscure author who wrote on all manner of topics, but whose work has been largely forgotten.

> Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b.

I'm certainly no expert, but I've read a bit into 2a (so called "free banking" eras) and they seemed overwhelmingly quite stable. On what do you base an objective dismissal of that approach?

Mainly my knowledge of the history of the financial system in the U.S. which was characterized by regular panics, crises, and bank runs before the Federal Reserve was founded. (Of course, the Fed bungled it badly in the Great Depression, but has done a pretty reasonable job since then.) Looking now at the history of free banking in other parts of the world it looks like it is not invariably catastrophic. Maybe it's a cultural thing. I suspect that free banking works better in a world where everyone knows everyone else, and the banker's customers know where the banker lives so if he screws things up too badly there's a real risk that people will literally show up on his doorstep with pitchforks.

The system in the US before the creation of the Fed wasn't free banking; after the civil war, the National Banking Acts of 1863-64 created a network of chartered national banks with a single currency backed by the US Treasury. Then in 1879, the US went back to the gold standard, so you're on (1), not (2a).

On that view there has never been a 2a system. No one would honor a private bank note that was not backed by some asset or government fiat. Such a note would, quite literally, be worth no more than the paper it was printed on.

There's a difference between people freely choosing what assets are acceptable to back a given currency and having many currencies floating in value against each other, or the government deciding what each currency can be backed against and at what value (the National Banks had to accept each other's currency at par value).

Yes, of course. But if you have currencies backed by too many different kinds of assets those currencies aren't money any more, they are tokens in a barter economy.

Your thoughts are clear and interesting. It appears we've always had a ratio of 1, 2a and 2b with some collapses or perhaps even more illusive is the [slow] migration. Like paper gold, man-made diamonds or the private entity stops acting on behalf of the government and ends up owning it.

I think you replied to the wrong comment. I'm guessing you meant this to be a reply to:

https://news.ycombinator.com/item?id=20216673

In any case, thanks for the kind words.

This is not Appeal to Authority fallacy. He's simply citing a historically accessible example of similar criticism that here is being dismissed as "lots of people are hasty to throw out the old without really understanding it".

Sorry, try again.

The existence of central banking criticism doesn't justify throwing out the financial manual on what makes a good payment system.

The number of conversations I've had with bitcoin evangelists where they argue about the lack of refunds, chargebacks, or dispute handling being a feature, not a bug, is not solving problems with central banking.

Payment networks which supply such functionality can be built on top of crypto as secondary escrow layers. This practice is already common in decentralized marketplaces.

Aren’t those issues primarily handled by credit lenders like Visa and Mastercard?

I do find it funny how just by strength of community alone the most successful cryptocurrency may be the very most centralized one.

I have a feeling the centralization will allow it to have decent transaction speeds and volume which seems to be BTCs biggest flaw (addressed by the lightning network? I’ve kind of stopped following) since all the other nodes (ebay, 26 other companies) can afford the bandwidth.

It’ll be interesting to see how it plays with regulators if it takes off in any way.

That was just one example. Transaction rates are another. The idea that we need to throw out the manual and then repeat all the same mistakes that the manual helped prevent, because of a technology fallacy, is a problem.

> It's so much more complex than "young naive devs want to throw out the manual". Extremely valid criticisms towards central banking have existed since before central banks even existed.

Isn't a lot of Bitcoin/cryptocurrency ideology basically "Wasn't the gold standard great? Lets go back to something like that."? The gold standard may be have some positive attributes, but it also had problems that lead to its abandonment, and any new system should at least try to intelligently respond to those problems that central banking solves than to deny their existence or impact.

Does central banking solve them though. The fact that negative interest rates exist suggests otherwise.

> Yeah. Central banks are actually a kind of technology, which I don't think a lot of people recognize.

They are. And a very unbalanced one at that which relies on constant credit growth (which is insane).

Not defending cryptos but I gotta say that we need better monetary systems which reward work and not investment, and does not rely on constant money printed inflation.

But even with software and silicon technology, lots of people are hasty to throw out the old without really understanding it

Especially with. The number of times young programmers "invent" something which was done 10 to 30 years ago is epidemic.

>lots of people are hasty to throw out the old without really understanding it

There's enough wrong with the current financial system to make it worth trying new things even if they don't work out. I think what bugs us is that Facebook is marketing this already. Cryptocurrency is definitely not something I want to replace the current financial system though.

When speaking of finances, a trying things out mentality and failure can lead to a lot of value being wiped over night.

When the bubble bursts, if enough value disappears, we are then faced with an economic recession.

Not saying that we shouldn't try things out, but many people right now are conned to invest in Bitcoin alternatives that are the new ponzi schemes.

"There's enough wrong with the current financial system to make it worth trying new things even if they don't work out"

Is it really though when 'not working out' means that someone loses their entire life savings?

This is why I said I don't want to replace the current system with cryptocurrency. Retail investors weren't prepared to handle the technical requirements. Part of that is on regulators, the other is on naive investors, another part on conmen. At some point you have to have accountability for the result of putting your entire life savings into a new, untested technology.

People incorrectly assume their money can't be stolen from a bank via hacking or wire fraud.

The only thing you get from having your money in a bank account is government-mandated insurance, that covers you only up to a point. I think as crypto ecosystem matures, similar services will be offered there too.

That limit is $250,000 per bank. For 90% of Americans, government insurance is complete protection. If you consider only those Americans with at least some savings, 90% of Americans could be entirely protected by dividing their money into two banks.

What kind of events this insurance covers? My understanding is that it does not protect from wire fraud. It is there to cover bank bankruptcy, which is impossible as per se with a cryptowallet in the first place.

Am I correct?

If an exchange lent out more than it had on its books, you could have a run on an exchange. Insurance would guarantee your money back if the exchange, your custodian, collapsed.

You don't have to store your money in an exchange, so the risk is very low at any given point of time.

Currently people pay for the prolonged version of that risk by receiving a benefit of convenience. But this will stop as soon as somebody creates an equally convenient cryptowallet infrastructure.

> The only thing you get from having your money in a bank account is government-mandated insurance, that covers you only up to a point.

That's like saying that the only thing you get from not being homeless is a roof above your head.

Deposit insurance shores up trust in the financial system as a whole, and prevents runs on the bank from desperate depositors if the bank has a bad quarter. Desperate people riot, loot, and create coups. There are trillions in $ value in having a stable economy with a population that has peace of mind.

But unlike banks your own cryptowallet does not have that risk at all.

Banks are simply custodians of your identity, no?

“Libra”? Should have named it Cancer

Bravo.

https://github.com/libra/libra/issues/41

I bet you have to buy them with good old dollars.

    (is-coincidence? (= (alpha->num-sum "Libra")
                        42
                        answers/life
                        answers/universe
                        answers/everything))

  1) Insufficient sample size (1)
  2) Insufficient improbability of occurrence

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