Facebook urged to pause Libra crypto-currency project | Hacker News Reader

Facebook urged to pause Libra crypto-currency project

bbc.co.uk

107 pointsheadalgorithm125 comments

Conspiracy theory time: Facebook knows they can't do this legally across the world. They're announcing it beforehand in an attempt to get permissions in like 10 jurisdictions tops, with a soft deadline that's going to be used as an excuse to get those permissions as soon as they can (or, at least, faster than they would otherwise).

For the other 200ish jurisdictions, they won't bother. Why act proactively when they can launch a currency, hope that it catches on, and then act re-actively once other jurisdictions with less power catch on to what's happening. Western governments will get what they want before the projects kicks off, and everyone else... well, who gives a shit about everyone else? Certainly not Facebook's shareholders.

That’s not a conspiracy theory. It’s a proven business model.

Look at Uber, AirBnb, Lime etc. They were launched illegally in many countries.

but to play the devil's advocate, why should a service which proportedly offer a benefit to the user of that service be disallowed to be offered? If a country's citizens chose to use libra, it must be because they found it useful, and the country should not have permission to prevent it.

If it was exploitative, then presumably the users would not choose to use libra.

Oh, only non exploiting business models ever get chosen. (Taking notes.)

I think the point was more "it should be legal until some one exploits it" not that every business model should be legal.

Because citizens often make decisions that benefit them in the short term but that are catastrophic in the long term. You might be right if everyone were a perfectly rational actor with access to all relevant information, but they aren't.

But politicians that make decisions like this are more rational and have access to more information, benefiting in the long term ? Let me doubt it

No system involving human decision-making approaches perfection, but politicians and civil servants are tasked with making decisions in the collective interest on the advice of experts. In countries with strong institutions and the requisite checks and balances, they do a better job than the invisible hand of the market and the transitory utility of individual citizens. That's why most of us would rather live in Europe or the US than in Somalia or Turkmenistan.

Aren't both those places the result of policies that were purported to be better than the free market?

You are right, there are no systems that are perfect when they involve humans. However, you used two countries that are, respectively, failures of socialism and communism as an argument against the "invisible hand of the market".

I prefaced the sentence mentioning the invisible hand with "in countries with strong institutions and the requisite checks and balances" in anticipation of that objection. Collective decision-making is open to abuse, but it is possible to create institutions, traditions, and laws that limit that abuse while allowing us to enjoy the benefits of a longer-term view of the public good.

Presumably Smith's 'invisible hand' also applies to competition between economic systems. Looking at migration patterns, while people generally try and move from poor to rich countries, in cases where the economies are roughly equivalent in personal wealth, they also tend to move towards social democracies with strong safety nets. Migration between the Nordic countries and the USA tends to flow east, for instance.

That only works in a perfect world where the public makes a collective risk assesment that is accurate. In reality, that does not happen.

A single person might use Libra because it is useful for them, and one more user of Libra will not change much. However, it is difficult to assess the risks that could come with FB having control over millions of people's transactions, and then factor that in your individual decision. And that assumes that people know what can go wrong with monetary policy, which is far from reality.

To make an analogy... "If a country's citizens chose to use opioids for pain management, it must be because they found it useful, and the country should not have permission to prevent it."

> If it was exploitative, then presumably the users would not choose to use libra.

So apparently no one does meth, or gets involved in pyramid schemes, or buys ridiculous ICOs.

>If it was exploitative, then presumably the users would not choose to use libra.

Unless one actually believes in the existence of homo-economicus and also has never previously encountered a history book, I have no idea how someone would draw such a conclusion.

What's exploitative about a cryptocurrency?

About a cryptocurrency in general, nothing particularly that isn't also a property of money in general.

Specific cryptocurrencies on the other hand, well, where do I start? We could be here all day.

It's not a crypto currency in the p2p sense. It's federated, and the servers are run by the initial investors. It's world-Venmo.

1. All the interest from the reserve (which isn't all hard cash but also low risk securities) goes to the investors. No ability to create your own bank offer interest and compete.

2. Undercuts sovereignty. The HN crash may laugh but ask Yanis Varoufakis what it's like when you can't do your own monitary policy. Would you rather deal with the IMF or Facebook?

>Would you rather deal with the IMF or Facebook?

Now that is a genuine dilemma. I'd say the IMF, purely because there is enough historic data to use Bayesian inference to guide you in doing the opposite of what they advise.

edit - Better the devil you know, in other words.

Because that country might have laws stopping financial cons, as it can seriously destabilise a country.

Also, I country might have laws about equal access to financial services, which libra might not offer.

Essentially...

> Better to ask for forgiveness than for permission

Mantra/MO that they have been following since inception.

Look, it does not matter to me whether this uses blockchain or not. Such discussion won't even be productive.

Facebook has not been the best steward for its main feature the News Feed, leading to fake news, mass misinformation, not to mention their heavy use of psychology to keep people hooked.

I refuse to trust them something similar won't happen with Libra.

This. Currencies only work if people have confidence in them. They also need to have confidence in the institution backing them. In no way should anyone have any confidence in Facebook.

On top of this, in most economies, deposit taking institutions are backed by Reserve Banks. Facebook could die in 20 years. Do we want to trust it will still exist? If it collapses can you recover your money?

There are so many issues, they haven’t even come close to addressing even a small portion of them.

Caveat emptor!

It is amusing watching big US tech giants trying to launch payment platforms to solve problems the rest of the world has forgotten about.

> “In time, we hope to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass,”

You can instantly and securely send up to £100,000 for free between any UK banks, and contactless payments are EVERYWHERE here - I've even seen a begger with a chip and pin machine - let alone paying for coffee or a bus fare without cash.

Judging from the photos used on the libra.org website they're targeting a very different audience.

Yep, they're going after Wave. Not a bad idea; Africa has decent growth potential, and it's not clear what wave's penetration is (most Africans I've met use it).

Like you said, this is all about exploiting the unbanked and the migrants/illegals that send cross border payments home. This is why Visa and PayPal are involved too, they want a piece of that pie as well.

You do know that most of the world isn’t like the UK.

Money transfers between countries in particular poorer ones is absolutely not a solved problem. Neither is accepting money for products/services in countries where not everyone has a bank account or a credit card. And there is rampant corruption in many places as well.

Even a handful of these are enough to make the effort a success.

Neither is accepting money for products/services in countries where not everyone has a bank account or a credit card.

Check out M-Pesa or EcoCash. These are largely solved problems from a technical point of view.

International money transfers between entities not on the SWIFT network is still not a solved problem, or more specifically, the solutions that do exists are expensive and slow (and SWIFT transfers can be quite expensive)

Ah yes, let's put the developing world in the caring hands of Facebook. What could go wrong?

Didn't they already do that with internet.org?

Still not "the world", but we've had next day transfers on SEPA in EU for the last 10 years and EU banks are now scrambling to comply with instant transfers. Even before that they were not as trivial but easy enough. We've had pin-and-chip for more than 20 years in France. The domestic US transfer and payment situation looks ludicrously outdated when viewed from over here.

> Money transfers between countries in particular poorer ones is absolutely not a solved problem.

It may come out wrong (that is, there are some people that legitimately and desperately need this in these countries) but I fear this will mostly enable more extortion and scam schemes. And of course, one more way for Facebook to gather data.

>Money transfers between countries in particular poorer ones is absolutely not a solved problem.

Money transfers in some poorer countries are done successfully via sms messaging and have been for years. You are basically trying to sell people a payment service on their phone, when they already have a payment service on their phone that is backed by the phone company, which would seem less risky to the average user than having the same thing but backed by a marketing scheme.

Have you been to any of countries in the world with dysfunctional banking systems?

India immediately comes to mind, many African nations likely would find this incredibly useful. Just because it isn't useful to YOU doesn't mean its useless.

I thought India had any form of crypto currency banned?

It is however true what you are saying. But I can easily believe that these companies would exploit those countries even more than "traditional" banking systems ever could.

I visited a few African countries in April, they call it "mobile money" Mpesa, MTN mobile money, and then there's Wave, Xoom, etc.

To my knowledge you don't even need an internet connection for mobile money.

How is India’s system broken?

For consumers India's banking system has seen a large number of fast online payment systems. Yes, they have problems especially in rural areas but for the people that would be target group of Libra they are well served in India. In fact, India and (as far as I know) many African countries have far more advanced digital payments systems for consumers than many European countries.

International transfers are still an issue (at least from India to abroad) but this is largely a regulatory issue on foreign remittance than a technological one.

I heard commentators make the same argument when Facebook was trying to push a Facebook-preferring free "basic internet" in India, which India rejected. It turns out the terms of these ostensibly beneficial deals generally only benefit the western corporation pushing them and aren't great for the people of the recipient country. Yet then too there was this sentiment of "Poor people in India should be grateful they're getting any kind of internet at all!"

Yep - bank transfers are free and fast, all my bill payments are automated, contactless is everywhere - it's great.

Since when are bank transfers fast? If I happen to need to send money over the weekend it takes an entire day for it to show up in that person's account.

In the UK they actually are fast (as in: often almost instantaneous, and almost always on a same-day basis). In the rest of the world, not so much.

I live in London dude

Honest question: how is this different to a website having a means for users to buy tokens, and then either give those tokens to another person on the site or trade them with another user?

I can buy reddit gold and then gift that gold to someone who amuses me with a comment or a post, and the only difference I’m seeing is that reddit keeps my money and only gifts virtual gold to the funny guy. Is the only difference with Facebook’s Libra that when I give the Libra to someone else they can cash it our for ‘real’ money?

Apologies for the question if I am missing something obvious.

The intention of cryptocurrency is the public ledger ("blockchain").

Rather than relying on Reddit, for instance, to determine who owns what, everyone can check the blockchain to see for themselves.

The public ledger means that Reddit doesn't (in theory) control the ledger. Reddit couldn't go in and delete coins or give coins without payment. Reddit could have a large stash of coins though and be willing to buy and sell coins though.

Libra though is kind of really weird. It is a "decentralized" system but really the decentralization is just putting it in the hands of a small group.

That isn't totally a bad thing, but it definitely isn't a great thing. Look at 51% attacks, that is why having a small group of large holders is a really bad idea. On the other side though, the large holders are well-known so at least everyone would know for sure who is pushing around the network.

> The public ledger means that Reddit doesn't (in theory) control the ledger. Reddit couldn't go in and delete coins or give coins without payment.

Actually, there would be nothing stopping them giving coins without payment. The ledger cant record that payment was received in order to mint some coins, it would just record that coins were minted. Thats what scary about this whole situation. They could mint extra "funds", and as long as user deposits are greater than what they "spend", you would never know.

I'm going to preface this with the statement that I know nothing of the technical implementation of Libra. I'd be grateful if someone who does know would comment to see how it compares to what I'm about to say.

I was perplexed as anyone about the use of blockchain for Libra, but seeing this thread I can imagine a scenario where it makes a ton of sense. If they are simply using a markov chain to create a ledger that makes public all transactions in a provable way, then this actually seems like a good idea to me. If you give FB $10 and expect to get X Libra back, you need your bank's help to prove that you gave FB $10, but you don't need anything to prove that FB did or did not give you X Libra (assuming you agree to identify yourself as the recipient of the transaction).

In fact, I don't think we actually need proof that FB is receiving funds for its Libra, because FB has tonnes of cash (almost literally). You can think of the receipt of Libra as a bond rather than as cash. You can then trade that bond for things or other cash. Because of the aforementioned tonnes of cash, this bond quite rightly should be highly rated -- in fact, I suspect it would be rated higher than many government bonds.

This may worry governments. I'm not sure -- incredibly liquid bonds would essentially be cash and could undermine weak currencies. You can imagine that if you are in trouble with hyper inflation, anybody who can will grab Libra because it will be easy to get and very, very liquid. This could sink your currency pretty quickly.

On the plus side (and I can't believe I'm actually saying this), this is practically exactly what I wanted when BTC was first released. Of course it is crap that it will be run by a single entity... but if it's liquid enough and if they don't start charging ridiculous fees it would be awesome as a payment method for online purchases.

Should be more highly rated than government bonds... wait, what? In no way would you ever say that a government is less secure than Facebook.

I predict that not only aren’t governments worried, but they will crack down hard on Facebook. In fact, if it ever happens I will personally write to the Australian Consumer Competition Council and ask them to make sure they don’t try third line forcing (forcing people to only pay with Libra-bucks or what they are called). EBay and PayPal tried that, and got smacked down very quickly.

Some government bonds. For example Argentina's government bonds are currently rated B/B2.

But, to the actual end users, Libra is no different than, say, writing a check. It doesn't matter to me how the banks themselves shuffle their funds back and forth when I give a check to someone.

Reddit Gold works on Reddit, and that's it. Libra pretends to be an actual currency, with which you can buy things.

There's also the issue of scale. Facebook is everywhere, if it controls our money it can become more powerful than governments.

> it can become more powerful than governments.

We've probably crossed that bridge already, but this would certainly speed up that outcome.

That bridge is definitely crossed with Google which has an (approximate) effective userbase of 3 billion people. That's a larger directly-influenced population than any government in the history of mankind. And the best part is that Google's operations are entirely undemocratic to their users.

> if it controls our money it can become more powerful than governments.

Hmm I see why this might sound scary but I don't get why this is a bad thing, it might be the competition we need against governments to improve monetary systems across the planet.

Governments are democratically elected. Facebook is not.

You've used democratically in a positive sense in which I would contest. I don't think it's a force for good and in many cases it has ended horribly. A company is "elected" in the sense that they have to generate revenue (people have to willingly give them money in order to function). The same cannot be said for governments who forcibly extract resources from the people living within their geographic region. One is voluntary and one is forced. We are hiding under the guise of ethically contentious concepts like "social contracts" in order to justify the use of force as a proper mode of operation. Facebook hasn't murdered millions upon millions of people in their name, but governments have.

And how is a corporation better? A corporation is made with the ultimate purpose of making money for their shareholders. The wellness of the customers is not a goal at all.

Also, I disagree with the part about a corporation being "elected". If you don't like how your schools run, for example, you can vote for a different government, and at no point you will lose the schools for voting differently. If you don't like how Facebook is run (or any other company for that matter) the only way to "vote" is to be ready to stop using Facebook. In other words, the cost of having a say in how a company is running a service is possibly losing access to the service, and therefore the company has far more power over you than the one a "government" would have running the same service.

Improve them how? Also, if they become more powerful than governments, they don't have to answer to no one. Once they control your livelihood, you wouldn't be able to even complain. It's basically putting them at the doors of an authoritarian government.

I'd say that the difference is in market penetration and scale.

Individual governments actually feel threatened by a global currency that is available on platforms most of their citizens already use and is backed by a basket of geographically distributed low volatility assets.

If US is worried, then governments with smaller and more volatile currencies may be having a panic attack.

Exactly the question that came to my mind as well...

In your example, Facebook lacks the ability to peer into a complete and (by design) persistent history of your spending activity. That's the biggest difference, and that's why they're pushing for this. Just like every other Facebook venture, it's all about gathering as much information about you as possible and using it to sell ads.

Libra is supposed to be a currency, which means people will sell stuff and get paid in it. That makes it easier to launder money - you can just claim to be selling some digital ebook or whatever, and that the users paying you are customers (when in reality they're just your sockpuppets, or actually paying for other services/products).

> Is the only difference with Facebook’s Libra that when I give the Libra to someone else they can cash it our for ‘real’ money?

That's a pretty big difference! It's the one that makes Libra a currency.

That you can exchange something for other currencies doesn't make it a currency. Currency is defined by its use as a medium of exchange.

Non-redeemable purchasable tokens could meet the definition of a currency. Conversion can be facilitated by exchange between users, rather than by the issuer. In this case, the issuer's sale price only sets an upper bound on the exchange rate.

> It's the one that makes Libra a currency.

it doesn't. Currency needs to have one other property - the legal requirement that a party accepts it as payment. For example, i cannot force a shop to accept my gold coins as payment (they could choose to accept it - but it's not a legal requirement). However, if i offered cash, they are legally required to accept it as payment.

Facebook can make this a pseudo requirement by virtue of network effect, but it isn't the same as currency with legal tender status.

US federal reserve notes don’t meet your definition - they can be legally refused for purchases, it’s only debts where you can’t refuse them. In a purchase scenario, where there is no pre-existing debt, a dollar is no more legally privileged as a payment method than pocket lint.

I get the impression from the article that no lawmakers had knowledge of the protocol. I hope Facebook does not plan to introduce this "sneakily" without taking into account laws and the financial issues this can introduce.

Honestly, I really hope this project is stopped as soon as possible. Facebook already has way too much influence in our lives. It controls news, messaging and relationships with others, and it has not been managing them in a responsible way. Why would anyone let this company control money too? What happens if Facebook causes a financial crisis? Who will be controlling them? Who will they be accountable to? What happens if Facebook goes bankrupt? Libra is a project with way too much risk for the benefits it offers.

You don't have to use Libra, or Bitcoin, or Ether, or...

This is not another app. This is Facebook saying that they want to create a widespread currency, not just a payment system. And I don't need to use it to become affected by the monetary policy of the behemoth that Libra could become.

Ah, not in my backyard

Do you care to expand?

People having terrible economic backyards may want to move near you. Yet you say they should be stopped because they ll ruin your view.

[it doesnt have to be facebook's currency, any cryptocurrency could have major monetary policy implications]

>People having terrible economic backyards may want to move near you

Nothing to do with that. Facebook is saying that they have a new lawnmower that could improve some lawns, and I'm saying to stop it because Facebook has shown that it does not care about anybody's lawns but their own, and their lawnmowers could very well accidentally release asbestos to screw users and non-users alike.

>any cryptocurrency could have major monetary policy implications

Yes. However, up until now no cryptocurrency has had the full backing of a behemoth such as Facebook. Facebook could very well use their power to act as a bank and as a financial actor bypassing regulations put in place to avoid problems.

Not yet, so lets not let it get to that point. Fiat is bad enough.

>If Libra wants to be a big player in the UK's payments system it will have to be regulated by the Financial Conduct Authority and show that it knows who its customers are and that it has strong anti-money-laundering controls. Existing money-transfer firms say complying with all the rules can be an onerous and expensive business.

Similar deal in Japan. They'll need to ensure nobody using it is in a gang, is a terrorist or might be politically exposed. In a lot of cases they'll be required to collect identity documents. They'll also need to cease offering service to any flagged individual across their entire platform.

That's no big deal really. USDC does that:

https://support.usdc.circle.com/hc/en-us/articles/3600160603...

And it should be easy to implement in a private consensus blockchain.

>In a lot of cases they'll be required to collect identity documents.

This may very well be the major reason for Facebook to introduce & maintain the cryptocurrency.

The "real name" policies were tried across the social media, with the expectations of both higher civility, and also faster, more complete build-up of personal data gathering/social graph build-out for advertising etc. The policies failed for obvious reasons.

However if Facebook was legally mandated to obtain & keep personal identification data due to handling of the cryptocurrency, and also at the same time able to track transaction of the users, it would have an unprecedented look into even more connections between people.

Tracking money shows business connections, family connections (think allowance for kids, gifts, etc.), and also social connections (think hanging out with friends, splitting bills with Venmo, etc.).

That's never going to fly in the EU, the regular will simply insist that they keep all such data entirely separate, even if that's very impractical for them to do.

...after 5 years of hand-wringing and investigations. By which time Facebook would have had made out like mad bandits.

Plus they really can white-wash the data; as per the announcements, not only Facebook but also other major entities would hold the ledger. You can easily imagine Facebook buying (or getting for a nominal $1) processed data from the other entities. No user data would change hands, "merely" well trained AI models.

I remember a lot of crypto exchanges require photo of passport / id card. This is not new

This is not the first cryptocoin, or stablecoin or anything that has not been released before. It's hard to take these reactions as anything other than politicians grandstanding for popularity points.

Do any of those released before, even in their wildest dreams, have a chance of being as widely used and having as big an impact on ordinary people as Libra?

Facebook is not attracting political and regulatory attention not because what they are doing is new, but rather because they have a realistic chance of doing it on a much larger scale than we've seen so far.

Bitcoin was supposed to have dominated the world by now. Apple pay could potentially be in 1.4 billion devices. Google pay could potentially be in 2.5 billion devices. I dont remember much political theater when these were rolled out, that's why i believe this is just posturing.

Are they afraid? What happens the next time the pound takes a massive tumble down (again) during a Brexit like event? People might decide to convert their money from pounds to Libra's. The Libra is based on a basket of currency's, much like the SDR governments use. It's potentially MORE stable than the pound. https://en.wikipedia.org/wiki/Special_drawing_rights

Why would they convert into a currency owned and controlled by a private company? A private company proven not to really care about morals?

While it could absolutely be that the £ tumbles there are a number of stable currencies in which £ could be exchanged if people are worried that it loses value (that's value in relation to other currencies). ¨ The concept is called FOREX[1] and is not exactly new or revolutionary.

[1] https://en.wikipedia.org/wiki/Foreign_exchange_market

edit : wrong word

> Why would they convert into a currency owned and controlled by a private company

Because if a bank runs the risk of failing (like BOTH of mine did in Holland) people freak out. Their bank accounts are suddenly a liability. If there is a fast and easy way to transfer money out of the banks, that would be a big plus. Even if you were to purchase dollars, they would still sit on your bank account.

And if there's any trouble with "cash" issued by a private company: Best of luck getting help from their "customer support".

At least a bank is regulated and holdings are insured up to a certain amount.

> Because if a bank runs the risk of failing (like BOTH of mine did in Holland) people freak out

Most EU countries have had deposit guarantees for a while (even before the crisis). It's an EU-wide rule since 2014 [0]. Would FB have that? Doubtful, as the deposit guarentees are provided by the governments that are in control of the currency.

> If there is a fast and easy way to transfer money out of the banks

What bank do you use that does not allow you to withdraw money?

0: https://ec.europa.eu/info/business-economy-euro/banking-and-...

> Would FB have that?

According to them, yes: https://libra.org/en-US/about-currency-reserve/#the_reserve

It's not the same. A deposit guarantee is given by a third party, so that if Libra goes under or mismanages things I still cannot lose my money (up to a certain limit).

You could just buy some (or one) of the currencies backing Facebook's Monopoly Money. A basket of major currencies is, purely logical, less risky than the same basket plus a layer of Facebook crypto-voodoo.

Considering some rather beleaguered tech company's fancy new crypto-whatever to be more stable than currencies that have decades of rather benign market histories does not strike me as rational.

Edit: Not Great Britain, but Venezuela: "those who are banked currently face extreme levels of inflation, meaning the worth of their bolivars, sitting in national vaults, diminish in value every day. No doubt, having access to a stable global currency could help encourage savings and accumulate wealth."

A week ago every blockchain and cryptocurrency article on HN was full of comments declaring the whole technology a huge ponzi scam that only con-artists and idiots used ("look at this NIST blockchain workflow [smug face]"[0]).

Now blockchain is the most powerful monetary technology ever created and governments and regulators must put a stop to it immediately!

It's incredible what can change in a week.

[0] https://i.redd.it/uu0qg8t28tq11.png

This isn't a "blockchain" discussion, this is a discussion about an application of blockchain. It's clear that this isn't just a cryptocurrency, but a bank using the cryptocurrency label to avoid regulation - thats why it needs to be stopped.

You should read the comments in this and the announcement article (still on front page since yesterday) as it seems you are confused.

A week ago the pitchfork commenters would say anyone that uses blockchain is clearly an idiot because a centralized database is superior in every way.

Suddenly everyone is agreeing that blockchain technology has value! I’m just so shocked

Your shock comes from the misconception that the two are incompatible.

The crucial point here is that FB is creating a currency they control. It can still be true that FB are idiots for using a blockchain instead of a database.

The other thread is full of people lambasting Facebook for using a blockchain when it’s not really needed since it’s a centralized currency in practice

No, the issue as GP says is that they are using crypto as a label to avoid regulation. They are using a "but it is a decentralized blockchain" argument to try to avoid all the regulations they can't/don't want to meet. This whole association is really just a new banking conglomerate. That wouldn't pass muster without full compliance. This is just the normal "try to skirt the laws" startup mentality so you can create exploitable margin over your competitors that actually follow the rules.

How is it different from USDT and other stablecoins in that respect? Must USDT be stopped?

you mean the coin that was unable to pay out funds (and doesn't guarantee they will)? that has refused to show proof of its reserves? that lends its reserve funds to “partners” to cover up missing funds in their reserves? that has recently admitted that there is only 0.74 dollars in the reserve for every dollar invested? How is that "stable"?

yeah, that kind of shit must be stopped. you disagree?

> yeah, that kind of shit must be stopped. you disagree?

Actually i don't disagree. And look, facebook coin has addressed all these issues from the get-go.

If you read the white paper - heck, even if you just read the comments here - you would see that Libra doesn't solve these issues at all. It just gives that power to facebook and partners - as well as the ability to earn (in perpetuity) commissions, interest, etc on user invested funds. There is nothing for the consumer here, this is just another way to make money by becoming a bank in everything but name (and regulation).

Sure we can "trust" (this is central to current proof of stake systems) that facebook et al won't do anything nefarious, but I'm not sure we should be trusting facebook at all, let alone with our money.

It solves the issues you mentioned, but it creates other issues with being overcentralized. David marcus of facebook says that in the future they may change or decentralize the platform, but we can't take their promise of course.

> There is nothing for the consumer here,

i disagree on that, i could use it to earn micropayments from facebook users tomorrow, this can be pretty impactful.

> by becoming a bank in everything but name (and regulation).

Cryptocurrencies are regulated, even though their status is still not well defined, and this will actually pressure the US SEC to set their standards more rigorously. KIK is already trying to push for that. I don't have a problem with facebook becoming a bank, it's not like banks have a stellar reputation either.

Who called the blockchain itself a scam?

The claims I've seen have been (1) that the whole ecosystem is overrun with scammers and (2) that the blockchain is being ill-used (hence the NIST workflow).

I'd say (2) still applies here - the "blockchain" here is just a distributed database, which already existed before Bitcoin came around. Bitcoin's innovation - combining Merkle Trees with POW - is irrelevant in a network of trusted partners.

A "huge Ponzi scheme" is exactly what governments and regulators should put a stop to, so I really don't see a contradiction?

Until tech firms start taking responsibility of ensuring that their platforms are robust and cannot be misused, I am not convinced of Libra. Putting the blame on people using the technology is incredibly naive on their part, frankly because it is human nature to exploit something. They need to start operating from a position of 'how can this be misused' not from a position of 'let's make this cool thing and expect some ideal world out there to embrace it and then think about problems as they arise'.

And this is just 1 part of it, the other part is assurances that this data will not be used to further interests of all the validators. I am curious on what is the value proposition pitched by FB to attract validators, besides what is given on the public facing websites. The fact that you have government institutions is to have a body that is removed from profit making goals, and thinks about the society in the long term. Sure, there are corrupt politicians, but not all of them are. Europe seems to have the right mind with regards to tech firms. What is it that fb and other investors look to get out of this thing?

If Maxine Waters is against it then it is probably a good thing. And why is one Facebook even batting an eye at one lawmaker?

It's both Republican and Democrat calling for this holt and testimony. https://www.nationalmortgagenews.com/news/maxine-waters-call...

Considering Facebook is either dead or dying in the tech savey under 40 market who is this aimed at? How many 55 year old boomers are going to exchange their known fiat currency for magic Facebook bucks?

Also any note yet or the scope of this? Will it be pushed to Instagram and what ever other garbage Facebook peddle?

This is all about exploiting the unbanked and the migrants/illegals that send cross border payments home. This is why Visa and PayPal are involved too, they want a piece of that pie as well. This is FB seeing how well WeChat has done with payments and going after Africa and South America since Asia has already been won.

They have said this will be available in Messenger and WhatsApp.

You're aware that Facebook owns Instagram and Whatsapp right? It's by far the number one social networking company for people under 40.

and if you're only looking at the people around you in your own country, that can undersell their influence even more. The entirety of India runs on WhatsApp these days. I was in Cartagena earlier this year, and even their taxi cab dispatch was running on it.

> Will it be pushed to Instagram and what ever other garbage Facebook peddle?

I literally reference them owning Instagram in my post, Whatsapp i forgot about admittedly/

Why would the US be against this?

The current US dollar holds power globally largely thanks to the oil trade. As the world moves away from oil, surely you'll need a replacement reason for us to keep wanting the US dollar?

Libra would be a geopolitical coup.

I agree with all of that, but still have fear about how unhinged the us could become in that scenario. No matter how unhealthy, uneducated, disrespectful of the judiciary & rule of law, and xenophobic the population grows, the government has always valued stability. A big part of that is the USD's place as the defacto world-currency, stabilised by its place in the global energy sector. Even when I haven't liked where they were headed, I've always felt like America had a steady hand on the wheel. For the first time in my life I feel like that may change.

Let's face it: the traditional world is shitting their pants.

The disruption of 'money' was already on the table with all the cryptocurrencies. And now powerhouses such as Facebook, Visa and MasterCard, Uber and Lyft, eBay, and Spotify stand behind this new Libra.

I would shit my pants too.

Even though I hate Facebook, but most politicians do such things only to get featured in the news. They neither understand nor even care about what they are talking about.

...that point where the policymakers realize "Oops this cryptocurrency stuff is not going away on its own". Next step: Pass some laws to shut it all down. (EDIT: To be clear, I don't agree with this, but this is what's going to happen).

It being crypotocurrency isnt the issue here.

The problem is that this isn't the same as a proof of work system - it is proof of stake - with the "burden" of proof put on facebook and its partners. This means that they can simply "create" currency with no oversight or proof of reserve.

In short, it works EXACTLY like a central bank, but it's not regulated. This is extremely dangerous for consumers.

My point is: The trend in financial services and payment systems regulation is going in the complete opposite direction of the kind of features that would make crypto interesting. Decentralization, Anonymization, etc are all things that the policymaker has been actively working to combat.

This isn't decentralized (its overseen by facebook and partners). It's not anonymous either (in order to participate in the network you need identification).

This is a bank, albeit using the cryptocurrency label to pretend it doesn't need regulation.

This is _exactly_ the point stakhanov is making.

I dont read it as that.

> "Oops this cryptocurrency stuff is not going away on its own". Next step: Pass some laws to shut it all down.

> Decentralization, Anonymization, etc are all things that the policymaker has been actively working to combat.

The reason policymakers should want to regulate this is because it is a bank - not because its decentralized or anonymized (because its not)

Well: Either it is crypto, in which case policymakers are going to dislike it because of how crypto is linked to these aspects that policymakers dislike. Or, if they called it crypto when it's not really crypto then that play clearly backfired because instead of lessening the regulatory scrutiny it's actually increasing it.

Either way, I think my point is valid: Cryptocurrency is in this state of limbo where it's something that policymakers dislike but they haven't yet gotten around to making the laws that say so. I can't see into the future, but I am hereby going on the record by saying that this is something I am expecting will happen. And facebook entering the scene serves as a catalyst to accelerate the lawmaking. Them kind of saying "hold on a sec..." is what I see as this process kicking off right now. Will be interesting to see whether it holds true or not.

> ... haven’t gotten around to making the laws that says so.

Huh?

The SEC is very clear that most crypto currency is a security. The laws are on the books. That deranged Reddit people imagine the laws don’t apply to them in no way changes that.

Similarly, Facebook appears to be proposing that they become a bank, then putting some lipstick on to suggest they’re not a bank. The laws are on the books about how banks are regulated.

The argument here is “does claiming you’re not the thing you obviously are work as a tactic to avoid regulation”. Clearly AirBNB and Uber got away with it, so Facebook is hoping they can, too.

The question of whether or not a bitcoin or whatever is a security is only the tip of the iceberg of regulatory questions that someone might ask about cryptocurrency. How does anti-money-laundering regulation apply to it? Does a cryptowallet need to come under FDIC insurance? How does the Volcker Rule apply to someone who takes deposits and also engages in trading around a cryptocurrency? etc etc etc Large parts of the law are written on the basis of the assumption that currency is actually a dollar bill printed on paper, or a number in a bank computer with a very narrow sense of what is and what isn't a bank. Those definitions are being blasted wide open, and asking the law a bunch of questions about cryptocurrency often resolves to "it does not compute..."

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