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Comment by docdeek | Hacker News Reader

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.

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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.

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.

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.

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.

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

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