Regulators Have Doubts About Facebook Cryptocurrency, and So Do Its Partners
nytimes.com
nytimes.com
I could send someone an Amazon gift card or a Starbucks digital code as long as me and recipient agree on a common medium for such transaction.
It's the way forward to a dystopian sci-fi trope: Corporate-owned and minted money that transcends national fiat currencies. The implications of which have again been extensively discussed in aforementioned media.
If they were supporting crypto they'd work with one of the x000 existing crypto currencies. Not sure they are adding any value by creating Libra aside for gaining control. And that ultimately is what bothers me.
- financial data: who will own it. Governments want access to it first hand. - monetary policy: governments want to be able to define the circulating amount.
In real life if a casino doesn't think you got a chip from them directly as part of gaming at that casino they won't pay out on it. That actually happens with some regularity.
Really? In Bringing Down the House there was a plot point of the crew enlisting strippers to cash in their chips, because they could do so easily and without attracting suspicion because it was normal for them to get paid in casino chips.
Not anymore.
I'm reminded of the 'Liberty Dollar', a 'private currency' that ended in a raid by the FBI and Secret Service. It didn't help their case that their coins looked suspiciously similar to real US currency, mind.
https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
Broadly they fall into these categories:
- debt-like: bonds, banknotes, credit balances, invoice/PO pairs, chips, and so on. Things where theoretically you could redeem it for the face value of real money. These should appear as liabilities on the balance sheet of the issuer. There may be problems if this gets very large.
- redeemable for services: Canadian Tyre, most gift cards. If you look closely at a lot of these things they will have an "equivalent cash value" of a tiny fraction of a penny printed on the back.
- "those that belong to the emperor": state-issued money
- security-like (Howey Test, and similar rules elsewhere): this is the big one for cryptocurrencies, since it depends very heavily on the marketing. If Libera is floating this may be a problem. If it's a normal token redeemable at a par value, it's not.
- non-redeemable consumable or durable items that are commonly used in barter: can usually be distinguished from money by not having a face value of any kind. Steam items don't look like money even if they can be traded.
I agree that a lot of this is combining people getting upset about cryptocurrency with people getting upset about Facebook, but in both cases there are underlying valid points; there is also potentially a TBTF issue - how much is Facebook going to issue, and what effects would its huge market dominance have?
Are there reward points that you a) actually own, b) have a formal value, and/or c) are allowed to trade?
For instance:
https://www.britishairways.com/en-gb/executive-club/terms-an...
"21.1. Avios points, and all rights of title to and property in such Avios points issued at any time, remain with AGL at all times and never pass to the Member.
22.1. [...] Avios points are not transferable [...]
22.2. Any purported purchase, sale, transfer, unauthorised use (including bartering), procurement or redemption of Avios points issued or awarded to another person [..] will constitute a fundamental breach by the Member of these Terms and Conditions and the Conditions of Use."
I can sell them as well on a few marketplaces online, so they have an agreed value as well.
Most importantly, because I can sell and trade them... Does that not make them mine?
While true, in a lot of cases it ends up costing almost as much as they are worth to transfer them, so I'd argue it's different.
Casinos and their chips are regulated as well, even more than the regular currencies.
Chuck e cheese tokens are one way, you can't exchange them back into dollars, as far as I know. While technically you can create a large-ish society that uses their tokens as currency, it hasn't happened yet.
a) not a true crypto-currency because it's centralized
b) such currencies are not regulated yet in the slightest
c) the centralized authority is a consortium of private corporations of which one, Facebook, is providing the entire infrastructure
d) Facebook is known to not handle data appropriately and is not well regulated when it comes to privacy and data protection
e) I haven't seen any method to allow other people to invest or directly convert the money back to nation currencies which makes it easy for the consortium to just decide to pull the plug and exit scam with no insurance for people who bought Libra
f) The consortium have essentially become a bank out of thin air and that comes with a whole slew of regulatory issues
Facebook is not just any company either. It holds world wide dominance in marketing, advertising, and communication. It is also accessible through a wide age range. If Libra becomes the only way to interact with Facebook, what do we do about children on Facebook who are often, in the eyes of the law, not able to handle financial responsibility? Due to the current problem with loot boxes and in game gambling in video games, I can see this becoming a problem.
Libra apparently isn't pegged to a specific currency but fluctuating assets that are claimed stable. So if you put 10 fiat currency into Libra, you're not guaranteed to receive or get 10 out (even if we account for a transaction fee) which would normally happen when interacting with a bank and its services. One poor investment by some random company, and your Libra tanks.
The problem with your analogy is that unlike your CeC tokens, the FB Mafia completely controls whether you can give them to someone else or not. You can't trade them on their (fake) blockchain to someone else if they say no and without making a direct payment to the FB Mafia. It is also likely you can't even try to do the exchange without using the FB Mafia's wallet application. There is no physical thing that can be exchanged like with your tokens. They have also said they will comply with any government regulations. So if someone reports your CeC tokens as stolen, the FB Mafia can just steal them back and you have no recourse.
Essentially, what you'd be doing by embracing Libra is giving Facebook access to one of the few types of information about you that they can't access by law. Throw in the extra creepiness of the inevitable forensic accounting services to governments the world over, and you've basically turned Facebook into something with damn near panoptiv capabilities if there isn't some serious revamps to how customer data is mandated to be treated.
> "Jerome H. Powell, chairman of the Federal Reserve, said on Tuesday that the central bank would be looking at Libra “very carefully” given its potential scale. “I think that our expectations from a consumer protection standpoint, from a regulatory standpoint, are going to be very, very high,”
When Chuck E Cheese becomes one of the world's biggest companies and wants to turn its tokens into legal tender, regulators will be paying attention then too.
[1] https://www.pcgamer.com/how-microtransactions-and-in-game-cu...
There’s a plenty of illegal activity related to Valve games, but it’s not the kind mentioned in the parent (drug trade, terrorism, human trafficking). Not at any meaningful scale anyway.
Drug dealer has cash, drug dealer buys Steam gift cards from local 7-11 (or physical stores that carry them) and uses it to load into Steam.
Steam has a marketplace, dealer buys hats/skins and then sells them for real money transferred by paypal e.t.c. via the various 3rd party sites that do that kind of thing.
Cash is now converted to money in a bank account without ever going into a bank itself.
Why wouldn’t they just use some of the many cheaper and simpler methods of getting cash into digital currency?
I do not think Mark Z's and facebook's past actions bode well for their cryptocoin venture
I am sort of hoping they won't figure that out. But it seems likely that eventually they will.
Maybe I should stop saying it's not a real cryptocurrency and stuff, because perhaps if they think it's real or could turn into a real cryptocurrency then many will be afraid of it and kill the project. And that could give time for Bitcoin and Ethereum scaling efforts to be deployed.
By the way, what are they all planning to do if the scaling efforts of real cryptocurrencies succeed and the dream of digital cash becomes a reality?
Some of them, like GoPay works with the Indonesian gov't to provide loans for micro-small businesses. Since they have the data of business transactions they can forecast loan repayments.
> By the way, what are they all planning to do if the scaling efforts of real cryptocurrencies succeed and the dream of digital cash becomes a reality?
My fear is WeChat and GoPay will get there first well before cryptos.
Digital cash is a public system. It is not run by a monopoly company. It is auditable by all. Fees are reasonable. Wallets are entirely in your control. Wallets are private. Companies and governments can't control your money. The system is secured by strong crypto.
I'm not sure there is just one dream, though.
Some are dreaming of assets that are stable in the way that (they think) fiat currencies aren't. Some are dreaming of making a lot of money buying low and selling high. Some are dreaming of being off the grid (yet it seems to be really hard to get that right). The list goes on and on.
I even tried complaining through their website about my miserable failures in trying to buy stuff from them and their online complaints form returned an error when I submitted it - meaning that I ended up emailing them complaining about their complaints process!
Edit: Apologies for the off topic rant - but I saw "Vodafone" and "customer service" together and couldn't stop myself.
When I go on Facebook, the site is so bad, the app is so dishonest that it is disgusting and intractable to use. Everything is a lie. Nothing works in one normal way. You can tell that it's this tangle of effort hoisted up into service with maximum effort to slime people.
It's like when wholesale clubs move the products around the warehouse so that you have to wander around and look for the thing you wanted to buy. Where is that thing I need? Why can't I find it?
Oh right. The system is designed to suck me in and waste my time. I can't delete anything because deleting data isn't real anyway. I have to prove the revenge porn is me by posting nudes. Riiiiiight...
Yeah, trust Facebook. They won't play games, because they care about you, and they take your money seriously.
The best part about Facebook is that, when push comes to shove, they're helping you see more relevant ads.
If you were to estimate FB's health as a company based on HN comments only, it should have been dead and buried long ago.
Trustless is not a requirement for a cryptocurrency. PoS requires trust, but still would be a viable consensus mechanism for a cryptocurrency.
Regardless, Libra still qualifies as a cryptocurrency, even if it's not trustless.
Nothing on the internet is anonymous
Chickens are currently a bit small and shortlived for the full system that gets applied to cows, sheep, goats etc. In the UK, if for some reason you wanted to pay for something with a cow, you'd have to tell DEFRA. https://www.gov.uk/guidance/report-and-record-cattle-movemen...
The chicken example is nice and all, but why not just offer the same advantages as good old cash? Would be a far more appropriate comparison, don't you think?
Most internet transactions are not anonymous of course, but there are options and I like to keep them. I regularly use non-anonymous transactions myself, but that is not the issue.
And pseudonymity is good! We should allow for lots more of it.
But anonymity is a different thing. It’s not clear to me that anonymity is worth trying to achieve, anymore; instead we should be fighting for judicial oversight of when pseudonymity can be pierced, combined with dramatically less anonymity for the misdeeds of the powerful.
More broadly, it seems that yet another media campaign to push Facebook's bowl over somehow is going on. Not a fan of the company by any means, but it does look like this project has merit and will happen whether the naysayers want it or not. Given this I would just assume that any big tech company would like to participate with their knowhow.
And yes, maybe it won't succeed, but it's hard to see how it wouldn't. I guess the regulators are the biggest possible obstacle.
An absolute waste of time.
What's a waste of time about this? It seems reasonably well balanced, facebook have an incredibly narrow line to walk launching this currency. Finance unlike the internet actually has regulation, and a negative view from a regulator has the potential to scupper the project. Everyone is cautious as a result. Its a chess match at this point.
Libra is nothing more than the latest iteration of a long line of stablecoins a-la Tether, USDC, GUSD etc. I find the industry and regulatory overreaction puzzling, surely these issues have been explored before?
The "But it's Facebook!" argument disingenuous, any one of the popular chat app has, or can replicate this experiment (Wechat, Telegram, Slack, Kakao, Line, Twitch, Discord).
because more often than not when we do that our data happens to end up in the hands of private companies that try to steer public elections. Facebook is a private company and we should not let it attempt to displace the financial system. The same scrunity should be applied to wechat or telegram should they ever attempt to do the same. As it stands wechat has no relevance on the western markets though. Control over financial transactions and the monetary system directly impacts national security.
>Libra is nothing more than the latest iteration of a long line of stablecoins a-la Tether, USDC, GUSD etc.
the difference is that facebook exercises control over 2.4 billion users, so everything it does, by definition, is in a very different ballpark than a community project.
Why do people think that this will shove our existing financial system aside? The second something comes close to having too much of an impact (stepping on the toes of banks, displacing the dollar, etc), the regulators will crack down on it. What I can see happening is that it becomes an alternative payment method at best.
Does anyone know what the downsides are? I haven't been able to find any posted anywhere, but I don't trust something until I've seen the cons, so I'm wondering if anyone here has looked into it.
https://cointelegraph.com/news/stellar-node-outage-causes-tw...
EDIT: It looks like it can be decentralized, just nobody is running any nodes apart from the foundation. I wonder if that's because there isn't enough incentive, or that people just don't trust them. Either way, it's bad.