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Comment by carlosdp | Hacker News Reader

Idk why this article is so high up here, it's not very good.

- The article implies Facebook "already made money off Libra", that's false. That $270M goes to the non-profit Libra Association in Switzerland, of which Facebook is 1 of 28 current members. They don't "get" that money, it's there to fund the Association's maintenance costs.

- Facebook built this, yes, but they do not have full control. In both governance and validation, they have 1 vote of 28 (currently, the number is supposed to go to 100 by launch). Will Facebook have the largest deployed Libra wallet? Yes, at least initially. Can anybody make a Libra wallet? Yes.

This isn't a data play, it's very clearly a play at getting a bunch of people in developing markets that can only pay with cash right now the ability to pay online. That's a HUGE opportunity all on its own, they don't need our data to make this worth it if it works.

How can they sell ads to people in emerging markets, Facebook's fastest growing userbase, if none of these people can buy the things they are advertising?

Facebook doesn't need an ulterior motive to make a buttload of money off of this, if it works. I don't know why "experts" are looking for one.

Edit: I originally said the initial $10M buy-in per member goes to the Libra Reserve, but that was in error. It goes to the Association to fund the non-profit itself. The Reserve will be funded by the initial on-ramp of users.

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> Facebook built this, yes, but they do not have full control

Well, the Libra documents are vague about timelines and how/if they plan to move to a "permissionless" system- Instead of saying "they do not have full control" you should qualify it to say that "their marketing materials claim that even if it launches with full FB control initially, they state that they hope to eventually transition to lower amounts of control."

No, they do not have full control from the start. Even in the current permissioned model.

The 28 (will be 100) member companies do (or rather a majority vote of them do). But Facebook itself will not have full control, from the start.

This is really important and something the media keeps getting wrong. Facebook isn't dumb, they know no one will trust something they control right now, so they made it so they aren't the ones in control.

They likely will be the biggest wallet app though, which is significant. But they still can't single-handedly change the rules of Libra, they need a majority of the Libra Association members to do that.

I'm not saying you're wrong, but can you provide a citation? Where does it concretely say that FB will not be in charge of the network when it first launches? The closest I can find is the lawyerly language written here [1] that sounds, on the face of it, purposely misleading: The sentence "In these early years of the network, there are additional roles that need to be performed on behalf of the association" only makes sense if rephrased as "In these early years of the network, there are additional roles that need to be performed BY FACEBOOK on behalf of the association"

[1] https://libra.org/en-US/white-paper/#the-libra-association

From that very page, second paragraph:

"The association is governed by the Libra Association Council, which is comprised of one representative per validator node. Together, they make decisions on the governance of the network and reserve. Initially, this group consists of the Founding Members: businesses, nonprofit and multilateral organizations, and academic institutions from around the world. All decisions are brought to the council, and major policy or technical decisions require the consent of two-thirds of the votes, the same supermajority of the network required in the BFT consensus protocol."

Edit: the things they are describing that "need to be done by Facebook" likely means software dev work, done in open-source (it's already open-source), cause they have a ton of well paid people already that know how to do this whereas Visa, for example, might not. They are recognizing that early on, they will be doing a lot of heavy lifting, that's all.

Yes, but in the paragraph I quoted, it clearly implies that the network is already live and that some unnamed entity acting "on behalf of the association" is recruiting the founding members, so there is some time period being referenced in which the network is already live and the founding members have not yet been established.

I should point out I'm not necessarily anti-libra, but I just think anyone claiming that we needn't worry because "Swiss Association" seems unreasonably sure of the situation.

It's live in a "test net" at the moment, so developers can build on it. The test net is hosted by Facebook, through this year.

When the "main net" launches, it'll need all 28 members to run validator nodes to start it up.

Until it's fully live, Facebook can change the terms, contract, code, strategy, etc. however they want. Until they have an actually decentralized system humming away, it's all us trusting Facebook to do what they promise.

Until it's fully live, it's all funny money and not any sort of threat to real users. It's not like they can change things now and no one would notice before they launched and it took off?

If 2/3 of the members vote for something but the infrastructure is built/developed by facebook, I wonder if Facebook can simply say no. Not in the sense of publicly refusing to do it, but if something is not in their interest, they could slow it down or do it poorly so that it doesn't work. It seems the other members would have to take something like that over to get it done which is costly and may not be worth their time/money.

Any of the members can build their own implementation of the Libra protocol and give it to other members, or they can take Facebook's and modify it (it's already open-source on Github).

Several of the members are already software shops that would gladly manage an implementation if the interests of Libra (and therefore, their own interests, cause they would only care if Libra were successful) were threatened by the Facebook implementation.

> it's already open-source on Github

the released code appears to be rudimentary at best https://www.bloomberg.com/opinion/articles/2019-06-20/facebo...

It's early, but I wouldn't call it rudimentary... Cryptocurrency implementations are complicated distributed systems problems. If the code were more complete, I'd wager the author would be complaining that too much of it was developed in private.

Idk, we don't need to depend on Bloomberg's opinion, we can check out the code ourselves: https://github.com/libra/libra .

> they need a majority of the Libra Association members to do that.

Don't you find it odd that all of the member companies either (1) are based in SV and/or (2) have strong ties to SV? You don't think these people would collude with each other "offline" if they needed to?

Not odd at all, it's easiest to get them involved cause these people all know each other, obviously.

I don't think most of the new 70+ members they add by next year should be in SV, or even in the US necessarily, and it would be dumb if they did that.

I don't think collusion is a huge risk:

1. Many of these companies are direct competitors (Visa, Mastercard, Paypal, Stripe, etc.), you would need the silence of ALL of them in order to get away with some manipulation (cause they can all independently validate) AND

2. They would have to somehow spoof the public Validator API they are planning (which allows us peons to validate the ledger), without anyone noticing.

That's quite a caper, I think there are easier ways to make money at that point that are way less risky.

Visa and Mastercard settled a price-fixing suit just last year. "They're not going to collude because they're competitors" seems like a very odd argument. Colluding while pretending to compete is the central thing that makes that sort of behaviour illegal.

Sure, Visa and Mastercard are similar enough their interests could align to collude.

Why would a non-profit or NGO or university (several are already in the Libra Association) stay silent? Where do their interests align with Visa and Mastercard?

Why would a Wookie live on Endor? I'm just saying, you are presenting the definition of collusion as a reassuring check against collusion. This is not a strong argument.

Neither is an argument that despite all of the ways to detect collusion against the ledger, they will somehow still collude, just cause.

I'm offering several mechanisms built into the proposal, in law and in math, that work against collusion, in addition to market dynamics.

Right but I didn't say that. You said they wouldn't collude because they compete. If that were true, we wouldn't need the law part.

Wookiee.

> Why would a non-profit or NGO or university (several are already in the Libra Association) stay silent?

Because they don't have equal say perhaps? Or more realistically, because staying silent would politically benefit their institutions.

> it's easiest to get them involved cause these people all know each other, obviously.

Right and that's precisely the reason drug cartels are so attractive to the people who run them....what's your point?

> Visa, Mastercard, Paypal, Stripe, etc.

Are you serious? If you don't understand how in bed these companies are with each other then I have a bridge to sell you.

You've brought up some seriously good points about how Libra is a reaction to WeChat, but IMHO this is a naive perspective into historically how companies work with each other in markets.

Oh my. What else should Facebook do for you not to trust their word?

Do you think Zuckerberg just magically became a trustworthy person?

I don't need to trust his word, that's the beauty of doing it this way. I just need to trust Swiss law, market dynamics of competitors, and math.

FB isn't dumb, they know they're reputation is in the toilet right now.

Please show us the Swiss law.

It's not set in stone until the network is live. Everything at this point is still in the hands of Facebook. And I doubt that will change.

Oh, you keep saying in your comments that Facebook isn't dumb.

I agree.

Facebook's leadership is smart. They know what they are doing. They just hope that most of us would be dumb enough to believe them.

Don't have to believe them, the governance and cryptoconsensus in the whitepapers is enshrined in law and math, and in addition there are competitors in the Libra Association that would easily decry other members if they tried something to subvert the operation of the currency.

"But if you invest a lot of money, you can designate universities or nonprofits to vote for you on this council. So, in effect, the more money you invest, even though you may not have direct power over how the association functions, you can still have enormous influence on the voting blocs of what would in essence be a new international currency. I’m wondering what—"

https://www.democracynow.org/2019/6/19/big_techs_war_for_you...

Sure, look, I'm not saying the Libra plan is perfect and unable to be corrupted, I'm just saying most of the "critical analysis" I've seen thus far doesn't go this deep into how Libra could actually go wrong.

They just say "Facebook controls this and they just want your data" and either conclude that it's stupid and will fail or it's evil and must be stopped, with no other reasoning.

I don't think that you need an in depth analysis to understand that Facebook and a consortium of powerful private interests are looking to wrest further control of the world financial system from local control. Corporations are the opposite of democracies, so allowing a group of unaccountable players looking after only their own interests to control the world money system would be a disaster. To the extent the economy is already set up this way, it is already a disaster.

By that logic, it's already a disaster, so this doesn't really change things? All it does is allow more people to engage in payments online. Even in that view, it seems like a potential net benefit to the world economy, maybe.

I argue that it must be stopped in its tracks right now for two reasons:

It has potential to undermine the monetary systems of poorer nations, in essence (re-)colonialising them on the currency front

It has the potential to destroy decades of efforts in achieving monetary transparency and fighting money laundry on a global scale.

Even though some of the more libertarian minded contributors here seem to think that fighting money laundry is a bad thing I can assure you that it's not.

In addition I'm a bit flummoxed about the trust you seem to have in Facbook and they doing the right thing. A trust which is absolutely not warranted when I look at the short and dirty history and the constant lies and evasions of this company.

Given recent financial censorship by some of the starting member companies, why should I trust any of them more than FB itself? Why not just use existing bitcoin or etherium?

Are you asking why you personally should not use Libra in preference to BTC/ETH, or whether the parties in the Libra organisation should use BTC/ETH?

I'm questioning why FB and the member parties didn't just support an existing solution/infrastructure. The fact is, I don't trust them, and they have proven that I shouldn't. If they aren't actually decentralizing the system, and allowing direct person to person transfers without an account on their system, then that doesn't add anything over fiat currency, except allow them to not pay taxes.

It's designed the way it is expressly because of the issues BTC/ETH/etc. have with price stability and regulators. Libra is basically an in-between, it's not fully distributed, but it's not fully centralized.

I'm personally in the "rising tide lifts all boats" camp atm; I think Libra will act as a bridge and help explode the rest of the crypto economy by making the fiat -> crytpo acquisition process way quicker and easier.

So I guess my answer is, I don't think you should use Libra if you don't trust it, and I'm not asking you to. I'm just pointing out that there's a lot of FUD right now about it from people not reading the whitepapers or not caring to be accurate.

Good answer. I doubt however that Libra's terms of service will allow purchase of "real" crypto - just like I doubt they will allow purchase of drugs, porn, or malware.

They explicitly encourage crypto exchanges in the materials, actually!

They even designed/are developing a smart contract language called Move to facilitate DAO exchanges and the like.

I missed that! That's very interesting.

If two individuals cannot send each other currency directly, without one of the member companies blocking it, or requiring an account on a given member site... then I don't see any real advantage against fiat currency.

Exactly. This will just be a "meta-currency", stable against a basket of government-issued fiat, and with a permissioned transaction system built on top of it.

Libra's use of buzzwords like "blockchain" and "decentralized" are just PR.

I mean, it is decentralized... The only difference is the member companies are publicized and we know who their CEOs are, whereas the mining pools that account for the grand majority of Bitcoin's hashrate, for example, are virtually nameless to the general public.

The banking system is decentralized too, but the word has a specific meaning in cryptocurrency circles - which I think Libra is invoking. I do agree that currently the Bitcoin mining/transaction system is centralized to a few very large mining pools.

Because it's digital. In the west, we have a digital abstraction around our fiat money (credit cards / ACH bank transfers) to send our money easily (sorta).

In the emerging markets Libra is primarily targeting (Facebook's fastest growing market), many people have phones and internet (and FB/Whatsapp), but no banking. This doesn't need to beat our fiat, it just needs to beat fiat in Africa.

That said, Libra still has many of the benefits of other crypto for general consumers (ie. the grand majority of people who aren't very worried about the government seizing their accounts or freezing transactions):

- It's safer than a credit card, since payments happen by sending currency (like cash) rather than forking over bank or credit card credentials to a website (the equivalent of forking over private keys)

- Transaction fees are far lower

It's safer than a credit card, since payments happen by sending currency (like cash) rather than forking over bank or credit card credentials to a website (the equivalent of forking over private keys)

Why should it be safer than paying by credit card? If a payment is fraudulent it's not my problem and I get refunded. If the service I paid for isn't received or is not as advertised I have the means of a charge back. With crypto no matter how turn it it's gone. And looking at customer service at tech companies I put exactly zero stock that I get help from them. So I think you have that backwards.

Transaction fees are far lower

Says who? We don't know that yet, do we?

Edited to add: I think the comparison between handing over my credit card number to a website with handing over my private keys is beyond ludicrous.

> I'm questioning why FB and the member parties didn't just support an existing solution/infrastructure.

You cannot build a stablecoin on crypto-assets that have limited issuance.

The 28 all need licenses from Facebook, which means Facebook retains the control. It's decentralization theatre, and the ulterior motive gets Facebook much closer to being it's own soveigrn superpower than it's stated objective

They are already bought in as members in the Association, written in whatever bylaws for the Swiss non-profit. How does Facebook subvert that without violating Swiss law? And how do they control the currency when, by design (the source code for their implementation is open-source) they only have 1 vote in the consensus?

So... if this work this would essentially concentrate a lot of world market capital power in the hands of 100 multinational companies? Wouldn't this take away power from governments (especially small countries), which are the manifestation of the sovereignty and power of individual peoples'?

This sounds like a an extremely bad version of what the TPP aimed to achieve.

THAT is the real conversation we need to be having.

My issue is everyone is talking about this being some secret data play or Facebook owning a currency instead.

I agree that there are concerning attributes when talking about a world where fiat currency has a true global alternative (if Libra works).

This seems like a way for supra-national companies to arise like in cyberpunk fiction. I think Bitcoin was the beginning of the end for government controlled fiat currency even if most people have no idea how or why.

> - Facebook built this, yes, but they do not have full control. In both governance and validation, they have 1 vote of 28 (currently, the number is supposed to go to 100 by launch). Will Facebook have the largest deployed Libra wallet? Yes, at least initially. Can anybody make a Libra wallet? Yes.

The Ethereum hack and the subsequent actions have already put holes into the decentralized - no one controls anything - argument. In Ethereum's case we at least had two chains existing because everyone can run whatever chain they want. With Libra, a corporate product, you can bet that though it looks like Facebook doesn't have any significant influence, covertly they will control the largest vote share. If not, there is no point for them to build this product.

> This isn't a data play, it's very clearly a play at getting a bunch of people in developing markets that can only pay with cash right now the ability to pay online.

The rise of mobile banking through e-wallets like WeChat Pay, upcoming Whatsapp Pay, Google Pay, Paytm etc are already breaking down the barriers to banking. People often don't need banking accounts to use these ewallet products.

> If not, there is no point for them to build this product.

The second point you mentioned literally disproves this point. There's a massive opportunity for making money if Libra works exactly like they say it does.

Google Pay and friends can't move into emerging markets because they depend on banking infrastructure that doesn't exist there. WeChat maybe could, but that's a scary thought, so I'm glad this alternative will exist.

First of all, I like that you skirted around the fact that the point made was about Facebook's control and not the product's existence.

Still, how does it disprove the point?

Most ewallets are designed to solve the fact that there is no banking infrastructure in developing countries.

Libra will still need the same infrastructure to get people to buy those coins.

> WeChat maybe could, but that's a scary thought, so I'm glad this alternative will exist.

People who use WeChat everyday don't care.

It seems sometimes SV fails to understand what they care about and what their customers want are two different things.

> Libra will still need the same infrastructure to get people to buy those coins.

Go try to offer Paypal to people in developing countries!

Libra is a cryptocurrency. I can sell it, you can sell it, anyone can sell it. You can't sell Paypal "currency" in developing countries (well you could, but they would either need an account with wrong informations or use your account directly for the transaction, which in both case doesn't make sense) but you certainly can sell Libra currency pretty easily.

That's the beauty of it. If Libra takes off, Facebook won't have to build infrastructure anywhere, simply because it will be simple (and relatively profitable) for anyone to build infrastructure anywhere and act as a middlemen.

I didn't skirt around it. Your argument was hand wavy and essentially saying "they must be in control because why else would they do it?" My counter-point is the reason is very clear, and very upfront in their materials.

> Most ewallets are designed to solve the fact that there is no banking infrastructure in developing countries.

Um...no? Most ewallets are designed by extreme Libertarians that believe that we would be better off without government regulation, or that government collapse and somehow them having Bitcoin will make them safe.

So, you consider a concrete example where Ethereum, a coin which was touted as a decentralizated and later exhibited centralization by trying to stop the Ethereum hack by changing the code as "hand wavy"?

So let me ask you directly without any hand waving - how will Facebook or anyone handle a big Libra hack without trying to centralize the power?

> Most ewallets are designed by extreme Libertarians that believe that we would be better off without government regulation, or that government collapse and somehow them having Bitcoin will make them safe.

What are you talking about? I have given examples of ewallets like Paytm and Wechat Pay which work without bank accounts and you start talking about Bitcoin. sigh I give up.

> This isn't a data play, it's very clearly a play at getting a bunch of people in developing markets that can only pay with cash right now the ability to pay online

Just like Facebook Zero was simply a play at getting a bunch of people in developing markets with no internet access a way to use the internet and not just a way to use Facebook as the internet?

No? Look, you can say things like that, but there is no evidence thus far to back up this being a data play, and every piece of evidence says it is exactly what they say it is.

- Facebook wants to make more money, they stand to make the most money if this thing works they way they say it will. Surely we can trust their greed?

- You don't need a Facebook account to use Libra.

- The thing is built so Facebook doesn't have full control, enshrined in Swiss law and math.

I'm using historical evidence by comparing this play to some of Facebook's more notorious previous plays, which overwhelmingly have been shown to be detrimental to the public good while simultaneously deploying Doublespeak in order to caress public opinion and limit public inquiry.

Your bullet points all fail to recognize the threat that Facebook (consciously) poses to real alternative currencies which truly are based on altruism and decentralizing financial control. Facebook lifted every play from our book and used our own words against us in order to control the narrative and produce pointless bickering while they progress unhindered.

This is evident from the core to the skin, with the most shining example being the name of the coin itself: "Libre coin". Remember the PATRIOT Act? Funny how that turned out have very little to do with true patriotism to the US. I don't mean (and don't wish to) start a conversation about US politics, I simply mean to illustrate my point with another notorious example.

If I had to trust Facebook's word to trust Libra, I wouldn't. I don't have to though.

I can trust Swiss non-profit corporate governance law, math, and the fact that keeping a secret between 28 (or 100+ soon) organizations, with many being non-profits, NGOs, and universities, whose interests do not have clear reason to align otherwise, has never been done before in history.

This carefully sidestepped my main issue, in that Facebook is deliberately choking out currencies which are truly decentralized and in more visionary and technically capable hands, in order to further cement their influence (even if you can argue it's not "just theirs", it's orthogonal to the issue)

Because it doesn't make much sense to me. Those truly decentralized currencies are choking out themselves with slow transaction speeds and high transaction fees all on their own.

I think true decentralization is super interesting and I'd like to see it happen (I think, there's some unease for me still relative to fiat). I think Ethereum 2.0 with it's proof-of-stake and sharding to combat transaction speeds is super interesting, for example.

Libra is an in-between that could bridge today to tomorrow for true decentralization.

> Those truly decentralized currencies are choking out themselves with slow transaction speeds and high transaction fees all on their own

That may be the case with Bitcoin/Core, but it's not the case with currencies like Bitcoin Cash. Every payment I make is snappy as hell. Ethereum has some nice ideas but ultimately poor leadership and bad hype management; some of its better ideas, like smart contracts, are being worked into other currencies.

Facebook argued Zero was a bridge from no internet to full internet, but then everyone learned that Facebook intended for the "internet" to just mean their own ecosystem.

If nothing else, Libra should help get people accustomed to the crypto payment flow (push vs pull)

Absolutely, I believe Libra can be the gateway into crypto for the general public that we need.

This is a well-reasoned reply, but the reason anti-Libra sentiment is high is not a huge mystery. You even alluded to the reason in your final paragraph. It's people who are suspicious of Facebook management's ulterior motives, that is to say conspiracy-type thinking.

The RFID technology that is widely deployed today was reaching wider adoption in the early 2000s and the AM radio conspiracy hosts I used to listen to for fun were spinning wild yarns about how RFID would be going underneath everyone's skin soon and everyone would be rounded up and put into camps.

I think there's a subterranean truth hidden in the ravings of madmen. It is a frightening prospect to empower further the people at the top who make the most impactful decisions in our society. RFID and Libra both make the global economy more efficient and that puts more power in the hands of our financial overlords. Now, it is also the case that financial overlords spend more time worried about themselves and their families than they do trying to control individual people's lives and make them worse.

So conspiracy theorists are wrong about the ultimate outcome of new technology, but I think their fears would be well served by distributing power as widely as practically possible. The principle of sharing power to put people's minds at ease is what you referred to in your second bullet point.

I agree with you on the reasoning, and I absolutely believe that is why Facebook is doing it this way. They know people would never trust a currency soley backed by them to start, so they solved that problem from the get go.

Now it's just a PR problem of everyone believing they are in full control, when they actually aren't.

FWIW, Facebook for years also said that they care about our privacy.

Now, in court, they argue that there's no expectation of privacy on Facebook.

They are just now telling you what you want to hear but that's probat not what they will do.

I don't disagree with you, Facebook should be trusted with a grain of salt when it comes to privacy right now.

This isn't relevant to the Libra discussion, because of the way Libra is designed. You don't have to trust Facebook to trust Libra.

They built it this way because they know we don't trust them right now.

Unless you can provide actual legal documents as opposed to whitepapers, your argument is unconvincing. Nobody trusts anything Facebook says, which given their past actions is completely reasonable.

You can ask Visa, Mastercard, Stripe, Spotify, Paypal, Uber, or any of the other founding members if they feel like their lawyers seem convinced they each have a legal vote equal to Facebook's.

Do you really believe that each of these orgs, many traditional with whole legal departments, would sign on to a public association with this potential without crossing their i's and dotting their t's?

Don't trust Facebook, trust that the 27 other companies (and their lawyers) don't trust Facebook.

I trust that they would be willing to cede control of several aspects to Facebook for the sake of being involved and having some cut of the profit for fear of missing out.

Unless all the contracts are public you have no idea what kind of backroom deals they have with different organizations.

It may sound paranoid but that’s the level of trust many people feel Facebook deserves at this point in time.

Actually in China they do track people and then round them up by forcing them to install apps on their phones (https://www.ibtimes.com/china-forces-muslims-install-anti-te...) which is not that far from putting an RFID chip under their skin. If RFID chips were cheaper than install a phone app I’m sure they’d do that instead.

What do they do if you don't have a phone? Serious question.

> Facebook doesn't need an ulterior motive to make a buttload of money off of this, if it works. I don't know why "experts" are looking for one.

I would guess that it's because Facebook is a company with a history of selling toxic things and trying to convince people that it's good for them.

In this case, the question is essentially what it means to be one of the other 27 members. If the remaining 27 groups aren't free to take the currency in a direction that undermines Facebook's business, then they really don't counterbalance Facebook. If Facebook can unilaterally shut down the ecosystem, then the other members don't counterbalance Facebook. Etc.

Every major cryptocurrency I'm aware of is essentially controlled by one or two entities. Even Bitcoin's development direction is controlled by a small number of companies, and the business goals of those companies influence what features Bitcoin supports.

Well they have just 1 vote in the governing association, so if a majority validator nodes disagreed with Facebook, Facebook can't override.

If it took off, unilaterally shutting down the ecosystem (or otherwise hurting it), in a scenario where they are market-place dominant (when it comes to Libra wallet users, which is likely at least early on) would hurt them the most.

I get why Twitter users are looking for it, I don't get why people that present as experts are after reading the whitepapers. It's like they aren't actually reading them, or are just arbitrarily ignoring them for the clicks (gasp).

> How can they sell ads to people in emerging markets, Facebook's fastest growing userbase, if none of these people can buy the things they are advertising?

https://trendwatching.com/trends/SACHET_MARKETING.htm

> In Brazil, fast moving consumer goods giant Unilever sells Ala, a brand detergent created specifically to meet the needs of low-income consumers who want an affordable yet effective product for laundry that is often washed by hand in river water. In India, Unilever successfully markets Sunsil and Lux shampoo sachets sold in units of 2-4 dollar cents; Clinic All Clear anti-dandruff shampoo sachets at 2.5 rupees each; and 16 cent Rexona deodorant sticks. In Tanzania, Key soap is sold in small units for a few dollar cents.

They'll sell it, they'll advertise it.

I'm not saying you literally can't sell things in these countries, of course. I'm saying it has this massive barrier right now that creates a high threshold to entering and serving the market compared to the internet-enabled developed world, and that means less money for Facebook advertising in those areas at the moment than they could be having.

More advertisers means more demand means price-per-ad goes up and makes them more money.

> This isn't a data play…

Of course that's a significant (the most significant?) aspect of Libra for Facebook. Do you know much about their business model and history?

So, if you use Facebook's wallet app, I'm sure they'll use that data for themselves, of course, as with everything on Facebook.

But you DO NOT need a Facebook account to use Libra, and Facebook CANNOT reverse lookup what non-FB Libra account maps to whatever person. So it's not much more useful as a data play than Facebook's existing Payments play.

This is a play for the 1.3 Billion + users that they are getting in droves in their userbase, but currently make them less money than people in first-world markets cause of this payments problem.

> Facebook CANNOT reverse lookup what non-FB Libra account maps to whatever person

Sure they can. They're already tracking non-members today. It's trivial to extend this to whatever Libra data they can get. Yes, it's not 100% certainty in most cases, but that doesn't make it less dangerous.

It's far less trivial that you are implying, there's way less data about a Libra account on the ledger than there is on your web browser when you visit a page.

But I'll grant that it's not impossible, just wayyyyy more expensive and more trouble than it's likely worth. Especially since most Libra users (at least at first) will already be using Facebook app or Whatsapp as their Libra wallet, which they can of course get data from.

Just to note: the $270M is not for the reserve but for maintaining the network. The reserve will be created when people will on-ramp.

Yep, you're right, I'll clarify!

developing markets probably also have less electronic medical records. maybe facebook can create a decentralized electronic medical records custodian for them too...

I wouldn't support that myself.

This particular problem, payments, I think is an ok thing to solve on a global level though, since it's the same everywhere basically, and they are involving NGOs and non-profits so there is buy-in from orgs that don't make profit and have good context into the real problems in emerging economies.

Well, somebody should.

If people can't buy things Facebook wants to advertise in certain markets, that sounds like an affordability problem more than anything.

If Facebook is really trying to grow further, it certainly sounds like some bean counter's idea to go with "let's try and extract advertising revenue from people who have no money to spend", that is to say, it doesn't sound like it will end very well.

No, it's a problem of how do you order the cool new toy being advertised to you on FB, online, if all you have is physical cash?

You can't throw cash at your mobile phone (and 500m+ in these markets have internet and phones, and many have Facebook already).

So .. how are people going to get Libra? I can see that they're trying to do an MPesa or Wechat pay thing here, but they still need an on ramp.

You're absolutely right! This is basically trying to beat WeChat to these markets, but in a less-centralized way.

These markets already have a lot of internet access and mobile phones, just not a lot of banking. This is Facebook's fastest growing market right now, by far [1]. The Facebook app (and Whatsapp) is the on-ramp, that's why this is a good play for them. They have early advantage, but not because they have control of the currency, they have control of the initial users.

[1] https://www.statista.com/statistics/268136/top-15-countries-...

But what is the last mile plan - you're standing in rural India with a phone and a rupee, how do you turn that into a libra?

A local enterprising person starts an "exchange bank" that purchases Libra from an "authorized reseller" that is able to mint it by paying money to the Libra Reserve and sells Libra to locals for cash. There are as many ways for them to make a nice business out of that as there are way to make money as a bank, since it basically is one.

Right, so all of these people are responsible for the KYC/AML compliance and registration as money transmitters or forex dealers?

It's not impossible to build this network, Western Union has it, but they will want a cut.

Honestly, since we're on HN, I'll point out that this sounds like a potential startup opportunity created for someone to make implementation of compliance easier for these exchanges, at scale.

It's the fastest growing, but the average ARPU is much less than that of US / Canada.

Exactly! Why is that? Part of it is lower income per capita, sure. But Facebook and friends did the math and it turns out you can increase that ARPU quite a bit if you give them a way to actually pay for things online, which they largely lack at the moment!

Alright, let's say these people do have money to spend. Cryptocurrenices have existed for about a decade. Libra is supposed to solve the problem because it's backed by reserves? There are already tokens out there backed by real currencies (e.g., USDC). Why aren't these people using those? Surely, if they really wanted to buy the things Facebook is advertising, they would've found a way to get these tokens.

Those other stable-coins don't have the level of capitalization FB is targeting, don't have buy-in from existing payment networks like Libra does (Visa, Mastercard, Paypal, Stripe, etc.), and don't have a massive network of already deployed apps that will surely integrate this (FB app, Whatsapp, etc.).

I don't necessarily see how that solves the problem, but I concur that these could be valid points (e.g., a higher market cap). Users still need a way to physically exchange their paper currency for Libra. Do employers switch to paying in Libra, so people having something to use within Facebook's platform? Will these people trust Libra more than their paper currency? I'm curious of what the migration strategy could possibly look like for the bankless.

@JMTQp8lwXL

That's a great question. I'm pretty sure enterprising locals will start up "exchange banks" that interface with larger "authorized resellers" that interface with the Libra Association to turn cash into Libra. So you would go to a local exchange and turn your cash into Libra.

So, what the bankless need is banking services. This seems like a fairly convoluted way of bringing them to people. Visa, et. al could just set up shop in these areas, but they haven't yet. I guess this comes down to:

1. Are there enterprising individuals that see value in operating local exchanges for Libra <-> local currency?

2. Do Facebook's users in these areas see enough value in obtaining Libra (including the overhead transaction costs of switching to/from Libra) to be worthwhile, for access to goods/services that would otherwise be unavailable via local currency?

What banking infrastructure would Visa build on in these areas? There are none, that's the problem!

On the second point, we'll see, but Facebook and the rest of the Libra group seem convinced enough that there is to try, right?

>Alright, let's say these people do have money to spend.

They DO have money to spend, they've just been ignored by the digital economy. The "let's say" part of your comment shows why.

I disagree with this because cryptocurrencies have existed for nearly a decade. Nobody's telling people in third-world countries that have smartphones that they can't use cryptocurrencies.

Most cryptocurrencies are too price volatile to be a store of value / transaction method, and most crypto currencies aren't directly supported by an app with 2.3b users (FB/Whatsapp).

It's a matter of ease of use. All these people in the 3rd world have Facebook already on their phones, all of a sudden they will have a neat crypto currency wallet too and it's going to change everything.

Even if Libra was blocked due to regulations in the US, Europe, Japan, and China it would still be a massive win.

It absolutely would! The US, Europe, etc. aren't the big target for this thing, they would be the icing on the cake.

I wouldn't count on it making it to China anytime soon though, WeChat and Alipay have that locked up and I doubt Libra makes it through the Chinese Firewall given China can't control it.

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