Libra, 2 Weeks In
facebook.com
facebook.com
"At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement"
In other words: let us do Libra and we'll help you win the war on cash.
The biggest blow on privacy in the world's history, brought to you buy Facebook.
No cash mean you can't do anything that has not been validated by the state first.
It means kids will have less options to foul around without the parents checking it.
It means you won't be able to pay in a gay bar anonymously.
It means any new (and hence controversial) political concept will have no way to financially grow to acceptance.
It means no living off the grid.
It means hobo will be even more excluded.
It means in case of crisis, the financial system is paralyzed.
It means if powerful people wants something bad for you, you can't be on the run.
It means easy censorship against unpopular activists or artists.
It means no way to test a weird idea off the record to see if it's worth it.
It means no escape if the gov raises taxes in an unjust way.
It means no workaround for paralyzing bureaucracy.
It means no grandpa selling his home grown vegetable at the farmer market on the side.
It means everything you do, where you do, at what time and with whom is tracked, permanently recorded, then passed to algo or AI for analysis.
No grey area. No margin of error.
Just the immovable, inflexible structure of current society imposing itself to everybody.
Of course it makes me wonder if this is just history repeating in some sense. People came to the new world in part to flee European monarchist tyrannies. Now people will go to space to flee the Earth technocracy.
This is one of the primary reasons that I'm planning an exit from software development. I see most of what we do as being a useless waste, and at worst we're building our own enslavement. I'm fortunate to be working on something harmlessly entertaining, but I want to exit all together and start a business that will actually help people.
The unbounding optimism of technologists is pretty disturbing. We can see for ourselves how tyrannical those at the top of our industry can get, yet we are easily chatteled into helping them because of the paycheck and the prestige. It should become less socially acceptable for us to assist tech zealots who want to involve data warehousing technology and AI into every single problem and facet the world is facing.
International waters have already seen a lot of creative uses to avoid governments.
So yeah, China...
This is already the case, and has been for almost a hundred years.
Govt spending/taxation is 38% in the US! So, I we're already there.
Sort of related, in the Netherlands, we will soon (2 years or so) have a ban on cash transaction of more than 3000 euros. Not to one-up, just saying that it's happening. To be fair, I contribute to this by doing pretty much all payments electronically. Just like I contribute to local bookstores disappearing by buying from Amazon, although I claim to like local bookstores.
Starting in January, the ECB will stop the distribution of the €500 bill.
We're nearing the death of cash.
In simpler words: another US-domiciled lever that can be switched to the off position.
Huawei's CFO is currently on "house arrest" in a $10 million dollar estate in one of Vancouver's best neighborhoods, but free to move about the city so long as she's accompanied by a minder. As contrasted with the Canadians that China has kidnapped in retaliation and remain in secret prisons 8 months later with limited consular services. [1]
She's under arrest for wire fraud because to be extradited from Canada you have to have committed what would be a crime in Canada, and violating US sanctions is not a crime in Canada. She is not awaiting extradition, the trial hasn't happened yet, and she may well not be extradited if this is in fact primarily case of US extraterritoriality. One of her best arguments, per usual, is Trump's comments on the whole situation.
[1] https://www.bloomberg.com/news/articles/2019-05-08/huawei-cf...
I guess main problem is that to a very good approximation nobody wants these. Generally, the ones understanding monetary policy don't understand the need for privacy and the ones understanding need for privacy don't understand the need for negative rates and the rest don't care.
So what you want is... cash. But cash from a separate currency. This is identical to what we had here in Brazil in the 90s during the Plano Real transition: the cash everyone had was in the Cruzeiro Real currency, but all the prices were denominate in URV (a "virtual" currency, which months later became a real currency called Real). The Cruzeiro Real was suffering from inflation at the time, but the URV was stable, so to buy something with a price of 1 URV you might pay CR$ 864,14 one week and CR$ 1004,68 the next week (source for these values: https://pt.wikipedia.org/wiki/Unidade_real_de_valor).
This is a feature not a bug.
Exchanges != crypto.
Individuals can use btc anonymously. It's public, but only the person you deal with know who owns your wallet.
Otherwise, Libra can be used "anonymously" just like Bitcoin. You download a client, you generate an identity and then you can receive/send it.
https://developers.libra.org/docs/my-first-transaction#creat...
That's why the whole money laundering issue comes up in the first place, because Libra is a cryptocurrency much like many others.
Its distinction is really that it's not decentralized (like Ripple), that it's backed by real assets (like Tether - supposedly) and that Facebook and some other big corps are involved.
Those are all reasons for crypto-idealists to hate on it and spread FUD, which the Facebook-hating rest of the interest readily gobbles up.
In practice, those are all reasons for Libra to actually work as a means of exchange, as opposed to a highly speculative risk asset. Ripple transactions are instant. Tether price is stable, despite its sketchy background. Big corporations can influence points-of-sale.
Ripple (or rather XRP, which I referred to as "Ripple") is widely referred to as cryptocurrency. It uses a distributed ledger and cryptography, like a cryptocurrency. It is traded on cryptocurrency exchanges and can be sent/received like a cryptocurrency (requiring no account registration like Paypal). Also, like most cryptocurrency it is backed by nothing and its price fluctuates and moves along with broader cryptocurrency market trends. For most intents and purposes, it is a cryptocurrency.
Of course one can make the distinction that a "true" cryptocurrency should be fully decentralized, but that's besides my point.
Of course the market says both of these tokens are worth billions in market cap. It treats it exactly like a cryptocurrency, feeding on the cryptocurrency hype. Clearly the market doesn't value decentralization to the point where XRP is shunned.
If you look at how we generally solve problems in the world, the idea that the untrusted general public should be involved as a matter of principle is ludicrous, because that requires significant defenses against bad actors at multiple levels.
Bitcoin didn't even solve this problem, it just raised the economic barrier for bad actors to cause trouble. In practice, many smaller cryptocurrencies are highly vulnerable to 51% attacks, but even Bitcoin mining power is highly centralized to a few companies.
I think the way XRP or Libra solve things (in principle) has very strong arguments going for it, but they are pragmatic, not idealistic. I haven't heard any good arguments on how the way Bitcoin solves things is so beneficial that it becomes a worthwhile tradeoff. I don't see why it should be the defining factor on what is or isn't considered a cryptocurrency.
A decentralized cryptocurrency would not reward economies of scale the way Bitcoin does.
Bitcoin can be used anonymously if you avoid KYC on/off ramps and specific transactions tied to your identity. Hard but possible. From Libra's white paper this appears impossible. That's a big difference.
How so? Can you be specific? I quote the whitepaper:
"The Libra Blockchain is pseudonymous and allows users to hold one or more addresses that are not linked to their real-world identity."
The only difference that I see is that you could mine Bitcoin anonymously. You could also buy Bitcoin with cash in a private transaction, but the same can be said for Libra.
Otherwise we end up with cash that only outlaws use:
"His total assets were quickly converted to New Yen, a fat sheaf of the old paper currency that circulated endlessly through the closed circuit of the world's black markets like the seashells of the Trobriand islanders. It was difficult to transact legitimate business with cash in the Sprawl; in Japan, it was already illegal."
This is what you get. How do you like the "deprecation of cash" now?
Don't worry, the million/billionaires will still put their money on real estate or other places where there are convenient exceptions for it, make no mistake.
Let's say a consumer wants to buy something. They can either pay with "normal" money in one step or they can use their phone to convert their money into Libra and then make the purchase with Libra. Why would they go through the extra step(s)? Am I to believe that the benefit is "lower transaction fees"? Because if so, Libra doesn't have a chance. Only vendors, not customers, see those fees directly. Even if the customers did see them, they aren't big enough to sway the inertia of the way things are.
In the real world, the vast majority cares very little about things like decentralization. They don't care about how the banking system works and who controls the flow of money. They want to swipe their card and get what they want. Anything more than that is just an obstacle. At least BTC has the benefits of pseudo-anonymity and speculative appreciation. Libra has neither.
Beyond all of this, people like to have control over their money. To feel they have control, people need to have understanding. Paper is easy to understand. Cryptocurrency makes people nervous. Facebook REALLY makes people nervous. Put the two together and it will feel like a big risk to users.
I'm an open minded guy, but I don't see it. Someone please enlighten me as to why this won't be Facebook's biggest failure. Why would anyone want to use Libra?
The problem for Facebook is that these people can't buy anything online, because they don't have a bank account. If Libra launches successfully and remains stable, those same places selling X MB of data for cash, could easily start selling Libra too.
That's what so many people here are missing. Facebook isn't targeting this at people who have credit cards, Paypal accounts, and know what Bitcoin is, they're targeting the day laborer in a rural, 3rd world country, who might be enticed to part with some of their spending money for some Chinese plastic trinket that they never could have bought before, because none of the few stores in a 100 mile radius stock stuff like that.
Why couldn’t they sell prepaid Visa cards, or Venmo/PayPal (or whatever is the local equivalent) top-ups?
I get that having access to brokers that will sell a globally recognized hard currency for local cash is super useful, especially if it’s in electronic form.
I don’t get why it’s useful for it to be a blockchain, or why Facebook is the most likely company to run it successfully. When I ask people this the answer seems to be some hand-waving about regulation, but if this is hard for Venmo and PayPal to offer because of regulation, why would throwing around the word “blockchain” magically make it any easier for Facebook?
Whether or not it will work I have no idea, I don't know the markets that well. But their motives are transparent, the rest of the spiel is just "change the world" drum beating and cleaning the dialogue.
It's also not so much that it's impossible, but the markups are crazy.
But what surprises me is the extent of penetration of these wallets despite not being cash based. To a large extent, this success is probably attributable to the "glue" between these disparate wallets - the government-launched UPI or Unified Payments Interface (https://www.npci.org.in/product-overview/upi-product-overvie...), which allows you to link any of these wallets directly to your bank account.
Deposits, moving money in various ways, checking balances or statements, bill pay, customer service, etc etc. What exactly is missing that is important that American banking desperately lacks? The larger banks are borderline obnoxious with the options ('features') they try push on you, for what their mobile banking offers now.
The only thing I can think of, is easy & instant account funds transfer from one person's bank account to another person's bank account (which is a structural flaw in the US system, and which PayPal & Co. fill).
I think that's exactly what they're talking about.
Yeah, if that's what they're thinking they don't know too much about "3rd world countries"
I use it a lot. It’s never been easier to collect expenses from board game nights, and when I recently bought the first Harry Potter book (in Danish for my daughter) I didn’t have to enter my credit card information.
I think that’s what Libre will be, only global. I don’t like Facebook, but if they actually succeed at this, they’ll become the easiest way to pay for things on a global scale.
Remember that most of those small stores are able to do this by breaking the terms of service. Accepting MobilePay is NOT free for business, it's not even cheap. As a customers is pretty easy to spot, if the stores MobilePay number is just their phone number, they're breaking the terms of service, and you should pay cash.
I never said it was free, but depending on the service you want, it is significantly cheaper than having a credit card terminal. One of the reasons it’s cheap is because it tells your bank about everything you buy. We worry about social media, but it’s the banks that know what brand of hemorrhoid medicine I purchased last week.
I’m not advocating either solutions, by the way. I’m just pointing out a use case. I mean, I care enough about privacy to not use google or Facebook, and I still use mobile pay because it’s really, really convenient.
Not sure about the last one though because Visa/Mastercard seem to be extremely entrenched in the industry, as far as I can tell they have completely replaced any other debit card system.
EDIT: To your last point. I think the problem with fee's is rather that you need to convert currencies when you do global transactions. Banks could offer this at a loss but nonetheless libra has an edge here.
Copying credit card numbers all over the place is tedious and risky and people are kind of nervous about it for valid reasons. Swiping cards like a caveman is already a thing of the past and also not that safe. There's a huge amount of friction around payments for both users and merchants both online and offline. Even cash has a cost for merchants.
Contact-less payments with cards or phones are rapidly replacing cash payments (more convenient). But of course online you basically still get to copy credit card details around or deal with middle men like paypal or one of the many direct debit systems in many countries.
BTC is nice as a gold alternative and similarly tedious to transact with. It's useless for payments as transactions are extremely slow and rate limited to a ridiculous ~5 transactions per second globally. Price volatility means that it is hard to price things in it because you have to update the prices continuously. Ethereum is useless for the same reasons (in its current form).
Libra will require a bit of selling and educating obviously but actually comes with all the tools needed to make that easy. E.g. micro payments and tipping are very easy to implement on it and you could use that to incentivize users with e.g. bonuses, tiny refunds/rebates, etc. Integrating payments into chat removes a lot of friction for the user. And once there are enough merchants adopting this that incentivize users to use this, adoption could be quite rapid. Having low transaction fees will make this very interesting for merchants.
* Have 25 separated accounts or savings goals
* Share any bank account (or savings goal) with anyone (using bunq)
* On the fly couple my passes to any of the accounts
* Use NFC on my Android phone to pay
* Have a website where people can transfer me money coupled to any account
* Make payment request that are (when accepted) in my account in seconds
* Make 5 virtual MasterCard to route online payments to different accounts
* Choose what they do with my savings to generate interest (I have it set to "invest in green companies")
They are mobile first (the app is first class) but they have an API (and an open source desktop client as a result). All this is more expensive than traditional banks (I pay 8 euro a month) but they do not invest in shady things and promise to respect my privacy. I imagine Libra will do the same and more (but for the privacy part). It will be more like an ecosystem.
Not that I want it. I completely agree with all the sentiments here. I chose bunq because they have the same ideology as I do.
But there is btc and qr code scanning. I'm not saying we should ditch cash entirely.
I don't understand what you mean by this?
So presumably you link to your beer money account on a night out, expenses account on a work trip, etc, etc, but its all on one physical card.
For work I do the same, create a dedicated account and after a trip I can easily export an overview to get the money back from the company.
In the Netherlands one pays with Maestro cards but for international travel I can couple a (debit) MasterCard, or the new TravelCard which is a real credit MasterCard but backed by your own money. bunq does not do debt.
Similarly, cross-border payments in general are a huge PITA and affect enough people that stuff like Transferwise exists. If Libra can help assuage that there's a nice market there.
It might not be a resounding success but it could be enough to sustain an ecosystem.
The lower fees enable micro transactions which is something that I believe the internet needs in order to move away from ads. I'd happily pay a fraction of a cent per page view, there is no good way to do that right now.
That's because the person controlling the flow of money hasn't taken enough away from them. History has plenty of examples where a centralized controller went "too far", causing a mass exodus.
This is very hyperbolized, but consumerism and society today is truly reminiscent of a rat inside a cage with infinite sugar water, cocaine, and a steady supply of new mates.
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As for Libra, what is Facebooks plan? The only way I can see them winding up on top is if they make the "next Bitcoin" where they own like ~10% of the supply, kinda like Satoshi. I don't see Libra working if it's centralized.
Money laundering. You'd no longer need to buy a condo in New York to get your rubles into dollars.
Of course that only describes one "hypothetical" case but the mechanism is the same everywhere and for all pass through commodities.
This reference in context has the virtue of being slightly humorous IMO.
I see how buying a condo helps to launder corrupt Russian money, but it is unrelated to the currency, it works the same regardless of what the currency is, dollars or libra. I don’t think Facebook (or whichever libra provider is) would allow users sending a million dollar worth of libra to another wallet without any explanations just using a phone app.
Because the article literally says they plan "gradually transitioning to a permissionless state" and "Facebook will not control the network".
And, not that this is their plan anyway, but how could they prevent Libra's from crossing borders if it is permissionless?
And even if there were a limit on transfers somehow. A limit, by the way, on an automated system that presumably will involve large sellers with large volume. A limit which the word "permissionless" makes impossible. How will they prevent multiple wallets?
For laundering generally: you buy a thing with cash or the like from an incurious seller and sell it again. To grease the wheels, you could buy at over market value and sell under. Realestate is very popular, even driving up urban prices. But Persian rugs work just as well[1]. It's not currency change that is interesting but the erasing the origin of the purchasers money and replacing it with a legitimate origin: the sale of a condo.
[1] https://www.newyorker.com/news/news-desk/paul-manafort-and-t...
Same ways banks connected to Visa deny certain transactions.
> Because the article literally says they plan "gradually transitioning to a permissionless state"
I must admit I don’t understand what permissionless means. It’s not possible to be truly permissionless if you a member of the network prints money.
> Facebook will not control the network
Other members of the network can do the same transaction moderation.
Exactly, it certainly appears the claims can't all be true. This is a bit disturbing from a company with a questionable track record.
Extra step can be very simple: your libra wallet can be auto topped up from credit card.
> Only vendors, not customers, see those fees directly.
A lot of small shops around the world (like one next to my home) do not accept Amex because of higher Amex fees. And require cash if total cost is less then several bucks. Maybe these shops will eventually stop accepting Visa and MasterCard and/or allow libra on even smallest transactions.
> Facebook REALLY makes people nervous.
Are you talking about common people or people who visit HN frequently? I doubt common people really care about their data shared with advertisers. Even I don’t really care.
And again, Facebook will be not the only provider of libra.
> Why would anyone want to use Libra?
To be able to send money to your parents living abroad. To pay on vacation and don’t worry about conversion rates. To be able to send small debts to your friends easily. And so on.
If they are paid in Libra, and can pay in Libra, they become part of the global economy.
I know Brexit has taken its toll, but its not quite that bad.
Or they can ban Facebook.
Considering that most of those have countries have trouble enforcing the most basic tax laws, I'd like to see them try banning digital money that can be transferred over encrypted channels.
The protocol may be open, but the permissioning participants are (as of writing) large multinational corporations. If a country tells them that they have credible reasons to believe Libra is being used for money laundering, tax evasion, or gasp funding terrorism, they will be more than happy to close those channels down.
From the article, we also have this quote (h/t 'Lucadg)
> At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement.
I don't intend to speak to various other merits (or the lack thereof) of Libra, but to this: yes?
Of course! Transaction fees are huge. If you are operating in a razor-margin business, which more and more businesses are these days, then it adds up.
FasTrak, the Bay Area toll processor, charges your card when you drop below a certain balance, and also charges you what they think your average monthly rate will be. Why? To avoid excessive transaction fees on every toll eating into their coffers.
If the only way to buy something is Libra, or if merchants prefer Libra, then folks will be using Libra. Just look at how much market share PayPal has conquered, and they're arguable garbage.
If you can substantially beat PayPal, you win.
Libra's selling point will be FB's onboarding of users. It would not be unreasonable to expect dark patters there.
Sending money internationally takes several days currently and comes with high fees.
If Facebook implements Libra into their platforms such as Whatsapp, Facebook Messenger, Instagram etc. this brings less familiar people in contact with Cryptocurrency.
People might start to use it because of way faster international money transfers and (most likely) less fees. I know I will because of that reason.
Like Google did(doing?) with Visa/Master card data.
Closest related statements I could find in the blog,
>while Facebook, Inc. owns and controls Calibra, it won’t see financial data from Calibra
>More commerce means ads will be more effective, and advertisers will buy more of them to grow their businesses.
everyone seems to think crypto is for the first world, it's not, it's for the third worlds. will it empower the citizens like they claim? i don't know, but they definitely have a more valid use case.
There have been a few good discussions here on HN when it launched [0], but I think most of these have been very biased against anything Facebook-related.
I find the launch of Libra a really interesting "experiment", with potentially big negative or positive consequences for the entire world.
Right now, it's really hard to judge on the technical merits (e.g. the Move language, or the architecture, or how they're going to transition to a truly permissionless and decentralized consensus).
However, I think that it's wise to follow Libra's evolution with attention, as it might, and probably will, have consequences in our lives.
Libra is invite only and they invited their business friends.
Libra consortium is based in Switzerland, so the businesses involved have guaranteed essentially zero government oversight.
Libra's owners have complete control over how much currency, the currency exchange rate, and even inflation rates (note that inflation is actually a tax on wealth).
I can't regulate it. I can't get my government to regulate it. I can't get a non-partisan consortium to regulate it (eg, Bitcoin). Businesses proven to put profits first have complete control. I have everything to lose and nothing to gain.
I don't care about the technical merit; everything about this stinks.
EDIT: and all that is before the privacy aspect. While accounts may be "anonymous", Facebook can use their data to identify you anyway. I don't like these big date companies tracking my friends or website visits. I certainly don't want them tracking my money too.
There's also the wrongthink aspect. Recent leaks from different companies seem to show them exerting political power and banning dissent. My political opinions may align with their now, but I'd bet anything that sooner or later, I'll disagree with them on something. I don't want my financial stability based on a platform that punishes me for thinking or believing "the wrong thing" (which could just be saying something critical about the companies in control).
Libra giving economic power to companies is straight out of fascism.
But technically it lacks the ethnic hatred, anti-intellectualism and gleeful blood-lust of fascism.
Do you really think a massive US company using some Switzerland corporation is going to protect Facebook and their investors against any regulatory scrutiny?
Even if they didn't, the US would have to pressure every single company involved.
More importantly, the US can't just audit bank records from another country. They can't go after Facebook unless they can prove wrongdoing. Offshore accounts protect a lot of bad people for this very reason.
Edit: There also the long term issue. If their currency takes off, the economic power it gives also shields them. Remember too big to fail? We can hardly manage the federal reserve where the government is actually part owner. The situation here would be much worse.
I'm sure the US could find a way to do the same for Facebook and their investors for how they're using Libra inside the US.
That's a big assumption. They were able to get their business friends to sign on, probably because they are already friends. I'm sure they asked a lot of other groups that were more hesitant, it would have made the initial announcement much more powerful.
Also important to note non-profits, NGOs, and universities are included, and they don't have to pay the $10m buy-in.
> and all that is before the privacy aspect. While accounts may be "anonymous", Facebook can use their data to identify you anyway...
The way Libra is designed, that would probably be a lot more trouble than it is worth. Tracking methods without direct trackers (like 3rd-party cookies) work because there are many data points. Like in browser fingerprinting, you have user agents, JS feature availability, history, etc.
With Libra, you only have an account address and transactions to other anonymous account addresses. One dimension of data like that would be very very hard to trace back to the user, without direct participation from many many merchants.
> There's also the wrongthink aspect.
Fair, however afaik only 1 of the 28 current companies (Facebook) has this attribute.
The real money in banking is in giving good loans. The more personal and immediate your info, the better the loan you can make. Reduced losses lower interest rates or boost profits. Facebook data is the big reason this all make sense for them.
Facebook's anonymous claim is simply a lie. Most people will have known accounts at signup. Even if not, the record of their spending habits ties in with their Facebook habits. For the rest, touching known accounts in the network means you know them or have contacted them. Even a very small number of transactions should be enough to identify the user.
In theory, you can do that. In practice, most people will have a Calibra account, tied to their FB account, and a pinky promise from Zuckerberg that they won't abuse that data.
I thought so as well, initially. But it only taxes a very specific form of wealth... money. As such this tax probably disproportionally affects those unable to transfer their wealth into other forms. Probably once again mostly the poor. Still a valuable tool, but not the great solution I once thought it to be.
What are some of the biggest positive consequences potentially offered by Libra in your opinion?
That debit card you use, it's backed by a bank. Most credit cards are backed by banks.
Economic censorship is certainly a valid concern, I think that's the kind of stuff we should be talking about with Libra. Fees on Libra would be way way cheaper than fees on credit cards, I don't think that's a huge concern. (most of the fees on credit cards come from the underlying banks, not the payment networks themselves)
I don't really understand the flow.
They are paid in cash for working their low wage jobs now.
How is the cash going to become Libra? Through... what is basically a banking service? Which they don't have access to now?
Bad actors will lift old exploitative models into Libra's ecosystem: payday loans with huge interest rates, wallet services that force a deposit and allow you to overspend and charge fees when you do, sign up people for accounts and services that they don't want and make commissions. Or maybe just wallet/business services that straight up scam people and disappear with no repercussions. The thing you set out to kill will just come back with a new flavor. Plus it's even easier now since you can do it all with a single click!
Then someone has to decide what to do with bad actors involved with Libra and allocate resources to actually enforce some actions against them (legislative, the cops, server bans, ISP bans, etc.). Now you've got those services paid by tax dollars dealing with a corporate currency and taking time away from other enforcement actions.
All of this is going to happen at the juicy, vulnerable threshold where the technical controls interface with the human element. I probably won't ever hack Libra/Move itself, but the human part is still there. If I can actually manage to get away with the crime and transact with a fake identity, it can't be reversed.
Bonus: that same $40 phone stops getting updated by a phone carrier and some drive-by malware swipes all of your LibraBucks with a corrupt text message and no one can reverse the transaction. Or maybe that Bloomberg supply-chain attack article will finally become a reality once there's enough economy behind Libra.
If this is widely adopted, it's going to have a pretty steep learning curve and plenty of real losses for everyone.
Which, actually, went a lot better. A lot of the common soliders would call up their relatives when they went on patrol or a mission so that their relatives knew to either stay away or come around later. A lot of relatives ended up being in the Taliban. As such, OpSec was a lot easier.
Vice news has a mini-docu on this a few years back, but I can't seem to find it online right now.
Point is, bad actors aren't sitting in cyberspace and aren't without authority. Money that you can't hold in your hands or bury in a tin can is worthless if the system you are in is corrupt. I'll wager that Libra is not going to be well adopted people in corrupt police jurisdictions.
And by reversible I mean refundable.
If it’s refundable then they are just paying for the crime itself out of their own pockets. They will still need a human layer to verify theft has occurred and it isn’t a fraudulent claim of theft where just I stole from myself.
>They will still need a human layer to verify theft has occurred and it isn’t a fraudulent claim of theft where just I stole from myself
Or have something similar to credit cards where you're forced into arbitration.
They can mint, and that's not a direct debit from Facebook's wallet, but it would devalue the currency ever so slightly.
But that raises the question of 'How much needs to be stolen before I activate the minting process?' If they mint for low theft values, then I can find a way to steal from myself and that's probably a decent amount of passive income. If they only mint for high theft values, then that only helps rich people who suffer the least from theft (unless they cram all of their life savings into it).
All of this depends on how Facebook works with law enforcement to manage the criminal parts of Libra. Working closely with them means we move closer to a corporate state. Working loosely with them means Libra is more vulnerable.
Right, they would also have to block the funds from being moved, which shouldn't be difficult since they control all the validating nodes.
>They can mint, and that's not a direct debit from Facebook's wallet, but it would devalue the currency ever so slightly.
If the funds are frozen, those funds are effectively out of circulation (similar to cash being destroyed or cryptocurrency wallets being lost), so that would cancel out any devaluing effects.
What you'd need is a service that allows you to convert from Libra to an item/currency and then back to Libra, ideally with the ability to trade the intermediate item between users.
This heads off into the unexplored territory. I don't think anyone knows how they're going to handle legit services that launder Libra on the side.
More importantly, though, is your note about who this battle is between: it's a battle between groups of people who should both be viewed very skeptically when it comes to the interests of "the rest of us".
Corporate controlled money has been tried in the past; it didn't end well for workers.
Only in the world where 0 > 7; there are 7 members of the Board of Governors, all Senate-confirmed Presidential appointees.
Bitcoin has become centered on the few largest mining operations. Libra is centered on Facebook. Who elected them? How do currency holders influence them? There are no defined ways to do so.
The scary thing about Libra is that it truly has the potential for global-scale "boil the frog" ramifications.
Contrast this to abstaining from voting. There will still be a president and a Federal Reserve Bank regardless.
The president of the United States does not control the Fed, if that's what you're saying. The current U.S. president is extremely unhappy with the current Fed chairman and has repeatedly demanded that the Fed alter its policies, to no avail.
> Also, the Fed is US only...so there's that
The U.S. dollar is pretty global.
And yet he nominated him. What's your point? AFAIK he also technically has the power to fire him too.
> The U.S. dollar is pretty global.
Can you use the dollar to buy food at a foodstand in Germany? No. Just because certain aspects of the global economy are driven by the dollar, doesn't mean everything can be transacted with it. Libra is meant for companies to be able to transact business globally under one currency.
Probably not, but in a tourist place you might succeed. And there's still plenty of places where the US dollar is more welcome than local currency. It's hard money, regardless of the politics of the Fed.
You said that the U.S. president controls the Fed, and that is just objectively incorrect. My point is to correct that, so that you and anyone else reading will know better. I thought that was pretty clear.
> AFAIK he also technically has the power to fire him too.
No, he doesn't, so your knowledge doesn't go very far here.
And by the way, although the U.S. president nominates the Fed chair, he or she must be approved by the U.S. Senate. So the president can't pursue a specific monetary policy agenda via an appointee unless the Senate agrees.
> Can you use the dollar to buy food at a foodstand in Germany? No.
Sure, but the dollar is used for more international trade (e.g. oil) than any other currency, and is also a store of wealth probably more than any other currency.
For instance, many Germans hold dollars in the form of US Treasuries, because they actually pay a positive yield, unlike German government debt.
Anyway, if you are afraid of Libra, and I'm with you on that. The solution is decentralized currency like bitcoin, not fiat. The Fed is pursuing a long-term suicidal interest rate policy (too low) and the ECB is no better off. Plus, the U.S. government has started using dollar banking regulation as an international weapon (e.g. Iran sanctions), so there is a rising risk that eventually other countries will wise up and stop using the dollar, and that will destabilize it.
I don't know about Germany, but most places you can easily convert it to local currency right around the corner. Not many currencies can boast of something like that.
This kind of response derails the discussion. Yes, the Fed is centralized, too. That doesn't defeat the point you are responding to.
My cynical view is that Calibra is actually the real value to Facebook here, and they are betting that it will be the biggest wallet by far. It will allow Facebook to reconcile millions if not billions of identities in ways they have not been able to to this date.
They skip the first question: Libra is not a block chain. It uses Merkel tree accumulators for updating the state of the database, so it's definately not a block chain, it's just marketed as one.
Libra is changing the Merkel tree over time, it is never final, which is similar to pre-Bitcoin digital currencies.
In the case where it succeeds massively as in some of Matt Levine's recent thought experiments, I'm not convinced that Facebook has captured enough of the US regulatory framework for them to turn a blind eye to a new global currency which eventually rivals or overtakes the dollar in usefulness. If we accept, for example, that needing to buy and sell oil in dollars allows for a much more effective sanctioning infrastructure then it seems unlikely they will let a corporate-controlled currency whose ideals don't align explicitly with those of the US get too powerful without a fight.
In the other case, where it just becomes a data-hoarding venmo, but initially for the unbanked global poor, I'm not convinced that a) those people are truly sitting around unable to transact while they wait for Facebook to provide the solution and b) that a payment token which is pegged to a basket of global currencies rather than their own is truly the solution that these people would be seeking.
Now, the (theoretical) implementation makes it look more like it's aimed towards the first scenario, some kind of global-corporatist dystopia which we as a society walk into blindly because it's conveniently available within WhatsApp.
And I don't doubt the value of convenience, nor that there are some very smart people behind this who may have estimated that with the right implementation and dark enough patterns, they can use their market share to break through the latter scenario and into the first. But these are interesting times - I don't expect governments to sit on their hands, and we're not exactly in the midst of a surge in the popularity of globalism right now.
It kind of proves that the separation between Facebook and Libra is nothing but a lie.
He just doesn't get it and he never will.
I'm pretty certain WordPress is all about blogging...
So if even Libra's team isn't capable of posting on their own website, but instead have to "reach out" to Facebook, it isn't too far fetched to assume that they're sitting in Facebook's premises to begin with.
The fact that this is something that is supposed to happen at some unspecified point in the future but the "blockchain" they have cannot handle it -- I think its just a lie. It looks like it would require a massively different codebase and hardfork to get to permisionless and decentralized. They are not actually planning on doing it.
Also, the fact that its backed by Visa, Mastercard, and PayPal -- they are the absolute enemies of cryptocurrency.
Real cryptocurrencies like Bitcoin and Ethereum will be able to scale. Ethereum in particular has very advanced plans for rolling out very high scalability in a matter of months. That is what I support.
I do not think it makes sense to use a fake "cryptocurrency" just so that the old companies can continue to get a cut of my transactions and the government can more easily control my money if they want.
With the post on.... Facebook.com
Also, there is a certain unavoidable irony in suggesting the way to scale bitcoin is to avoid using it.
Another disadvantage is that if you control your key, you must be online. Like, if you run an HTTP server, you must have a machine. With plain Bitcoin you can spend to a pubkey and it doesn't have to be online
To summarize.
1. Attacks are extremely unlikely in the first place.
2. Watchtowers can prevent them if they do happen.
3. Watchtowers are trustless. They in no way resemble banks.
4. Without a watchtower you are not required to be always online to be secure.
The channel state appears on the blockchain once either party closes the channel.
Think of it like opening a secured credit card with cash. Faster and more convenient to use, since you can now use the credit card networks instead of the cash, but requires tying up the funds you want to use to pay with.
Also, the merchant/recipient has to be able to accept the payments, and the software is new / in beta still.
I thought that transaction cost and speed was a problem, but I am not so sure anymore. There are second layer solutions, like Lightning Network. And it is also possible to use current solutions like Visa, through pre-filled cards or debit cards. Of course not optimal.
It's not that long ago when we got to choose network protocols in games for example, IPX/SPX in favor of TCP/IP because of speed. Maybe it is a similar time, we'll see.
If Facebook was launching their own business-controlled currency that was backed by an SQL database, you'd see the exact same reaction. The crypto part is just an implementation detail, what people are actually upset about is corporations trying to seize control of our currency.
My personal questions : If anything goes wrong with the Libra scheme, who will be responsible ? Who would be fined / sent to prison ?
I wonder how it is being branded here and whether there will be some kind of confusion, or mandatory differentiation.
imagine high volume small denomination libra transactions between florida and colombia - fb will spend the rest of their days trying to explain to fbi they didn't mean no harm.
The reason governments are worried about Libra is not his but the fact that people might choose to no longer exchange for fiat. If you are transacting and earning Libra, why would you swap for dollars/euros and pay the transaction fees for that? This is a much bigger concern for governments than the black market economy.
tell this to Vinnik, a Russian national who was arrested in Greece on behalf of FBI and extradited to US:)
if FB starts enforcing KYC, then the adoption will be very narrow - US and few other developed countries. even in US i doubt that many people will be happy to share their driver's licences and bank accounts with FB for obvious reasons. and without wide adoption there will be no libra "closed system" as you described. this is catch 22. i don't see how FB can pull this off. i don't even see any clear strategy behind libra.
I wonder how many people in the world can pass a KYC check right this moment.
KYC exists for the same reason the drug war exists: People believe in paternalism and want to feel that there is some greater power that is in control. And there are people with guns and throw-you-in-prison capability who are happy to make it so.
The worst way to try to catch or curb money launderers is to create some kind of monetary system in which they will take no part.
Gold will not cease to exist because of a corporate “cryptocurrency”? As long as there are any fungible value stores in existence, there will be money laundering.
Then why is Facebook the only entity making blog posts about Libra? Except, when you assume the reader is dumb.
Tide detergent is also used as currency, and it's better than power tools as a currency in all regards.
At least with a government backed currency we get a choice on who runs the government. Even though that power is constantly being eroded.
The companies that run Libra however have 0 obligation to users of Libra but only to maximise profits for their shareholders. This is their plan:
* Dedicate a lot of resources to spread the adoption of Libra
* Change the language of what Libra is.
* Extract as much value as they possibly can from Libra users.
The proof is simple, If FB and all of those companies dedicated resources to development and adoption of Bitcoin itself then it would be able to reach the goals of Libra and be more decentralised than Libra.
David Marcus and the entire Facebook Libra team make me sick to my stomach.
Also, the composition of large miners changes over time and can adjust organically, unlike membership in the Facebook coin cabal.
The Federal Reserve is a consortium of banks and tends to make decisions that are good for banks, so if you're worried about corporatism, it's already here.
The alternative would be a repeal of legal tender laws. This would allow consumers & businesses to transact in the currency of their choice.
Look I’m not saying you can’t criticize the existence of the fed, but calling them a “government enforced monopoly” is inane. They are a _part_ of the government.
There is a long history of private policing in the United States.
The Federal Reserve Bank is not owned by the government. It is considered a public private partnership.
https://en.wikipedia.org/wiki/Private_police_in_the_United_S... https://mises.org/wire/private-policing-isnt-fantasy https://en.wikipedia.org/wiki/Gresham%27s_law
Why the hell would the governments of the world give up their power over currency? It is a huge power they hold that they do not want to lose.
Have you ever heard the term "legal tender"? You are legally required to accept USD as payment in America, and every country has a similar law. The government can literally force you (with guns if need be!!) to use their currency. Is that better than what FB is doing?
Sometimes I think people get so wrapped up in dystopian fear mongering they don't analyze the current situation.
Accepting a currency doesn't force a customer to use it.
Only accepting a certain currency does force a customer to use it, which is the case 99.99% of the time.
In any case, the US isn't the only country in the world with a monetary policy that could get trampled over.
And before you say “lightning network” do realize that LN doesn’t exist and even if it did your solution is to avoid using bitcoin. Setting aside you still have to make transactions on the bitcoin blockchain before you can even play ball with LN.
Bitcoin/cryptocurrency is a giant scam marketed toward libertarians and certain STEM types. Why Facebook decided to hitch its horse to a giant scam is beyond me.
The whole point of using LN is to use Bitcoin as a settlement layer. You make one initial transaction to open a channel and that's it. In the future users will onboard directly into LN channels anyway. On chain scaling is still important. Ethereum 2.0 will likely do over 10,000 tx/sec. Don't know about Bitcoin.
Also loads of websites where you can use it.
And corporates basically own and run the internet and it seems to be doing pretty well.
Heh, I think you fundamentally misunderstand how central banks work.
1. The US Mint creates the supply of currency in the US, which is literally governed by the government.[0]
2. It's literally governed by presidentially appointed officials.
3. The Fed manages the banking system, which is a trusted system that utilizes fiat currency as a medium of exchange. Their focus is much more aligned to economic prosperity and policy formulation then it is about how the "currency is managed" (the two are obviously interrelated).
> And corporates basically own and run the internet and it seems to be doing pretty well.
There's a big difference between "it basically does" and "it is".
EDIT: [0] - My bad, the BEP creates currency which is overseen by the Treasury, which is in fact a government entity.
This is wrong in a couple of ways. The mint creates coins, not dollar bills. Those are federal reserve notes. But who literally mints the money doesn't matter - the Fed has always had control over the money supply. That's the power that matters.
> 2. It's literally governed by presidentially appointed officials.
This is also true of the supreme Court. This doesn't change the fact that the Fed can operate independently of the government. As an analog, how often do you worry about what your hiring manager things of you? Once you have the job, they don't have any power over you.
You wouldn't say that is it "literally governed". Just like the Supreme Court the Federal Reserve has appointed positions but has in the modern era been independent. It isn't like it is a department such as Homeland Security.
And the central bank model applies in most countries not just the US.
And have life-long appointments.
> You wouldn't say that is it "literally governed".
Your conflating two ideas. I would actually say that the Supreme Court is a government entity. You said:
> independent of the government
It literally depends on the US government in order to function. Calling it independent by any stretch of the definition is disingenuous.
> And the central bank model applies in most countries not just the US.
You missed the point. Libra is offering a coin on a global scale. To compare this to one central bank is like comparing apples to oranges.
Honestly, I really don't understand your overall point. You genuinely think the Fed just sits on some island while it regulates US economic policy without any influence or dependence on anything but itself? Think about that for a second.
Congress long-since assigned that responsibility--with the exception of coinage--to the Federal Reserve. Note that our currency no longer says "United States Dollar" on it, only "Federal Reserve Note."