Hacker News Reader

Comment by IAmGraydon | Hacker News Reader

I'm asking this in all seriousness. Why would anyone want to use Libra?

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?

View on HN

There are millions of people around the world that are unbanked. Especially in 3rd world countries, they get on the internet by buying the cheapest possible smartphone and data with cash. I was just in the Philippines, and I saw places selling access to only Facebook and WhatsApp, in increments of 30MB of data, for cash.

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.

I am not sure about Philippines, but most African countries have better mobile banking than US.

That's not true. These days even the smallest US banks tend to have mobile apps or normal mobile banking options. All the major banks without exception do. That has been true for years at this point.

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).

> 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

I think that's exactly what they're talking about.

Yes, and India too. Every little roadside vendor now accepts Paytm or PhonePe or Google Pay or Mobikwik or Freecharge. The only way to get money into these mobile wallets is either by linking to a bank account, linking to a credit card, or by doing a wallet-to-wallet transfer.

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.

> If Libra launches successfully and remains stable, those same places selling X MB of data for cash, could easily start selling Libra too.

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?

It won't. Unless Facebook decides to ditch KYC and compete with government currencies themselves, it won't help anyone.

You put that beyond them?

Selling prepaid visas misses the point. The issue is not that those in poverty in developing nations can't spend their money. The issue is that they can't receive my money. It's more important that I can buy a lot of Libra and hire them, and they can cash out or use it directly.

I tried using a pre-paid card to buy something online a few years back: it didn't work, was specifically declined for being a pre-paid card (I don't recall what it was I was trying to purchase, but perhaps that may have some bearing on why it was declined if the reason was they don't want to sell certain things to potentially anonymous persons).

I've never had prepaid cards declined for physical items. Abusable SaaS (hosting, email sending, telephone gateways) is another story.

The fact that they don't have a "bank account" in a traditional sense doesn't mean that they can't do what they want to do - transfer money to each other and make purchases using other means. The "bank the unbanked" idea that crypto-shills like so much only works for people who know nothing about these "3rd world countries".

Are you thinking of systems like hawala?

Making local purchases isn't the issue. Ordering something from another country is the issue. Good luck shopping online from Nigeria.

It's also not so much that it's impossible, but the markups are crazy.

I see mentioned a lot the problem with online shopping.. what about shipping and the other countless logistics problem with ordering stuff from Nigeria?

They can't buy online, and so no one is advertising to them yet they are heavily using the Facebook platform. Facebook is trying to recruit them into the online marketplace by giving them a seamless way to spend internationally online, so that advertisers will buy more ads.

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.

yes, this.

> 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.

Yeah, if that's what they're thinking they don't know too much about "3rd world countries"

One of the reasons many people are unbanked is the expensive KYC laws. Libra also need to respect KYC.

We have an app called mobile pay in Denmark, which I guess is similar to Apple Pay in that you link a credit card and it lets you send money to friends or pay for stuff. It’s owned by our banks and it works most places a credit card wouldn’t, like in small stores that can’t really afford to have a credit card terminal. That’s it’s main uses, sending money to friends or buying things. Only they also have an API for the web, so you can now pay for things you buy in more and more online stores.

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.

> like in small stores that can’t really afford to have a credit card terminal

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 understand it is a breach of terms of service but as a customer, why should you care? It is not like it is breaching the law. And small businesses live on a much smaller margin than banks.

I somewhat care because it seems like a bit prone to tax fraud. Not sure if it is easy for the Danish tax agencies to spot this kind of transaction and enforce tax collection though.

Why wouldn't it be? The transaction is still recorded and tied to the person's bank account and national ID, so the person has to justify that income.

The business REALLY should care as all of their transactions are at risk of being voided, and the money returned to the customers if they're found to be violating the terms of service.

Is is free for small businesses. They explicitly state that at least here in Finland. They also state that it is a temporary thing.

Are you sure it’s “most”? I can’t remember the last time I had to pay into someone’s private account instead of one of the correct ways to do it.

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.

This seems doable without Libra. I'm in Australia and my local transfers from the bank app (ING) are both free and instant. At least to banks that joined Osko. That sorts out pretty much all simple/tiny transfers. If Libra can guarantee international transfers for free, I expect that fee will also go away from the banks.

To be fair Australia is also extremely far ahead of the curve. I will be moving their soon and found out about the NPP and Osko a week ago. Very impressed with what the banking industry in Australia manages to implement. Once they have person-to-person transfers through Osko I see no reason for most fintech-y internet wallets (paypal, venmo etc.) to be used in Australia and frankly also credit cards should become obsolete if you have instant payments through the regular banking system.

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.

The problem is that every country seems to have its own system. In Belgium it's Bancontact, in Portugal it's MBWay, etc. I'm not sure they have anything that works internationally and instantly.

The SWIFT network is the internal standard. It is of course far from instant but it might be in the future.

I suspect the biggest reason is... nobody's better than them, so there was no rush. Even paypal is not that great. If Libre actually takes off, whether it's good or not, it's likely to force some competition. Kind of like Uber sucks in may ways, but it did get many local taxi companies to improve their services.

Very easy: convenience, security, and cost. You are right that consumers will care little about the cost aspect, because it is largely hidden from them (even though they pay for it indirectly) but they do care about convenience and security. Online payments are actually not really that convenient. That's why Amazon is so popular because they sort of shield you from having to setup payments with each of the merchants they proxy for you. This convenience comes at a price; Amazon is not a charity and highly profitable.

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.

In the Netherlands (or the EU) banking is sort of changing, we have some Fintech companies moving into the space (bunq, revolut, N26). I'm a customer at bunq and they are a breath of fresh air, I can:

* 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.

"On the fly couple my passes to any of the accounts"

I don't understand what you mean by this?

Shoddy translation from Dutch, but he probably means that you can link any of your Bunq bank accounts to any of the Bunq banking cards you have.

Interesting thanks.

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.

Sorry for the Dunglish :) Exactly that, we usually use my pass when going out, I couple it to the "beer" account and send everyone a payment request, or just my bunq.me page (like https://bunq.me/freekvh (try adding an amount to the url and then a word and see the page change dynamically, i.e. https://bunq.me/freekvh/10.15/beer_money) and they can fill the beer account (iDeal is the instant payment method in the Netherlands). I set another pin code on the fly for the pass or even choose 2 pin codes to access different accounts with each. But usually one pays "contactless" in the Netherlands.

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.

You can link any of your bank cards to any of your accounts using the mobile app (change is instant AFAIK) You can even configure different pin codes per card, where each pin code corresponds to a different account

That's all well and good, but can you also anonymously buy some blow with cash when you want to party?

I understand the argument. I guess cash has a usecase where the law is meddling with things it shouldn't.

But there is btc and qr code scanning. I'm not saying we should ditch cash entirely.

Most payment apps are locked to a specific country. If Libra becomes "Alipay except cross-country" then a bunch of tourist-y places in (for example) southeast Asia could start using it to get tourist's money without much of a hassle (especially given how many people are already accepting QR code payments from some local app)

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.

When vendors see transaction fees, they pass them on to consumers. Sometimes it's in the form of "$X minimum for credit card transaction", other times it's passing the costs though silently, other times it's not accepting cards at all. In the developing worlds, what we consider trivial fees for a vendor to accept are anything but.

Reasons I'm interested, stability and transaction fees. You don't want to pay someone in a deflationary currency, as their salary will always increase. A stable coin solves this in allowing people to actually use it.

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.

> They don't care about how the banking system works and who controls the flow of money

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.

---

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.

>Why would anyone want to use Libra?

Money laundering. You'd no longer need to buy a condo in New York to get your rubles into dollars.

I don’t understand, how buying a condo in New York helps you converting rubles into dollars.

https://www.wired.com/story/if-trump-is-laundering-russian-m...

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.

The article seems not to mention currency conversion. So I’m sorry I still don’t understand how buying a condo helps converting rubles to dollars.

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.

I haven't read the article, just imagining how money laundering works, I assume you find a not too scrupulous guy with a nice apartment who needs cash. You give him some dirty money in exchange for the deed. You then take out a loan using your new place as collateral.

Assuming they wanted to prevent large transactions, how will they? Is Facebook planing to be solely responsible for clearing every transaction?

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...

> Assuming they wanted to prevent large transactions, how will they? Is Facebook planing to be solely responsible for clearing every transaction?

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.

> It’s not possible to be truly permissionless

Exactly, it certainly appears the claims can't all be true. This is a bit disturbing from a company with a questionable track record.

> Why would they go through the extra step(s)?

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.

Large parts of the world have no access to banking and can never convert from cash to digital currency. How easily can you transfer money to random individual in random developing countries who might offer their digital labor?

If they are paid in Libra, and can pay in Libra, they become part of the global economy.

Check out FX charts for Russian Ruble, Argentinian Peso, Turkish Lyra or even the British Pound. Then ask yourself which of these countries have financial institutions that allow their clients to seamlessly transact in more stable currencies like US dollar or Euro and you have your answer.

These countries can simply ask Facebook/Calibra to not offer their wallet, or to require FB to disable the wallet functionality.

Or they can ban Facebook.

Have you read the linked article? The protocol is open, anybody can build a wallet and transact p2p without KYC with a pseudonymous account. If they get the initial market penetration through WhatsApp/Facebook then it'll be as difficult to ban as Bitcoin. Facebook alone wouldn't have the means to stop those transactions even if they wanted to, this is not PayPal.

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 is open, anybody can build a wallet and transact p2p without KYC with a pseudonymous account.

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.

"Russian Ruble, Argentinian Peso, Turkish Lyra or even the British Pound....more stable currencies like US dollar or Euro"

I know Brexit has taken its toll, but its not quite that bad.

I don't follow this line of argument? I already keep my investments in a UK tax-sheltered savings account invested in US securities, and my credit and debit cards work for buying things in dollars, but most of my spending is in GBP. I could have a Euro-denominated bank account if I wanted. How much more "seamless" would I want?

Then you're a part of tiny minority who both has access to these tools and figured out that this is the proper way to manage your money. Exactly zero people I personally know manage their money that way. Libra does next to nothing for you.

Doesn't the fact that zero people you know manage their money this way also imply that Libra does nothing for them in this regard?

> Am I to believe that the benefit is "lower transaction fees"?

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.

There's already a feeless, decentralized cryptocurrency which settles transactions in less than a second.

https://nano.org

Libra's selling point will be FB's onboarding of users. It would not be unreasonable to expect dark patters there.

I like to argue that Libra has the potential to become a widespread "mainstream"-like Cryptocurrency. Mainstream is the important factor here.

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.

I wanted to see if there's anything like- 'We are not doing this to see end conversions of our Ads i.e. whether one clicks the Ad and buys the same in the a physical store'.

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.

Libra indeed, is such a huge win for 3rd world countries because cross border payments are way to expensive plus if you're starting a tech startup with hopes of earning from US, or Canada, it's impossible because Stripe, or Paypal are not supported, so they're left out. Libra is great for Startups with global ambitions :)

that's a valid vue from the top of the dollar pyramid, but if your much lower and your local "dollar" doesn't have kind of sway in the world, than this starts making more sense. Look at Venezuela - if the citizens opted in to buy a stable coin (which they can easily do, unlike purchasing physical US dollars, which they can not easily do) than a currency like Libra makes a lot more sense.

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.

Imagine you live in Zimbabwe in 2008, or Argentina now, where people have no faith in their central banks to responsibly manage their money supply. Then ask yourself what's the value of a portable, anonymous, relatively stable currency that your government can't easily manipulate or confiscate.

Reply on news.ycombinator.com