Visa, Mastercard, Others Reconsider Involvement in Facebook's Libra Network
wsj.com
wsj.com
Also ... Facebook has proven it is willing to bully and lie to people doing business WITH Facebook.
If I'm Visa or Mastercard... do I want to get into this space and at the same time be at the mercy of Facebook?
If there is some other network / payment system would Facebook be ok with me getting into that too?
Generally if you read enough stories it is clear there's no consideration about "Hey should we do this?" at Facebook. It seems more than at most companies there are simply no rules.
Woah, I must be out of the loop - what is this in relation to?
I think Libra is very frightening and I hope it fails. I have nothing against decentralized systems, but centralized ones that is controlled by a few companies is very scary.
I cannot read the article, since it's locked but you can get the gist of it and if companies are leaving the coalition it's probably for the best.
Perhaps the only good thing about facebook is the public distrust of it right now. I hated it much worse when people unironically called Google "the good company".
On that note though, I agree: I don't like it. I hate it in fact.
No checks and balances like you get with government-backed currency.
It brings to mind the Tom Clancy book, one of the Net Force ones I think with the online VR company that declared itself as its own nation state... didn't end well
Edit: The book is CyberNation
Welcome to cyberpunk.
Not that I like or trust Facebook or its owner, but maybe Libra will introduce some competition. For instance Libra might not suffer from inflation (which is just a tax on people savings), this could be much better way to store savings than fiat currencies.
There’s no stock they’re beholden too, or billionaire boy genius running the entire operation, and they certainly don’t hold vast troves of information on billions of people.
It’s a positive they’re divorced from politics, and they’ve done a pretty decent job keeping the USD a trusted currency for use nationally and around the globe with a track record approaching a hundred years.
I’d say the Fed and Facebook are quite different.
All much, much more trustworthy institutions than any of those companies involved into the Libra project.
And especially more trustworthy than Facebook could ever be.
Decentralized, open ledgers are the future and these folks are terrified their Golden Goose's days are numbered. And of course there's the implications the current system, and the push to get rid of cash, has on personal freedoms.
a. It was backed by the fiat put in
b. They would collect all interest on the fiat for themselves, users did not see any kind of interest for holding the balance
This is such a silly argument that really holds no water in the real world.
https://www.federalreserve.gov/newsevents/pressreleases/bcre...
By the backer continuously increasing the backing ratio at not less than the average rate of inflation of the backing currencies.
I mean that's technically plausible, but why would any commercial entity do this? Isn't it the equivalent of throwing money into a fire? Has Facebook made any indication they're going to do this?
To promote the ecosystem as inflation-resistant, and encourage it's use.
> Isn't it the equivalent of throwing money into a fire?
Not any more than, e.g., offering a high-interest savings account is.
[1] https://www.washingtonpost.com/business/economy/tarp-moves-i...
But that doesn't make it a good long-term plan. The incentives for banks are still unchanged: "heads I win, tails I get bailed-out". And of course even if they run the economy into the ground they still get their bonuses.
I recommend the books After the Music Stopped or The Big Short for background on the crisis. (Also the movie The Big Short is excellent).
(I should have said became riskier, though. Of course the assets had some risk.)
The whole fiction that the government has to lend money into existence from the FED and the FED can buy assets off banks from money created out of nothing is this complicated convoluted game is intended to make it hard to figure out what's going on and to make it look like actual productive economic activity is occurring here.
And banks "make money out of nothing" because bank deposits substitute for hard currency. If a cryptocurrency became standard, then someone could create an institution that accepted cryptocurrency deposits, and it would function exactly like a bank.
How would Libra control the money suppply? Their reserve is described to be fully backed.
Libra is control over monetary flows. Offend zuck, watch your public key added to the block list. Watch the balance drained from your account as the producers use 'admin' transaction powers to remove funds. Maybe the ledger maintainers simply block your transactions from being committed.
And then we have currency controls in places other than the US, like India and China. Suddenly 'stablecoin's are more useful than bank account backed dollar holdings (outside the US). This is a power grab for the future currency of developing nations. The endgame is control of planet Earth's M1 currency supply.
Personally, I would trust Facebook more than I trust the government, and this is not a joke. As far as Libra, from a technical perspective there is a decentralized blockchain (with a credible plan to further decentralize it in the future), and a well-thought out stability mechanism. From a corporate structuring perspective, there is the Libra Foundation. I feel people have really politicized this topic, and most of the anti-Libra sentiment is fueled by partisan politics and fake news (ie "Facebook will control the worldwide money supply!!!").
Those saying that the government is good while corporations are evil are very naive. Governments are more corrupt and dissimulative than any corporation will ever be. They are a bunch of arrogant people not being personally accountable for their lies and errors. Zuck has his net worth tied to FB. Corporations are no angel, but they are accountable, and as such they are more trustworthy. Moreover, when they screw up, they do not pass a law to force us to clean up their mess.
Governments are going crazy these days, citizens need to take back control of the their money, we need to get back our freedom to conduct transactions freely.
Facebook is in a unique position to pull that one off. It's unfortunate they totally screwed on the communication front, but hopefully they can fix that. Personally I am looking forward to the launch.
Superfund Sites.
There is no scenario where Zuckerberg's net worth is reduced to an amount that one person is capable of spending in a lifetime. In terms of acting as an accountability mechanism, what is the difference between $100M and $65B?
> Moreover, when they screw up, they do not pass a law to force us to clean up their mess.
What was the Emergency Economic Stabilization Act of 2008 about then? And did the CEOs of any of the banks that were bailed out by TARP end up suffering any material deprivation as a result?
you or I would be overjoyed to be left with a mere $100M. if zucc were that type of person, he would have sold when fb was worth $100M. if there were a real risk that his net worth could drop that much, I'd bet he would be willing to do an awful lot to prevent it.
This is the problem of your own making when you want to decide for others the amount of money you can steal/take from them for whatever reason (don't really need that much, must be punished an arbitrary number because you think it's fair etc...). Whether it is this topic or another, the conclusion is that people will never be satisfied as long as the person is not homeless. Even if he is reduced to 1 million of net worth, you will say: "but he is still a millionaire while people from the millions of lives he has destroyed earn minimum wages"
As someone else said in this thread, with 50 billion you can invest (angel investment etc..) and live very differently than with 100 million. Most people cannot understand that but they do not need to, and shouldn't feel entitled to understand because this is not their life. The most important thing is that market dynamics truly keep a private entrepreneur/corporation accountable.
I am not saying regulations is never needed, I am strictly strictly speaking about the topic of keeping people in check in the context of this discussion. And net worth is a shortcut to say many other things: trust, reputation, ability to raise money for ventures etc... what I'm saying is that corporations face this type of pressure so there is a line they can't cross (unless the government granted them a monopoly, like in telecoms, but then this is the government's fault).
> What was the Emergency Economic Stabilization Act of 2008 about then? And did the CEOs of any of the banks that were bailed out by TARP end up suffering any material deprivation as a result?
I do not disagree but these systemic banks are largely extensions of the government, 99.99% of corporations are not banks.
With this regard, FB would even be safer than banks, it's like deposits are automatically insured, yet there is no limit to the amount being insured (no 100k cap). There more I think about it, the more I feel Facebook really screwed in terms of communication, they were really naive and there were much better ways to present this project.
They are? It sure doesn't look much like it, at least if we're talking about very large corporations.
What's happened to some in terms of being able to access funding, while mostly extremists is scary enough in terms of slippery slopes without volunteering all the access in question.
and to pocket some, preferably most, of the $25 billion “lost by migrants every year through remittance fees.
Here, corrected that for you.
I disagree with that strongly and it's a huge way the market functions - a new company comes in and reduces costs for consumers, while still making a profit. Old company loses (or changes), while the new company and consumers win. It's how most discount stores work, airlines. Heck we're seeing it lately in equity trading with trade fees dropping to 0. Sure, robinhood did it first to win market share and make more money, but it's still been good for consumers. It's how walmart and then amazon became so dominant (though they also reduced services).
This is in no way an endorsement of anything facebook is doing, btw, Libra scares the bejeesus out of me, but that doesn't mean the incumbents aren't robbing people blind.
Not necessarily and a lot has been done to smooth the path - and lower the fees - for financial transactions. Mobile money in Africa (where you once, not that long ago, had to entrust an envelope with cash to a bus driver, hoping that it arrives at the intended destination) is a good example.
But I think that "helping the underbanked" is a smokescreen anyway.
Just like "Bringing internet to the poor", via internet.org, is a smokescreen for the underhanded tactic of smuggling zero routing into the very fabric of internet usage in poor countries and making Facebook (and their approved partners) == Internet.
There's never anything altruistic in whatever Facebook does. It's about accumulation of ever more power, money and data. And you just need to look at their short history for the proof in the pudding.
[0]: https://www.cnbc.com/2019/10/01/charles-schwab-is-eliminatin...
I think the center of their critique was not that the current incumbents are good, but that the framing implied that this new system would be better in some fundamental way. That this was a system of a different order than the current one.
This is my personal favorite I've been watching.
Libra itself can still make money by investing the float (money that doesn’t leave the system).
They will probably be able to pull something like this off in a country with poor banking.
So in terms of large-ish economies/populations, maybe they have a chance in parts of Africa (I know some people working at chinese-owned companies hard at work on this market) and maybe parts of South America and SEA?
Maybe the will make it work in countries that are either corrupt or incompetently managed. I don't see why a reasonably competent or reasonably non-corrupt government would allow this.
Owning other people's money and controlling where it can and cannot flow is way more than a way to get more data.
Since it is a cryptocurrency, the whole point is to allow people to send money w/o censorship.
The whitepaper also says that Libra will launch permissioned and transition to a permissionless cryptocurrency.
Yes, and Facebook hasn't lied to us before? They don't have an actual plan on how to accomplish this transition, which necessarily includes completely redefining the whole system Libra is based on.
What even is the USP of Libra?
Kind of like:
Level 1 (Zuck's thinking):
I'll tell them "We're building Thing X to improve Y in the world!" and most will buy it like the gullible sheep they are.
Level 2:
Some will not buy it and think we're really building Thing X to track their online activities (just usual tracking for ads and stuff)
Level 3:
Except what we're really trying to do is collect data so we can match their ThingX profile to their supposedly-private medical records and DNA footprint. But no one will figure it out until it's too late - and we'll be a few billions of dollars richer by then (evil laughter in Zuck's mind).
There may even be a Level 4 for all we know. I'm not sure I'd underestimate Zuck on this sort of thing. It always seems to be worse than we thought it was.
Best case scenario is that companies like Facebook start looking at data security and privacy as assets that factor heavily into their competitiveness in their industry. If they aren't as secure or privacy-forward as their competitors, it will lose them business, and not just on the user side. Apple seems to have realized this earlier than most, hence their latest marketing campaign.
Losing huge business partners due to privacy concerns over the business model will hopefully be a big wake-up call.
Companies like Facebook have a business model problem with this, though. Their business model absolutely depends on violating people's privacy. It's hard to see how they can factor privacy into things without entirely changing how they make money.
Personally, I don't think so but it's still a big win if they do, so I'm mostly fine with either outcome
The culture of Facebook right now is a dumpster fire of making money out of ads at any cost and disregard anything else. The majority of their employees are in their mid twenties and are mainly and almost only motivated by money.
Even the VPs are cynical caricatures of an ultra capitalist world with no concern for anything ethical. Good luck on changing the culture to start worrying about security. It would require at least a complete overhaul of all the execs.
Facebook will need to make this one: killing the Facebook brand, and a large part of the Facebook Feed product.
Sure, Facebook can survive without making this call, just as Yahoo! survived throughout Ms Mayer’s tenure.
Something that tells me they are currently unaware of that necesity is their 10K[0]:
> Certain of our past actions, such as the foregoing matter regarding developer misuse of data, have eroded confidence in our brands, and if we fail to successfully promote and maintain our brands or if we incur excessive expenses in this effort, our business and financial results may be adversely affected.
[0]: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001326801/a109a501...
As a US citizen, I realize that we won't control the reserve currency forever so it seems wise to slowly ease into all international capable transactions to being done in a basket or currencies. As a US citizen, I would like the US dollar to be a fairly large percentage of the basket. I think this is really something that we need major cooperation between major economic power countries to make this transition as smooth and gentle as possible.
If there were multiple digital currencies backed by real currencies like like Libra, that would probably be for the best.
The goal is to reduce transaction fees and friction in international trade (and all trade).
My default reaction, you could call it almost Pavlovian, is that Facebook lies whenever some of their spokesdrones or management types opens their mouth.
To them, Libra is an open (to consortium membership) blockchain network, whereas the thing Facebook is bringing to it is just a wallet product (Calibra) for holding and transferring the Libra-native cryptocurrency. They speak of Calibra with not-just-a-little distaste, in the same sense that you might speak of a rich investor in your company that you never really wanted investing in you but were desperate. They don’t really offer any special support for, or primacy to, Calibra; to them, it’s an unseemly app by an unseemly company that’ll happen to boost usage of their network from “some unknown blockchain” to “a blockchain 80% of the world has access to through an app they already have on their phones” (so they can’t exactly just tell it to go fly a kite.)
It’s interesting that, from the perspective of other companies in this consortium (or perhaps just the news media’s interpretation of it), the Libra Foundation “is” Facebook. It’s no more Facebook than, say, WebKit.org “is” Apple, or any ASF Committee “is” one of its sponsoring partners.
In all of those cases, there are employees of the sponsoring company steering the project, sure, but not in their capacity as employees; rather, it’s something they’re doing for the Foundation, not even billed to their employer. (How do features get developed? The employees, as the employer, using billable hours, create and submit PRs “upstream” to the Foundation. Then, the employees, as members of the Foundation, along with other Foundation members, vote on the PRs.)
Importantly, if the sponsoring company decided to withdraw its support from any of the relevant projects, the Foundation would still exist, and those people who are employees and also members of the Foundation would still be members of the Foundation—because they are personally, themselves members, not members as delegates of the sponsoring company.
Importantly as well, the employees who happen to also be members of the Foundation almost always have an understanding with their employer that—because they would be kicked out of the Foundation’s steering committee if they showed any favouritism toward PRs made by their employer—they have to treat their employer’s suggestions just like anyone else’s. With most such projects, if you subscribe to the mailing lists, you wouldn’t be able to tell they had any sponsoring partners at all!
I just want to highlight this, because it seems like nobody really understands this until they work on at least one project run this way. (My own experience is with Apache CouchDB, whose main contributor is IBM Cloudant.)
Isn't this how they decided to market themselves? The first news of it had Facebook plastered all over. Even their whitepaper says:
>Facebook teams played a key role in the creation of the Libra Association and the Libra Blockchain, working with the other Founding Members. While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.
Stating that "Facebook is expected to maintain a leadership role through 2019" would also lead me to believe that Libra Foundation "is" Facebook for most practical purposes.
Or you can click the "web" link underneath and usually get a non-paywalled option.
We have a system that works fairly well in Bitcoin. The system is decentralized and uses proof of work. It works well for being money. I think the next innovations in the space are going to be incremental improvements around this system.
Disclosure: I'm working on a project to change the economics of limited supply: https://bitflate.org/post/2019/08/26/bitcoin-missing-link-to...