Paypal Withdraws from Facebook's Libra Cryptocurrency
cnbc.com
cnbc.com
+ Many (or potentially all of the backers except Facebook) will withdraw from the alliance.
+ Facebook/Zuckerberg will defy the gov.s and launch Libra.
+ Libra might not dominate the world, but it'll be a success (at least a niche success) and it'll eat up some of the marketshare of these financial institutions.
I think Zuckerberg has come (or already know) to the realization that these institutions "added value" is navigating the regulations/laws of the different countries. They are a kind of monopoly. Sending money across "borders" is hard only because governments made it so. If Libra ignored these rules, they'll put these guys (or at least a part of their offerings) out of business. Why would anybody use Western Union if they can send money through their Facebook for less or no fees? It's easier and more convenient too.
Facebook will try to defy regulators, but I think the SEC will stomp on them, hard. It will end up a hybrid battle in the courts and Congress between libertarians, a few flavors of privacy advocates, US regulatory concerns, and ultimately land on US power projection concerns.
I think the US will eventually shape the law and regulatory environment to prevent the existence of any cryptocurrency with its own valuation - distributed ledgers denominated in central bank currencies will be all that is allowed at the end.
The US financial system is a core pillar of US world power and Congress isn't going to give that power away to Facebook. It will be a complex road because the issues are difficult to grok.
Existing SEC/CFTC/FinCen rulings seem to point in a very different direction. They've had many opportunities to shut down Bitcoin and have not done it.
Actually I wonder if the intelligence agencies of the world like the cryptocurrencies because it lets them find illicit activity more easily.
There are also decentralized, Tor-encrypted exchanges to buy and sell bitcoin like Bisq: https://bisq.network/.
Why? In most modern financial systems the ledger is not public. Why would I have to defend attempting to bring that level of privacy to bitcoin? It seems reasonable to want similar levels of privacy across instruments and doesn't seem illegal to use tumbler services, etc. I don't even see how that can be construed as money laundering. I imagine courts disagree but would love to read their reasoning.
It certainly will be competition for central banks, especially in countries where the monetary policy is kinda wacky, like Venezuela, where bitcoin is breaking usage records.
Here's an article by a Venezuelan economist: "Bitcoin Has Saved My Family": https://www.nytimes.com/2019/02/23/opinion/sunday/venezuela-....
He was only able to feed his family because he kept his money in bitcoin and not in bolívars, which was experiencing daily inflation of 3.5%.
If I recall correctly, early on in the life of Bitcoin, the United States had to infuse $14 trillion into the economy to save the banks and keep the country from going into a depression.
There's only so long people are going to put up with near zero interest rates or negative interest rates in some countries and with a slow down seemingly around the corner, Bitcoin's algorithmic certainly will look pretty good compared to the somewhat irrational economic policies that have been implemented.
If some folks risked their 401k on bitcoin it changes nothing.
If you own bitcoins in countries where inflation is double digit and you think they will save your family, think again: they would most probably get you killed or robbed.
How so? It's not like correlating who owns which address is easy, and any smart person has their funds distributed across several wallets. So if you rob me of my bitcoins and I give you access to a wallet that doesn't contain all of my funds, how would you know any better?
Zimbabwe also: https://qz.com/africa/1662753/bitcoin-crypto-soar-in-zimbabw...
There's really quite an opportunity here for Bitcoin to help people in these countries leap their financial markets forward a few stages in development: https://www.ifc.org/wps/wcm/connect/f12930a4-a78b-43c0-9fe1-...
The SEC is a civil agency. Launching something like this naked would garner state and federal prosecutors’ interests.
The government and card networks might do something similar. They could get SWIFT in on it, too, since they cooperate with governments and mostly profit from traditional banks.
Cryptocurrency ecosystem is already out of the regulations and mostly a black market
I would say that Congress shouldn’t give that power to Facebook. Congress isn’t very good at doing anything lately.
Don't poke the bear.
The reason companies are pulling out is probably just because it looks like it's not going to succeed. Another theory is that it is just too obvious when you have those payment company's names attached. Too easy for people like me to say "why do you think Visa and MasterCard would back a 'cryptocurrency'"?
It's quite possible that the people with real power in government will figure out that this is not a real cryptocurrency and in fact is the best defense the government has against real cryptocurrency which they can't track or interfere with. Because Facebook will give them total access for surveillance and control over transactions.
Really?
Sure, and the cost of doing so compared to some guy typing queries into their indexed list of every financial transaction in the United States (at minimum) is probably at least one or two orders of magnitude.
If you are someone or know someone to grant you some basic technical knowledge then certainly one or two orders of magnitude higher cost, unless you're a designated terrorist, or someone elected officials talk about executing.
Look up PirateChain.
Are we still pushing this? Last time I checked, once people saw beyond crypto as a get-rich-quick scheme, they lost interest very quickly.
This isn't like Uber silently encroaching on a city's taxi medallion laws with grey-area definitions of "taxi" and "employee". Facebook cannot do something like this without attracting scrutiny at every stage, and as we saw with Robinhood, the financial regulation systems are relatively quick to act. Especially if they "defy govs", then those government's will have every reason to come down hard.
This is one area where Facebook will need to finesse their way through-- moving fast and breaking things is not a winning strategy.
Not sure if serious or delusional, actually. Over-hyped by their own kool-aid, you know. It tends to happen to surprisingly large groups in the Valley. Time will tell, but if they don't have a special sauce kinda joker to play, I just don't see it. Defying states never worked well unless said states are basically non-existent.
I can hold a balance at Paypal. I can pay others and others can pay me. The "crypto" part seems like an implementation detail but otherwise irrelevant.
Note: I'm not saying Facebook should be allowed to make their own Paypal. I'm just curious other than "Facebook scary because big" what other reason would prevent Facebook from making a Paypal clone.
Google has Google Pay, Apple has Apple Pay, why can't Facebook have Facebook Pay. What would really be the difference? Just the part about currency conversion to their own units and back? Is that different from certain game virtual currencies?
A PayPal style system might work, but it is only low-cost low-friction (the main appeal for crypto) for the transactions that occur completely within it's own ecosystem. And they don't call it a currency, so they dodge some issues there. Paypal also dodges issues of "being a bank" because funds equivalent to customer balances are actually held in real-world banks, so it's not in any way an independent currency. It doesn't "float" against anything. Libra's basket-of-currencies approach may be very stable, but automatically puts it in a very different class of financial instruments. They could abandon that and really stick to the paypal model though.
Even then, there are still many regulations for this that must be followed: It falls in a business class of "money transmitter" which requires a separate license in every state, as well as registration with the federal government. They also must follow laws like filing a CTR for transactions above $10,000, and SARs for suspicious activity. There's simply no getting around major regulations if you're providing any sort of financial services.
Actually, it's obvious to me that this is the future - we want to share money in the same way and with the same ease we share thoughts and images ie inside chat systems and on social media. You don't need crypto to do this, but it's the best way of making a system anyone can join and trust.
Libra is going to be big unless it's artificially stopped, and that's my view, even as someone who would much rather see one of the current cryptocurrency systems win rather than a new Facebook invented thing.
If we hadn't ceded chat and social media to walled Gardens we would have solved this years ago.
AFAIK Paypal is a bank in the EU.
As US company deliberately violating financial laws of another country might still come under tremendous scrutiny from US regulators.
Regardless, it wouldn't be perfect, and hopefully would still provide an (albeit difficult) option to avoid massively unstable local currency fluctuations. It would, however, exacerbate those instabilities which may be a net harm for all involved. I don't know though, these are systems complex enough that no single human can hold all of it, and consequences of various actions, in their head.
This is feasible but not trivial.
Now, if you add in the "defy governments" part, it's clear that most merchants would not use it, which means users have a negative incentive to use libra over PayPal or whatever.
Even Amazon and Google failed to "just build a PayPal", and I don't see why Facebook would succeed easily.
Nail on the head.
The innovation with cryptocurrencies is decentralized byzantine fault tolerance, using unknown actors. Libra is based on BFT where all parties are known, which has been a solved problem way before Bitcoin. The "crypto" part is irrelevant.
Governments and banks are hand in glove. FB does not have an army, nor more Lawyers than the US GovernMint (to name just one). Oh yeah, and if you don't believe almost every US news source is GovernMint controlled--I just have no words to describe your "optimism."
If there is some level of control, it is at the complete opposite end of the spectrum from the strict authoritarian control of media in many other countries, so it's still much more "free" than many alternatives.
I'm sure they [1] No longer have any ties ;). Hey, why would Bush lie about this?!?
Because Western Union accepts and delivers cash. Western Union exists for the much the same reason payday lenders exist--to service the cash economy.
I don’t have time to explain this comment, but I am probably missing something in my thinking.
US has never been weaker in the recent history, nobody helps the old lion.
This relies on people consciously choosing to give money to libra rather than transferring directly. Why would anyone do this rather than use apple pay/cash/venmo/zelle with USD?
Libra is something I wish we fight to the death.
Wouldn't the west want something equivalent for geopolitical reasons?
All it takes is one weakness in a protocol or one mathematical breakthrough in cryptanalysis, and the whole economy of a country could become vulnerable to attack and break down.
I don't even know what is Zuckberg's ideology. And I am actually more confident about the Chinese knowing what they are doing than about Zuck.
Yeah, I want something equivalent. I want digital euros. I get to vote for the guys who put that into place.
I don't care that a solution is "western" if it is not democratic.
Imagine being unable to buy food because an algorithm determined that “you violated our community standards” and there’s no way to contact them. One or two stories like that will kill Libra stone dead.
If Libra ignored these rules, they'll put these guys (or at least a part of their offerings) out of business
This is called money laundering, people go to jail for it.
This already exists. If your bank's AML algorithm flags certain transactions, your account will be frozen, with no explanation (they legally can't tell you why they did it, it is an offense). You will be asked to produce some documents whilst they and potentially law enforcement investigate. Again, you won't be told why or how long it will take. Usually, if you haven't done anything wrong, you'll have no access to your money for 1-2 months.
Now, here's the kicker. Those flagging algorithms aren't very good. They don't work on any sophisticated social graphs.
They're based on a bunch of simple rules -- maybe you made a large cash deposit, or wired more money than usual, or received a bunch of small transactions (maybe you're selling drugs?). The flag is raised, the account is frozen and you're shit out of luck trying to get an explanation or buying things for a few months.
Given we still use banks, I'm sure "you violated our community standards" won't be the straw that broke the camel's back.
That depends entirely on how much trust there is.
Lots of people don’t trust their governments, but most do; ditto corporations. A government can be arbitrary and capricious in ways that corporations cannot, but most of us live in democracies and even those of us that don’t most live in countries that follow the rule of law.
I assume all large corporations care about rule of law, but I also assume they outspend governments on lawyers looking for legal loopholes, and corporations are not normally democracies. I don’t trust Facebook basically at all, I wouldn’t trust Google with money, the only reason I trust Apple with money is they’ve outsourced it to an actual bank, and I am only grudgingly willing to trust PayPal for occasional small transactions.
The banks themselves? Well, since the financial crisis I assume any given one will go under so I have several and distribute my money between them.
Of course, I’m unusually cautious.
I'm one of them.
Not to defend Facebook in any way but, isn't that already the case with a bank system automatically blocking your card for no valid reason and no way to call them over the weekend for example? (happened to me a few times)
Prepaid wallets with offline/anonymous use are a thing, already used for over a decade in some countries. It’s not easy to build in any way, but it’s already a reality.
But that's my "main" bank. My secondary bank is not as user friendly and thus don't get an equal cut of my business.
In all cases where my bank has blocked my card, they've been contactable (24/7), though to be honest, they've always contacted me in less than a minute after my card has been blocked, so I've never had to do this. I'm in the UK for reference, as I know experience will vary from bank to bank and place to place, as you've already identified.
In the case of Libra, you have no recourse if Facebook decide to block your account. You just have to hope that someday your case will be reviewed. Paypal seem to be just as bad, so it's not only Facebook who would have this problem, but I also avoid Paypal for that same reason.
And if you dare pointing out how incompetent they are they'll just close you account and leave you in the wild.
Imagine being unable to buy food because (an algorithm at) Visa or MasterCard decided that you violated their (community) standards. Oh wait, we don't have to imagine anything, because that's the world we already live in.
Not only do these corporations ban some individuals, some of them (Paypal, Square) seem to be taking aim at outright banning the sale of certain goods that are otherwise considered to be legal.
Visa won't stop your card over a nude Pic on Facebook - but Facebook might suspend your account and your libra over it.
Note that for example in Norway (probably Europe?) every card transaction is run through a check for money laundering and criminal/suspicious activity in real-time.
You touch your card, central authority can decline the transaction. (I have a friend that used to work on this system, implementing rules).
But they don't check your tweet history (although, I'm sure the intelligence services do, and I assume they have a secret, quasi-legal "terrorist" watch list that probably is linked to this system somehow).
But we've already seen that you can effectively be "banned" from the financial system in the United States. Just look at Alex Jones and what California is trying to do against the NRA.
Regardless of what you think of them, it is very obvious that they are canaries. It should be very obvious to everyone that there is a political movement trying to weaponize the financial system against their opposition under the guise of re-defining terrorism and hate speech.
That is mostly happening through the proper channels, that is the police and the judicial system do the policing and the legislative system makes the rules.
That in itself isn't a safeguard against abuse - but the other aspect is the privatization of utilities, and self-moderation that these companies do.
In between is the credit rating system, which allows for pretty arbitrarily denying banking services to individuals.
Still, if you are paid in a regulated currency, you still have an option to use cash. An access to legal tender.
With something like Libra, a private corporation, with a horrible track record wrt complaints/customer service can vanish your money because a friend shared a picture on your "wall", or some other entirely arbitrary thing that leads to account suspension.
You don't have to go out of your way to purchase fertilizer, diesel and nails - you could do a million different completely innocent things and still be locked out of your money - with no real recourse - including a viable legal recourse.
Member banks of VISA can. Remember that VISA is a limited-liability partnership founded by banks.
So they literally cannot flag your bank details over such things?
Do you mean that visa employees can flag your account over personal reasons?
Unfortunately not. The problem is that only few people are affected by such problems. Privacy issues and unacceptable EULAs are similar, not enough people get actual problems with them, hence companies can get away with them.
This seems very likely to happen.
> One or two stories like that will kill Libra stone dead.
This seems sadly very unlikely to follow. I doubt even a "juvenile starved to death"- or "kid stranded because bus ticket purchase was denied"-story would put a dent in this project.
Don't get me wrong, I think it should, I just don't think it very likely.
With 1 billion users, a serious bug/pattern that affects 0.1% of the users - harms a 100 000 people.
But their voices still drown in the crowd, as far as I can tell.
This is basically what happens in real life too. There are people that cannot buy food because "they violated community standards". This Libra thing is totally aligned with the world!
So if I'm in the United States, and want to send some of my paycheck back to my family in Sudan so they could buy stuff, how could I do that with Libra?
And if it is not Facebook, it will be WeChat. Then you first have to send your Libra coins to a suitable exchange that will wire it to that neighbor.
Actually, many African countries have mobile money, so you won't wire it to a WeChat exchange but to a mobile money exchange [1].
Well, you can't. Sudan blocks access to Facebook (I was just there). A VPN mostly worked, but it was painful. Sudan is also cut off from the international money markets because they are on the list of 5 "bad" countries according to the US. No foreign bank cards function at all.
Extremely nice and welcoming people. Friendliest I have ever met on the entire planet, hands down.
They could try but they'll be doing so in the face of laws designed to combat money laundering and funding of terrorist organisations. This isn't remotely on the same level as what AirBnB were doing when they decided to flout local laws around rental properties.
>I think Zuckerberg has come (or already know) to the realization that these institutions "added value" is navigating the regulations/laws of the different countries.
That's what will likely make Libra a non-starter in most countries. Financial institutions have already invested significantly to ensure their business practices are compliant with both local and international law. They won't allow Facebook to start undermining that.
On the contrary, it's much easier than it has ever been in human history to send money across borders, mostly due to government regulation of international finance.
For the absurdly wealthy, such regulation is a major pain of course. But the thing about the absurdly wealthy is... they can afford to deal with major pains.
For the rest of the human race, the real question to ask about these non-governmental currencies is: would you rather have your money be regulated by your local government and the governments of those you wish to trade with, or would you rather have your money be regulated by Facebook? I find this a very easy question to answer, personally.
This is a false dichotomy: blockchain tech makes it clear that a third possibility is emerging - one which relies on no central authority at all, be it state or corporate.
What we know about economics seems to fly in the face of design decisions repeated again and again by cryptocurrency originators.
The popularity of deflationary economics (maximum coin counts, diminishing mining rewards) incentivizes economic rictus-- eternal hoarding and austerity-- when basically every central bank on Earth recognizes that a modest, predictable inflation rate helps to spur consumer demand and actual economic activity. This is not some conspiracy to undermine your gold sovereigns and silver dollars, it's a century of data in action.
Then you've got the tendency to stick to unsavoury communities. While some of this may be because they're the funding method of last resort for businesses that can't touch conventional payment systems (criminal or just radioactively controversial), there does seem to be an active prioritization of privacy, unreversibility, and immunity from regulation features, over features non-enthusiast consumers want like "easy cashin/out to fiat" and "fraud protection".
If you said "here's a shiny happy new tech product. It's not designed as a treatise on the gold standard, to spar with governments, or create some speculative investment. It's just about using 21st century technology to undercut the high margins of Visa, Mastercard, and Western Union", that would hit real needs. But it would be 1) hard to bootstrap because there would be no philosophically or investment motivated enthusiasts to evangelize for it and 2) likely very different in structure and operation than today's cryptocurrency products. It might not even be a blockchain-crypto product, and it might even be outright ran by a state agency.
Surely that wasn't necessary to popularize it. It could have been launched quietly and promoted in-app to the target audiences, and the furor from the press and various governments could have been largely avoided.
Was there a benefit gained that outweighed that cost? Or does Facebook drink its own kool aid so thoroughly that they simply didn't realize people would push back?
I think 1 and 2 could still be solved with traditional fiat since there’s not a hard requirement that ACH needs to be used. The fees are low enough with Transferwise that it’s probably not too much of a blocker for people to pay them.
Municipal regulations. Not federal and state laws with criminal penalties.
Wilfully breaching AML statute is arson to Uber’s parking tickets.
I'm sure Facebook would not be dumb enough to step in front of that train, but if they did, it would run them flat.
There's also a sort of 9/11 effect going on here. The reason the 9/11 hijackers pulled it off was that nobody expected them to use the planes as giant suicide bombs. Previous hijackings generally ended peacefully, so everybody just stayed chill. But that window of opportunity expired before they managed to crash the 4th plane. Now nobody's just going to sit quietly through a hijacking.
Similarly, I think the reason Uber and Airbnb got away with so much lawbreaking is that it was novel to have nominally respectable companies blatantly committing a wide variety of crimes. But these days, tech companies get a lot of suspicion. Regulators are not interesting in getting caught flat-footed again. And that was true 5 years ago; SF vigorously shut down a bunch of entrepreneurs that wanted to sell public parking spaces back to the public: https://www.govtech.com/transportation/SF-Demands-MonkeyPark...
Plus, taxi and hotel regulations are a very different situation than laws intended to prevent international money laundering, tax evasion, sanction breaking, or black market economies.
New York City shutting down Airbnb doesn't shut them down in the thousands of other cities they're active in. If Boise Idaho restricts Uber, that doesn't suddenly restrict them in Chicago.
The US Government has an entirely different kind of power and when it comes to protecting the global reserve currency, the one guarantee is that they will use it.
It sure would be a shame if FBI directors in charge of such an investigation were cheating on their wives or were illegally getting kickbacks from contractors. Would be absolutely inconceivable that Facebook might even leak that information to their friends at the CIA or NSA and call in a favor.
But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
> But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
A company as large as fb has the means to segregate application hardware. Hell, even smaller companies do this for liability reasons. If fb didn't it would be pretty lazy and ill conceived.
Facebook is dealing with different powers here.
I guess they could go for the remittances market, but that's really not where I see Facebook wanting to go.
The same might happen with money transfers, if Messenger becomes another WeChat, just outside of China.
From the legal perspective, could Facebook be like Coinbase, but with a single currency?
Are you able to provide references supporting your claim?
Edit: oddly enough, that hit wasn't the one where I read about it last week... But any page with sources works I suppose.
How does that support your claim?
Here is a picture, convince yourself: https://www.messengerpeople.com/wp-content/uploads/2019/07/w...
There is north america, a few african countries, france and a few eastern European countries and australia. The rest is practically WhatsApp except for china which is WeChat.
WhatsApp and Instagram have huge popularity outside of North America
I’ve used WhatsApp since before FB acquired them but this is sounding like it’s going to get turned into a clusterfuck of stuff I have no interest in.
Is it easy for an individual to set up like, a program to automatically do money transfers that way, in a for-profit way?
Because if so, that's pretty cool.
I mean, I understand that most people don't particularly want to do that, but I still think it could be cool to have it as an option.
US don't have sepa or psd-2
The UK financial regulators are not dumb and have thought this through.
[1] Specifically here are details of the emoney regulations if you're interested https://www.fca.org.uk/firms/electronic-money-payment-instit...
The UK financial regulators have already given the Electronic Money license to at least three crypto companies[1].
[1] https://cointelegraph.com/news/uk-watchdog-grants-third-e-mo...
But FB must be spending a lot on lobbying, and that should help them avoid any major surprises regarding enforcement actions.
That only helps them in countries like the US where bribery is legal.
On paper, by insistence of the regulators, as a condition of acquiring it, there is a limit on their relationships with Instagram too...
(by message I mean the internet has foiled politicians pretty much using "trusted" organizations as mouth pieces and revealed many for who they are and also prevented scandals and whistle blower stories from being buried or turned)
1. Same has been said of Bitcoin, and yet the government kinda embraced it.
2. Facebook is not making Libra. It is a non-profit based in Switzerland.
3. Libra is backed by USD-EUR-JPY and the related countries might turn a blind eye because of that.
edit: nice try Satoshi!
- Shut down all bitcoin exchanges hosted in the United States
- Make it illegal for banks, credit unions, and other commercial financial institutions to allow their clients to make transactions with a crypto exchange (regardless of the countries where the exchange is hosted), or a blockchain
The point is the government can severely hurt Bitcoin adoption by making it illegal, but it cannot completely shut it down.
1. Gov didn't embrace bitcoin, they regulated it. The exchanges have to do KYC and AML monitoring and report activity.
2. If you think FB doesn't 100% control it, I have a bridge to sell you.
3. This doesn't really mean much at the end of the day. It's a tactical decision with low impact on regulations.
What you're failing to appreciate is how important it is for governments to control their financial operations. They don't make it hard just to make it hard. They make it hard because if they don't criminal activity will flourish.
The thing is, money is an iou from the government. If people start using other ious, the influence and power of the government will fade. Result is that libra will control a country.
Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there.
What Facebook might know about someone is completely worthless when it comes to KYC. In the country I live there are even some government issued identity documents that won't cut it.
This comes as a surprise for companies like Facebook because they were once internet startups. They still see themselves as youthful and innovative. Wearing T-shirt or being casual may correlate with innovation, but there is no causality. The founder/CEO had success with one big idea that turned into success. What evidence there is that they can recognize and repeat the success multiple times?
They can successfully refine and expand their original idea and grow it, but their internally developed 'disruptions' are crap just like any random pitch.
Microsoft, Facebook, Apple, Google, Amazon buy new ideas, then use the economics of scale and network effects to make it success. Amazon has expanded the idea of internet retail from books to everything, including data centers. Apple finds success in design and branding competence. Google is still search and advertising company.
1. Are not incremental, or just leveraging existing business to obvious directions.
2. originated internally
3. turned into big profitable business.
But a few obvious massive innovations from both once established as large companies: Kindle, Alexa, AWS, iMac, iTunes, iPhone, iPad, Apple Watch. AWS alone is enough of a counterexample to make my point.
>Xerox PARC has been in large part responsible for such developments as laser printing, Ethernet, the modern personal computer, graphical user interface (GUI) and desktop paradigm, object-oriented programming, ubiquitous computing, electronic paper, amorphous silicon (a-Si) applications, the mouse and advancing very-large-scale integration (VLSI) for semiconductors.
See also iPhones, Waymo cars etc. I think the trick is to have one or two smart and focused people in charge of the innovation left largely to do their thing rather than committees and bureaucracy.
Waymo LLC is not profitable. R&D that loses money is very easy to accomplish.
I recently sold a synth on its Marketplace which I had never used before. Here in Mexico its extremely popular. If Facebook starts using Libra for payments and escrow without having to pay credit card or bank transfer fees it would make it much more popular than Bitcoin. At least for small transactions.
What Facebook lacks among Big Techs the most, is public trust.
In an era where anything from Big Techs are meticulously scrutinized, something that seems to aim to bypass government regulation is probably the last thing people want.
That may have been the original point of blockchain, but control over money is still a pretty political issue. Accordingly, anyone who creates or transacts currency, regardless if done by fiat or mathematics, will necessarily wade into local political and social restrictions.
Bitcoin is impressive technology and definitely brought a nice jab to government monetary control, but it does not seem to be able to deliver a knock-out. No government will give up control over monetary policy without a fight. If governments can't control bitcoin directly, they'll do so indirectly (making them difficult to cash-out, blocking IPs, straight-up making it illegal).
It's yet another example of tech's beautifully orchestrated high-minded ideals, that come crashing down when they meet real power and reality.
My worry is that this teaches tech companies even more that they should get into politics, because that is the only way to enact their vision.
I like the idea that money transfers shouldn't cost essentially anything and should be instant. I think it's a shame that we don't already have that, but I'm just worried that this will give too much power to companies like FB.
The fuss is that even if Facebook fully decentralizes Libra, they'll probably own an undisclosed amount of it. One entity starting with most of the wealth defeats the purpose of decentralization.
Libra is meant to hold an fiat backing balance by users putting money in. Facebook gets to reap 100% of the interest on said fiat with no money going to users, ever. They document it as such in their "whitepaper".
It's basically a scheme to create serfs.
Something funny happens when the monetary contribution from a company to a country/government moves from millions to billions. It changes from a potential bribe that people want to keep quiet about to an investment that people want to boast about. And yet it's trivial to siphon between 10-70% of that "investment" into private pockets depending on the country.
Proxies too. Teenagers install proxy modules on their own phones and APs all the time across the globe. This “illegal crypto” is simple a series of mathematical algorithms.
You cannot truly “ban” math.
The best outcome here is that Libra doesn't launch at all in any capacity.
That’s an extreme and reductionist position - and I feel it’s an incorrect position.
The state does not have a monopoly on violence - certainly not in practice, and in most democracies today the state is expressly forbidden from using any kind of physical force (domestically, at least) excepting emergencies (e.g. police shootouts). Corporations /can/ be just as bad: look at brutal Fortune 500-sponsored union-suppression in South America happening today, for example.
Expect for very few exceptions like defending your home , self defence etc, you are even not allowed even show force let alone act violently.
State does not need to use violence in stable democracies they just have make sure ppl know they can to get everyone in line.
Also violence is not always physical. Threatening incarceration/ social humiliation / jail time for parole violations/ job loss and other economic harm etc is common tactic law enforcement employ to get cooperation. Finally the state also offers the candy of lower jail time reduced charges and assorted other incentives for cooperation all of it beneficial because of the harm associated with the alternatives.
I don't find the phrase all that compelling. What is legal in a given place is based upon the strongest coalition of people that cares about that place. When speaking at this level of social organization its basically might makes right. A state with no police and no military has a monopoly on nothing.
You can have your Jennifer Government, I'll keep the real thing.
Which governments? Libra doesn’t benefit any government.
While Libra is a “real” cryptocurrency (distributed, any user can exchange, etc) as opposed to schemes like Beenz, it’s closer to company scrip than to Bitcoin’s model of “digital gold”.
Also - despite all the white-papers and hired evangelists - Facebook would still de-facto control Libra: not directly, of course - but they’d control the specification and the reference implementation - which means they’d control the consensus system that underpins distributed cryptocurrencies - so if they want to switch to adopting a proof-of-stake system (i.e. good for whales and hoarders) or intentionally introducing a backdoor’d cryptography scheme - or even adding address blacklisting.
That last part is probably the most important: I imagine most governments (especially western ones) really want address blacklisting: it provides a Libra with an equivalent of today’s bank account seizures - and it’s easy to ask for: you don’t want to be seen allowing terrorists, money-launderers and CP porn sellers to keep hold of their money.
Finally, Facebook does not have a substantial corporate presence in every country - which means that governments without the ability to sue or prosecute FB for malfeasance probably /don’t/ want to endorse anything FB does.
You need another human to make use of any kind of money. This human will be subject to some governments regulations, so it's entirely possible to implement some form of address blacklisting (in the form of some "due diligence" requirement when receiving money) without a technical solution. No cryptocurrency can escape government control.
Excuse me, popular with whom?
I don’t understand how is that valuable? If that’s valuable then all companies with bad press would increase their valuations. Unlike the popular saying there’s actually such thing as “bad press”.
If done, Libra would have been the common interest of all those actors. That was the goal of the project.
It might lite a fire under goverments to take some action and create a proper crypto currency at the state or maybe even EU level for example, it's time.
Just try to run a business and take online payments via credit card, using something like Stripe for example. Literally near 8 to 10% of your transactions will FAIL, just like that.
Customers that want to pay you and their card fails a huge percentage of times, preventing you from gaining recurring customers.
The current credit card system is a mess, its a thing of the past sorely needing competition. It's ready to be disrupted by the next big thing and if its Facebook Libra, I'll take it.
What do they want to achieve without military and police power anyway?
[0]https://www.statista.com/statistics/264810/number-of-monthly...
The negative press cycle they got over the past year was quite public, not in a bubble.
> On the other side of equation there are over 2 billions [0] of users, users who WILL GLADLY USE this cryptocurrency if/when it becomes available.
In what world does a Facebook user = someone who wants crypto? Most people don't even know what it is, let alone trust it enough to put real money into it. Reminder, most Facebook users don't even have a payment method associated to their account because Facebook is free. That barrier alone is big. Then you have people that know crypto from last year and that it's a risky investment that doesn't make any sense and crashes. Again, what Facebook user thinks they need Libra?