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Comment by csomar | Hacker News Reader

Here are some wild predictions I'm making

+ 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.

View on HN

">If Libra ignored these rules..."

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.

Honestly from an industrial / historical perspective, they are trying to enter a game of a whole other level than anything social-media or ad-related can ever touch. I don't know how they can win using the same strategy (disingenuosity, cheeky attitude, etc) than they used so far. It just won't fly in that space. Even bitcoin et al. look more serious by comparison, by a mile, and that's saying a lot.

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 don't know what Libra's plans are but couldn't Facebook make their own Paypal? What would really be the difference?

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?

Nothing prevents them from building PayPal, except the regulatory regime they don't want to ascribe to. Also, the currency conversion to their own units and back relates to the taxability of said currency and the inability to use WoW gold to buy Starbucks. It is a matter of degrees - Facebook could seriously destabilize monetary policy for certain countries and subvert currency controls.

Apple and Google are still dealing with merchant fees. So is PayPal for many transactions.

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.

Crypto seems like it's (at the moment) neither low cost nor low friction; did I misunderstand you?

Nope, no misunderstanding, you're right! But the promise of crypto is cheap frictionless transactions. We're a long way off.

Understood. Yes, it will probably get there eventually.

Trasferring or requesting lumens on keybase is incredibly easy and very cheap. Turning the lumens into fiat and vice versa isn't so easy at present.

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.

> Paypal also dodges issues of "being a bank" (...)

AFAIK Paypal is a bank in the EU.

Oh, that's right. They got a banking license in one of the EU countries, which allows it to operate as such throughout the EU. If that move was necessary to operate as they do withing the EU, i.e., if they cannot simply be money stores without being a bank even if they're not using fractional reserve, then Facebook too would need to register as such.

Yes. Fully licensed Bank in Luxembourg. No branches though.

So, what stops Facebook from trying to push Libra everywhere and then bowing out in the countries it doesn't take hold in? I doubt that many developing countries would be able to shut the door on them. It might even be a boon for those developing countries, because it could enable trade between them without some heavy fees in converting currency.

Any developing country can do the same as the US: prohibit their own banks from processing transaction to/from Libra. If the US decided not to make such a move, then users in those other countries could probably find work arounds, but it would increase the barriers of entry & probably adoption rates. And the larger adoption rates became, the easier it would be to shutdown major on-ramps & off-ramps from the currency.

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.

https://news.ycombinator.com/item?id=21161233

Well, they would have to do what PayPal did, which is build 1. A system that is acceptable by the regulations of any possible country they want to operate in. 2. Implemented by as many merchants as PayPal is.

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.

> The "crypto" part seems like an implementation detail but otherwise irrelevant.

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.

Yeah, there's no reason they need crypto to offer some type of scrip that is backed by a basket of currencies in the same way... what does crypto really add to this situation? Blockchain transparency? Frankly I don't want all of my transactions transparently available.

> This is one area where Facebook will need to finesse their way through

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."

I'd need some expansion on the statement that media is government controlled. Yes, they are beholden to what the government is willing to tell them, but investigative reporting often digs up more. I have a hard time believing they're government controlled when at any given time, the government in power is faced with a large media segment that is biased against their political agenda.

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 have a hard time believing they're government controlled

I'm sure they [1] No longer have any ties ;). Hey, why would Bush lie about this?!?

[1] https://en.wikipedia.org/wiki/Operation_Mockingbird

it'll be a success

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.

It’s all speculation but I wouldn’t be so sure about some negative press killing Libra. Thinking of another large platform where an algorithm determined a driver safe and then they perform a sexual assault on one of their passengers, it gets tons of press, still has millions of users... Example: https://money.cnn.com/2018/04/30/technology/uber-driver-sexu...

Very correct, bad results or user experience would unfortunately not have any effect if it is not a systemic problem that the great mass of users experiences. Google services also are still successful and used by billions even though google has a track record of terminating accounts at random...

You're comparing oranges to apples here. I really don't see how Facebook potentially refusing access to their platforms for obscures reasons can be compared to an employee of a platform committing sexual assault.

> 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

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.

> 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.

This isn't quite correct. At Monzo (and thus I assume other banks in the UK as well) you won't be sanctioned until a human being had reviewed your case history.

Ive had similar thoughts about paypal for a long time after they randomly shut down one of my accounts for unspecified suspicious activity and was doing everything possible to not deal with it and fix their mistake. And I know I wasn't the only one either. And yet it still survives to this day.

What's more, I know plenty of people who hold unsavory views of PayPal... but still use Venmo.

I'm one of them.

Likely because these types of anecdotal accounts get no press coverage.

My favourite thing is how they wait for you to put money in and then lock your account for ID verification/adding a bank account. They know that 99% of people would just exit the site if they had to verify on registration, so they wait until you get paid, holding your money hostage so you have no choice but to verify or lose the money. Skrill is the worst, their ID verification is all automated, wonder if they deleted my $900 yet after 2 years because i just couldn't be bothered sending ID for a 5th time.

>Imagine being unable to buy food because an algorithm determined that “you violated our community standards” and there’s no way to contact 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)

This is why I'm against a cacheless society as it becomes too easy to lock someone out of society, being it a bug, algorithm, network downtime, or abuse. And for the platform to automatically draw money for arbitrary reasons like fees or because you forgot to push some buttons in their web interface. And then you have to pay a percentage in all transactions and probably also a monthly fee. And the platform will keep drawing money putting your account into negative.

cashless doesn’t mean always online.

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.

Happened to me too, over weekend, when I shop online and my bank thinks there is something suspicious, they freeze the transaction (not block it), text me a Y/N question with the merchant&amount, and if I reply fast enough, it goes through. Otherwise the vendor cancels the request and I can 5mins later try again, and this time it goes through.

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.

Your card isn't your account, just an avenue to getting at the money in your account, so it's not quite the same. I can go into a bank branch, or log into online banking and still access my money. I can also go into a branch or phone my bank and get my card unblocked.

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.

Why would Facebook not have the same level of support as a bank, when they launch Libra? Doesnt seem to be a strong argument.

probably because we have precedent of social media companies not bothering with that level of support/intentionally avoiding having to provide proper support. There's no reason to assume Facebook will change that either.

Well in France I can tell you that bank services are a big joke, no one ever called me when my card was blocked, worst, most of the time they don't even know why the card doesn't work. Happened to me on multiple occasions with different banks in different regions in France.

And if you dare pointing out how incompetent they are they'll just close you account and leave you in the wild.

PayPal has so many horror stories of locking thousands of dollars from its users for "violating terms of use" and no one seems to bat an eye. They are as big as ever.

>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.

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.

You're not in general paid in "visa". You either have a bank account and can withdraw cash, or you can get paid in cash. Now,if you're paid into your libra account (or indeed PayPal account, Apple pay, Google whatever) - then you're indeed at the whim of those companies use policies.

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).

> You're not in general paid in "visa". You either have a bank account and can withdraw cash, or you can get paid in cash.

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.

Now, there are separate issues here - the limit of banking for "bad actors" (terrorists, hate speech, democracy activists...).

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.

> Visa won't stop your card over a nude Pic on Facebook

Member banks of VISA can. Remember that VISA is a limited-liability partnership founded by banks.

They don't have access to your not-world-public Facebook posts, or flagged posts?

So they literally cannot flag your bank details over such things?

Do you mean that visa employees can flag your account over personal reasons?

> One or two stories like that will kill Libra stone dead.

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.

> Imagine being unable to buy food because an algorithm determined that “you violated our community standards” and there’s no way to contact 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.

To be honest, I think the same people, who ignore how corrupt and criminal Facebook is and has been for a long time, will be the people, who don't give a damn about whether someone cannot buy food. They just don't want to see it and want to keep going on in their comfort zone and not care about the consequences for others. So I think I have to disagree here, that this would be the nail in the coffin for Libra. I kid you not, there are still people out there, who did not hear or read about all the data scandals Facebook had and who still think it is all well and good and Mr. Zuckerberg is an idol for these kind.

You made so many assumptions about other people. And seemingly are making yourself out to be vastly morally superior to the people you grouped together.

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!

> Why would anybody use Western Union if they can send money through their Facebook for less or no fees?

Because Western Union accepts and delivers cash. Western Union exists for the much the same reason payday lenders exist--to service the cash economy.

>+ Facebook/Zuckerberg will defy the gov.s and launch Libra.

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.

> Sending money across "borders" is hard only because governments made it so

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.

> 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?

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.

The third option, despite not having a "central authority" seems to have been widely hijacked.

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.

Either Zuckberg has a geeky naive understanding of financial institutions to think this will go easily, or he is ready to use blackmail material.

Libra is something I wish we fight to the death.

What is so hateful about Libra when compared with the People Bank of China's digital currency project? When that is launched, any non-chinese can hold digital yuan without a bank account.

Wouldn't the west want something equivalent for geopolitical reasons?

Bank of China is not a private company it's run by the Chinese government. Facebook is not the US government.

I don't trust Facebook, but the Chinese government aren't exactly a shining paragon of virtue either.

As a "westerner" please explain me why I would want a private american company that has been known to neglect their responsibilities to wield geopolitical power?

I don't think any of this is desirable. For me, it's similar to digital voting, I have strong technical concerns with crypto currencies. The cryptography behind them or the implementations will be broken. People claim that it's different now than it used to be. Every cryptographic system of the past has been broken, but now we have the computing power to make them future proof. There are no mathematical proofs for this assertion and there is no reason to believe it when you take into account the history of cryptography. Moreover, for some reasons the security margins in public cryptography tend to be far too low. I'd be surprised if many existing crypto currencies are even "quantum proof" yet - but attacks with quantum computers will likely be feasible in 10 - 20 years, if they aren't already for some state actors.

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.

how is this different than getting a bank mainframe hacked?

It's a difference of scale. A single bank is less likely to drag down a whole economy and might even be insured against certain types of losses due to criminal activities. In contrast to this, if the value of a whole currency is destroyed over night, then the consequences are way more severe. Bear in mind that currency speculations and transactions can even get traditional currencies into trouble, see e.g. what happened in Argentinia.

I know what is the PCC's ideology. And it is socially more acceptable to dislike it than to boycott Facebook.

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.

> 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.

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?

I would assume that there will be a neighbor who offers a money service to the village. He will have a Libra account. No need to drive to the next big city. Your family can go to that person who they trust and he will hand out the money.

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].

[1] https://en.wikipedia.org/wiki/African_MobileMoney

> 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?

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.

There's so many ways beyond Western Union already to avoid exorbitant fees, one example is TransferWise. While a very broad use case I'm not sold given the existing competition that FB has anything super unique or compelling when just restricted to the cross border money transfer space.

+1 for the first and second points, but I think it will play out much differently.

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.

Nobody actually uses bitcoin in the US for anything besides investment speculation and really rare toy applications. It isn't being seen as a threat to anybody's central bank, because for all its enthusiasts and speculators, it hasn't developed into any sort of competition for the existing financial system unless you are doing something really illicit.

> unless you are doing something really illicit.

Actually I wonder if the intelligence agencies of the world like the cryptocurrencies because it lets them find illicit activity more easily.

Nothing like an indestructible globally replicated register of your transactions to help make yourself discoverable

Wasabi and other modern bitcoin wallets run over Tor and have built-in features (like CoinJoin, coin control, etc.) to defeat blockchain analysis companies: https://docs.wasabiwallet.io/why-wasabi/

There are also decentralized, Tor-encrypted exchanges to buy and sell bitcoin like Bisq: https://bisq.network/.

Either it works and you'll find it impossible to defend legalizing cryptocurrencies with money-laundering-as-a-service in front of Congress, or it doesn't work and prosecutors will slap money laundering charges on top of any crime that matters and you'll have a lot more difficult time defending yourself and your intent when you go to such lengths to hide your financial transactions.

> Either it works and you'll find it impossible to defend legalizing cryptocurrencies with money-laundering-as-a-service in front of Congress, or it doesn't work and prosecutors will slap money laundering charges on top of any crime that matters and you'll have a lot more difficult time defending yourself and your intent when you go to such lengths to hide your financial transactions.

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's been a little over 10 years since the first bitcoins were mined and today's market cap is $147,490,754,701. Given that there are now bitcoin investment products like ETFs, some folks have a portion of their 401k's invested in bitcoin.

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.

Bitcoins are valued 40 billion dollars right now, it's less that the net worth of Larry Page and less that the GDP of Myanmar, one of the poorest countries in the world.

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.

> 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?

Also, most people who have considerable wealth in bitcoin has them in a multi signature wallet, like a 3 of 5—spending the money requires the use of 3 of the 5 authorized private keys.

You’re missing a digit—it’s $140+ billion, not $40 billion.

> 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.

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 will stomp on them

The SEC is a civil agency. Launching something like this naked would garner state and federal prosecutors’ interests.

Sure Crypto backed by a particular company might not happen, but I don’t see BTC and similar P2P blockchain currencies going anywhere. It’s about as easy to stop as digital piracy, which is to say in other words physically impossible to regulate.

The US has a tremendous amount of power in the world financial system. If they want to inhibit crypto currencies, they can make it illegal to use credit cards to buy them, illegal for US banks to transfer to or from an exchange, and illegal for US banks to deal with any bank in any country that allows such activity, or any bank that deals with another bank that allows it.

It was illegal to privately own actual gold anywhere in the world as a US citizen between 1933 and 1975. That's absolutely an approach they could take.

Well, that depends. You could have gold teeth, and jewelry, so if you were really determined... though having all your teeth hollowed out and filled with gold doesn't strike me at scalable strategy, at least not unless you have a lot of kids. But all that was also only because we were on the gold standard. Which, contrary to gold-bug belief, wasn't immune from currency manipulation. The US government arbitrarily increased the value from about $20/ounce to about $30/ounce at on point, making the government suddenly richer in a way not much different than printing more money in today's fiat system.

They can't make it illegal to work for cryptocurrencies. Or to spend them for digital services like content, anonymous server hosting, or paying people for work. It's just not possible without destroying cryptography itself

Corroborating ineedausername, Wikileaks seemed like they were unstoppable defying governments and all. Then, they said they were about to humiliate one of the U.S.'s most powerful banks. Then, Mastercard, Visa, and Paypal cut off all donations to them. Then, Wikileaks started dying off.

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.

Exactly. Imagine MasterCard and Visa blocking Facebook the merchant so advertisers can no longer pay Facebook. I'm sure Facebook will drop Libra like a hot potato.

In short, governments are the real crooks.

I just checked and wikileaks.org is still alive and well. In fact a few years ago I donated crypto to them as a middle finger to the payment processors. Wikileaks is a perfect example of why banking regulations are ineffective when people can simply bypass said payment processors with crypto.

You don't have to stop the blockchain. You just have to prevent the tokens from being exchanged for dollars which is a lot easier.

This would have the singular affect of forcing the entire cryptocurrency ecosystem into the black market, where it would thrive alive and well. Likely doing more harm than good in the process by fueling violent cartels to wreak havoc, as is still happening with the war on some drugs

That makes no sense, cryptocurrencies are already being used for illegal purposes.

It does make sense. There's a difference between say 50% of all crypto transactions being black market ones and 100% of them being so, and I don't think the 100 would be the same size as the 50 is now, in other words some of the legal trade would for sure move into the black market.

I don't get the point

Cryptocurrency ecosystem is already out of the regulations and mostly a black market

Not really, Coinbase is pretty big and perfectly legal.

What about cash though? Isn't that stuff used for black market?

A good number of countries will outright ban it for fear of the US governments control (warranted or not).

> Congress isn't going to give that power away to Facebook

I would say that Congress shouldn’t give that power to Facebook. Congress isn’t very good at doing anything lately.

Lately?

I tend to agree, the biggest concern here is the goverment will create overly broad legislation with the only purpose of leveraging it against truly decentralized cryptocurrencies

Cryptocurrency enthusiasts (and... Facebook) are actively inviting legislative overreaction with their actions.

Don't poke the bear.

Much.

Libra is meant to be the m-pesa of the world. It is funny that the US government and CIA haven’t figured out how much Libra will offer US hegemony. At some point Sandberg will explain it to the political dopes and Libra will happen. That day is not today.

I don’t have time to explain this comment, but I am probably missing something in my thinking.

And that's exactly why it would be regulated by other countries. Like France who announced it would block it and then also talked Germany into doing the same.

That's why EU is moving

US has never been weaker in the recent history, nobody helps the old lion.

The U.S. government will be very pleased that Facebook have circumvented all their anti-money laundering safeguards. So will entire nation states. Nothing could possibly go wrong.

I wonder why they chose to trumpet Libra with a big announcement and all this rhetoric implying it would be a major competitor to fiat currency.

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?

Transferring money across borders has already been mostly disrupted by Tansferwise. Fees for that are about 10% of what WU charges. Granted there is still some room for improvement there since 1. Transferwise uses ACH so it takes a couple days and 2. Not everyone in poorer counties has easy access to a bank account or even a bank (with WU you can literally set up a stall on the side of the road and people can send and receive money).

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.

If that happens, facebook will be attacked from all sides (including states) and loose.

Normally I'd say that "[thing] but with no regard for the law" isn't a viable business model, but several startups have already proved me wrong.

Let me add: + Big act of terrorism found to be financed through siphoning funds via Libra, sidestepping worldwide regulatory frameworks. Bot Zuck Mark V walks into Congress, says he will look into it, nothing happens as said Congressmen used Libra to shift funds offshore to Panamá accounts...

Negative press hurt Facebook only slightly and mostly in the west. In Asia and Africa Facebook is still the internet.

One of the drivers for the regulation is simply that the government is concerned about getting their piece of the pie. The regulatory fight will be interesting to watch, but I'm more interested in how Libra is going to affect the field of cryptocurrencies as a whole.

I think the partners are all realizing the last thing they want to be involved in is a project with banking regulations / consequences and a partner that so far has thumbed its nose at government oversight.

> 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.

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?

The goal of Libra was not really to compete with Western Union. It was more to compete with real cryptocurrencies like Bitcoin, Ethereum, Monero, etc. and it wasn't just Facebook's idea. PayPal, Visa etc. know that real cryptocurrencies are eventually going to put them out of business. That's why they joined in on this fake cryptocurrency.

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.

It's way more complex than that. Pretty much everyone in government and the crypto space doesn't want Libra to succeed under it's current stewardship. The implications are very far reaching. Also, there isn't a single cryptocurrency today that can't be tracked, even ones like Monero.

Also, there isn't a single cryptocurrency today that can't be tracked, even ones like Monero.

Really?

Can be, yes. Through combining network and non-network meta-data. If anyone actually has the desire to do so is another question entirely, but I wouldn't be surprised if certain state-level agencies have already begun to compile such data.

>Also, there isn't a single cryptocurrency today that can't be tracked, even ones like Monero.

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.

ZCash?

Yes.

> Also, there isn't a single cryptocurrency today that can't be tracked, even ones like Monero.

Look up PirateChain.

Can still be tracked in the same way other zero knowledge proof cryptos can be.

> PayPal, Visa etc. know that real cryptocurrencies are eventually going to put them out of business.

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.

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