This is the part where they reveal how they plan to negotiate with regulators:
"At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement"
In other words: let us do Libra and we'll help you win the war on cash.
The biggest blow on privacy in the world's history, brought to you buy Facebook.
There has never in all of history been totalitarianism like what is possible now. We are building the technical infrastructure for our own total enslavement.
Of course it makes me wonder if this is just history repeating in some sense. People came to the new world in part to flee European monarchist tyrannies. Now people will go to space to flee the Earth technocracy.
> There has never in all of history been totalitarianism like what is possible now. We are building the technical infrastructure for our own total enslavement.
This is one of the primary reasons that I'm planning an exit from software development. I see most of what we do as being a useless waste, and at worst we're building our own enslavement. I'm fortunate to be working on something harmlessly entertaining, but I want to exit all together and start a business that will actually help people.
The unbounding optimism of technologists is pretty disturbing. We can see for ourselves how tyrannical those at the top of our industry can get, yet we are easily chatteled into helping them because of the paycheck and the prestige. It should become less socially acceptable for us to assist tech zealots who want to involve data warehousing technology and AI into every single problem and facet the world is facing.
Getting to America in the 1500s and 1600s was very expensive and came with a high risk of death. I'm not sure how it would compare to a ride on SpaceX's upcoming Starship but it was definitely tough. People found all kinds of ways to finagle or mortgage (e.g. indenture) a voyage. Eventually the price dropped of course.
Not to defend them, but this is exactly what happens to all non cash transactions. Which you kind of have to do to with any sizeable quantity of money (say over 100k) for practical reasons, like theft.
"all non cash transactions. Which you kind of have to do to with any sizeable quantity of money (say over 100k)"
Sort of related, in the Netherlands, we will soon (2 years or so) have a ban on cash transaction of more than 3000 euros. Not to one-up, just saying that it's happening. To be fair, I contribute to this by doing pretty much all payments electronically. Just like I contribute to local bookstores disappearing by buying from Amazon, although I claim to like local bookstores.
Interesting; I believe the creation of the 500 bill was at the request of Germany. This is the second visible 'give in' from Germany after not getting their candidate at the head of the ECB. Makes you wonder what they have traded this for.
True. This is exactly the problem with non cash transactions. Every single transaction, no matter how small, is recorded forever and shared with several governments and secret services.
I never signed up for this.
This is why we need cash and why they are fighting it.
Another question on my mind (again, just my random thoughts, not representing others) is: How could this be used to undermine countries economies who are possibly earmarked for regime change by a company with strong ties to the US State Department affect the current geopolitical landscape...especially when some "developing nations" populations literally see Facebook as the Internet?
Same as Trump's (and his predecessors) financial blacklists. Huawei CFO is prosecuted and currently in home arrest in Canada awaiting extradition to the US for allegedly bypassing sanctions on Iran.
In simpler words: another US-domiciled lever that can be switched to the off position.
> Huawei CFO is prosecuted and currently in home arrest in Canada awaiting extradition to the US for allegedly bypassing sanctions on Iran.
Huawei's CFO is currently on "house arrest" in a $10 million dollar estate in one of Vancouver's best neighborhoods, but free to move about the city so long as she's accompanied by a minder. As contrasted with the Canadians that China has kidnapped in retaliation and remain in secret prisons 8 months later with limited consular services. [1]
She's under arrest for wire fraud because to be extradited from Canada you have to have committed what would be a crime in Canada, and violating US sanctions is not a crime in Canada. She is not awaiting extradition, the trial hasn't happened yet, and she may well not be extradited if this is in fact primarily case of US extraterritoriality. One of her best arguments, per usual, is Trump's comments on the whole situation.
The problem with cash is that it prohibits sensible monetary policy in certain situations (i.e. negative interest rates). So instead of cash we would need anonymous physical (and digital) tokens whose value is not fixed, but is adjusted according to the interest rates.
I guess main problem is that to a very good approximation nobody wants these. Generally, the ones understanding monetary policy don't understand the need for privacy and the ones understanding need for privacy don't understand the need for negative rates and the rest don't care.
> So instead of cash we would need anonymous physical (and digital) tokens whose value is not fixed, but is adjusted according to the interest rates.
So what you want is... cash. But cash from a separate currency. This is identical to what we had here in Brazil in the 90s during the Plano Real transition: the cash everyone had was in the Cruzeiro Real currency, but all the prices were denominate in URV (a "virtual" currency, which months later became a real currency called Real). The Cruzeiro Real was suffering from inflation at the time, but the URV was stable, so to buy something with a price of 1 URV you might pay CR$ 864,14 one week and CR$ 1004,68 the next week (source for these values: https://pt.wikipedia.org/wiki/Unidade_real_de_valor).
The reason they are fighting it is because cash transactions are mostly transactions which will not be reported for taxes. When Greece implemented capital controls in 2015 the country's tax income skyrocketed because everyone started using debit cards.
This is exactly how all cryptocurrencies already are allowed to operate. Any domestic crypto exchange has to do KYC, but also cooperate with the IRS. With most cryptocurrencies, transactions are public and traceable.
That's why the whole money laundering issue comes up in the first place, because Libra is a cryptocurrency much like many others.
Its distinction is really that it's not decentralized (like Ripple), that it's backed by real assets (like Tether - supposedly) and that Facebook and some other big corps are involved.
Those are all reasons for crypto-idealists to hate on it and spread FUD, which the Facebook-hating rest of the interest readily gobbles up.
In practice, those are all reasons for Libra to actually work as a means of exchange, as opposed to a highly speculative risk asset. Ripple transactions are instant. Tether price is stable, despite its sketchy background. Big corporations can influence points-of-sale.
Ripple (or rather XRP, which I referred to as "Ripple") is widely referred to as cryptocurrency. It uses a distributed ledger and cryptography, like a cryptocurrency. It is traded on cryptocurrency exchanges and can be sent/received like a cryptocurrency (requiring no account registration like Paypal). Also, like most cryptocurrency it is backed by nothing and its price fluctuates and moves along with broader cryptocurrency market trends. For most intents and purposes, it is a cryptocurrency.
Of course one can make the distinction that a "true" cryptocurrency should be fully decentralized, but that's besides my point.
If it is not decentralised it defies the whole point of the solution. You then don't need a distributed decentralised network of independent transaction validators aka miners. You don't need any blockchain solution for it all. You can as well stick with MySQL and call it PayPal v2. Paypal also uses a lot of "cryptography" in its solutions but it doesn't make it a cryptocurrency. How many validation nodes are there in ripple? Less than a hundred. Can someone with bad intention and CPU power overtake it? No. It is a payment solution that is using parts of bitcoin ideas for no reason, really, rather than making quick cash on the hype.
Fundamentally I think both XRP and Bitcoin are equally worthless tokens with little practical use. However, XRP at least doesn't waste a huge amount of electricity in the process of sending those tokens around - and it does so instantly. That's a consequence of not being fully decentralized and trustless. Another consequence is that it isn't vulnerable to a 51% attack or a 33% attack.
Of course the market says both of these tokens are worth billions in market cap. It treats it exactly like a cryptocurrency, feeding on the cryptocurrency hype. Clearly the market doesn't value decentralization to the point where XRP is shunned.
Of course it is instant - any centralised payment solution is instant as they live in a a zoo rather than a jungle. That's what I'm saying, Ripple looks like a duck but is not a duck, it has some features of a cryptocurrency but lacks the core one - decentralisation. Also its blockchain is screwed - initial 30k transaction or so are lost. And on a personal level I dislike this company as I was constantly removed from their channels asking why their escrow in 2017 hold more coins than their total supply. They couldn't even get it right. D. Schwartz is probably a decent programmer, and I sort of admire how they became rich by building a lame replica of an expensive watch (bitcoin) - I read all of his posts on bitcoin stackexchange some time ago while learning about the industry...
XRP (or Libra) has decentralization, just not in a form that is accessible to the general public, because that brings in all sorts of other issues.
If you look at how we generally solve problems in the world, the idea that the untrusted general public should be involved as a matter of principle is ludicrous, because that requires significant defenses against bad actors at multiple levels.
Bitcoin didn't even solve this problem, it just raised the economic barrier for bad actors to cause trouble. In practice, many smaller cryptocurrencies are highly vulnerable to 51% attacks, but even Bitcoin mining power is highly centralized to a few companies.
I think the way XRP or Libra solve things (in principle) has very strong arguments going for it, but they are pragmatic, not idealistic. I haven't heard any good arguments on how the way Bitcoin solves things is so beneficial that it becomes a worthwhile tradeoff. I don't see why it should be the defining factor on what is or isn't considered a cryptocurrency.
"Otherwise, Libra can be used "anonymously" just like Bitcoin. You download a client, you generate an identity and then you can receive/send it."
Bitcoin can be used anonymously if you avoid KYC on/off ramps and specific transactions tied to your identity.
Hard but possible.
From Libra's white paper this appears impossible.
That's a big difference.
> From Libra's white paper this appears impossible.
How so? Can you be specific? I quote the whitepaper:
"The Libra Blockchain is pseudonymous and allows users to hold one or more addresses that are not linked to their real-world identity."
The only difference that I see is that you could mine Bitcoin anonymously. You could also buy Bitcoin with cash in a private transaction, but the same can be said for Libra.
Otherwise we end up with cash that only outlaws use:
"His total assets were quickly converted to New Yen, a fat sheaf of the old paper currency
that circulated endlessly through the closed circuit of the world's black markets like the
seashells of the Trobriand islanders. It was difficult to transact legitimate business with
cash in the Sprawl; in Japan, it was already illegal."
Hey remember how the press has been pushing for total control of money and transactions? Under the guise of fighting money laundry?
This is what you get. How do you like the "deprecation of cash" now?
Don't worry, the million/billionaires will still put their money on real estate or other places where there are convenient exceptions for it, make no mistake.
I'm asking this in all seriousness. Why would anyone want to use Libra?
Let's say a consumer wants to buy something. They can either pay with "normal" money in one step or they can use their phone to convert their money into Libra and then make the purchase with Libra. Why would they go through the extra step(s)? Am I to believe that the benefit is "lower transaction fees"? Because if so, Libra doesn't have a chance. Only vendors, not customers, see those fees directly. Even if the customers did see them, they aren't big enough to sway the inertia of the way things are.
In the real world, the vast majority cares very little about things like decentralization. They don't care about how the banking system works and who controls the flow of money. They want to swipe their card and get what they want. Anything more than that is just an obstacle. At least BTC has the benefits of pseudo-anonymity and speculative appreciation. Libra has neither.
Beyond all of this, people like to have control over their money. To feel they have control, people need to have understanding. Paper is easy to understand. Cryptocurrency makes people nervous. Facebook REALLY makes people nervous. Put the two together and it will feel like a big risk to users.
I'm an open minded guy, but I don't see it. Someone please enlighten me as to why this won't be Facebook's biggest failure. Why would anyone want to use Libra?
There are millions of people around the world that are unbanked. Especially in 3rd world countries, they get on the internet by buying the cheapest possible smartphone and data with cash. I was just in the Philippines, and I saw places selling access to only Facebook and WhatsApp, in increments of 30MB of data, for cash.
The problem for Facebook is that these people can't buy anything online, because they don't have a bank account. If Libra launches successfully and remains stable, those same places selling X MB of data for cash, could easily start selling Libra too.
That's what so many people here are missing. Facebook isn't targeting this at people who have credit cards, Paypal accounts, and know what Bitcoin is, they're targeting the day laborer in a rural, 3rd world country, who might be enticed to part with some of their spending money for some Chinese plastic trinket that they never could have bought before, because none of the few stores in a 100 mile radius stock stuff like that.
> If Libra launches successfully and remains stable, those same places selling X MB of data for cash, could easily start selling Libra too.
Why couldn’t they sell prepaid Visa cards, or Venmo/PayPal (or whatever is the local equivalent) top-ups?
I get that having access to brokers that will sell a globally recognized hard currency for local cash is super useful, especially if it’s in electronic form.
I don’t get why it’s useful for it to be a blockchain, or why Facebook is the most likely company to run it successfully. When I ask people this the answer seems to be some hand-waving about regulation, but if this is hard for Venmo and PayPal to offer because of regulation, why would throwing around the word “blockchain” magically make it any easier for Facebook?
Selling prepaid visas misses the point. The issue is not that those in poverty in developing nations can't spend their money. The issue is that they can't receive my money. It's more important that I can buy a lot of Libra and hire them, and they can cash out or use it directly.
I tried using a pre-paid card to buy something online a few years back: it didn't work, was specifically declined for being a pre-paid card (I don't recall what it was I was trying to purchase, but perhaps that may have some bearing on why it was declined if the reason was they don't want to sell certain things to potentially anonymous persons).
The fact that they don't have a "bank account" in a traditional sense doesn't mean that they can't do what they want to do - transfer money to each other and make purchases using other means. The "bank the unbanked" idea that crypto-shills like so much only works for people who know nothing about these "3rd world countries".
They can't buy online, and so no one is advertising to them yet they are heavily using the Facebook platform. Facebook is trying to recruit them into the online marketplace by giving them a seamless way to spend internationally online, so that advertisers will buy more ads.
Whether or not it will work I have no idea, I don't know the markets that well. But their motives are transparent, the rest of the spiel is just "change the world" drum beating and cleaning the dialogue.
I see mentioned a lot the problem with online shopping.. what about shipping and the other countless logistics problem with ordering stuff from Nigeria?
Yes, and India too. Every little roadside vendor now accepts Paytm or PhonePe or Google Pay or Mobikwik or Freecharge. The only way to get money into these mobile wallets is either by linking to a bank account, linking to a credit card, or by doing a wallet-to-wallet transfer.
But what surprises me is the extent of penetration of these wallets despite not being cash based. To a large extent, this success is probably attributable to the "glue" between these disparate wallets - the government-launched UPI or Unified Payments Interface (https://www.npci.org.in/product-overview/upi-product-overvie...), which allows you to link any of these wallets directly to your bank account.
That's not true. These days even the smallest US banks tend to have mobile apps or normal mobile banking options. All the major banks without exception do. That has been true for years at this point.
Deposits, moving money in various ways, checking balances or statements, bill pay, customer service, etc etc. What exactly is missing that is important that American banking desperately lacks? The larger banks are borderline obnoxious with the options ('features') they try push on you, for what their mobile banking offers now.
The only thing I can think of, is easy & instant account funds transfer from one person's bank account to another person's bank account (which is a structural flaw in the US system, and which PayPal & Co. fill).
> targeting the day laborer in a rural, 3rd world country, who might be enticed to part with some of their spending money for some Chinese plastic trinket that they never could have bought before, because none of the few stores in a 100 mile radius stock stuff like that.
Yeah, if that's what they're thinking they don't know too much about "3rd world countries"
We have an app called mobile pay in Denmark, which I guess is similar to Apple Pay in that you link a credit card and it lets you send money to friends or pay for stuff. It’s owned by our banks and it works most places a credit card wouldn’t, like in small stores that can’t really afford to have a credit card terminal. That’s it’s main uses, sending money to friends or buying things. Only they also have an API for the web, so you can now pay for things you buy in more and more online stores.
I use it a lot. It’s never been easier to collect expenses from board game nights, and when I recently bought the first Harry Potter book (in Danish for my daughter) I didn’t have to enter my credit card information.
I think that’s what Libre will be, only global. I don’t like Facebook, but if they actually succeed at this, they’ll become the easiest way to pay for things on a global scale.
> like in small stores that can’t really afford to have a credit card terminal
Remember that most of those small stores are able to do this by breaking the terms of service. Accepting MobilePay is NOT free for business, it's not even cheap. As a customers is pretty easy to spot, if the stores MobilePay number is just their phone number, they're breaking the terms of service, and you should pay cash.
I understand it is a breach of terms of service but as a customer, why should you care? It is not like it is breaching the law. And small businesses live on a much smaller margin than banks.
The business REALLY should care as all of their transactions are at risk of being voided, and the money returned to the customers if they're found to be violating the terms of service.
I somewhat care because it seems like a bit prone to tax fraud. Not sure if it is easy for the Danish tax agencies to spot this kind of transaction and enforce tax collection though.
Are you sure it’s “most”? I can’t remember the last time I had to pay into someone’s private account instead of one of the correct ways to do it.
I never said it was free, but depending on the service you want, it is significantly cheaper than having a credit card terminal. One of the reasons it’s cheap is because it tells your bank about everything you buy. We worry about social media, but it’s the banks that know what brand of hemorrhoid medicine I purchased last week.
I’m not advocating either solutions, by the way. I’m just pointing out a use case. I mean, I care enough about privacy to not use google or Facebook, and I still use mobile pay because it’s really, really convenient.
This seems doable without Libra. I'm in Australia and my local transfers from the bank app (ING) are both free and instant. At least to banks that joined Osko. That sorts out pretty much all simple/tiny transfers. If Libra can guarantee international transfers for free, I expect that fee will also go away from the banks.
To be fair Australia is also extremely far ahead of the curve. I will be moving their soon and found out about the NPP and Osko a week ago. Very impressed with what the banking industry in Australia manages to implement. Once they have person-to-person transfers through Osko I see no reason for most fintech-y internet wallets (paypal, venmo etc.) to be used in Australia and frankly also credit cards should become obsolete if you have instant payments through the regular banking system.
Not sure about the last one though because Visa/Mastercard seem to be extremely entrenched in the industry, as far as I can tell they have completely replaced any other debit card system.
EDIT: To your last point. I think the problem with fee's is rather that you need to convert currencies when you do global transactions. Banks could offer this at a loss but nonetheless libra has an edge here.
The problem is that every country seems to have its own system. In Belgium it's Bancontact, in Portugal it's MBWay, etc. I'm not sure they have anything that works internationally and instantly.
I suspect the biggest reason is... nobody's better than them, so there was no rush. Even paypal is not that great. If Libre actually takes off, whether it's good or not, it's likely to force some competition. Kind of like Uber sucks in may ways, but it did get many local taxi companies to improve their services.
Very easy: convenience, security, and cost. You are right that consumers will care little about the cost aspect, because it is largely hidden from them (even though they pay for it indirectly) but they do care about convenience and security. Online payments are actually not really that convenient. That's why Amazon is so popular because they sort of shield you from having to setup payments with each of the merchants they proxy for you. This convenience comes at a price; Amazon is not a charity and highly profitable.
Copying credit card numbers all over the place is tedious and risky and people are kind of nervous about it for valid reasons. Swiping cards like a caveman is already a thing of the past and also not that safe. There's a huge amount of friction around payments for both users and merchants both online and offline. Even cash has a cost for merchants.
Contact-less payments with cards or phones are rapidly replacing cash payments (more convenient). But of course online you basically still get to copy credit card details around or deal with middle men like paypal or one of the many direct debit systems in many countries.
BTC is nice as a gold alternative and similarly tedious to transact with. It's useless for payments as transactions are extremely slow and rate limited to a ridiculous ~5 transactions per second globally. Price volatility means that it is hard to price things in it because you have to update the prices continuously. Ethereum is useless for the same reasons (in its current form).
Libra will require a bit of selling and educating obviously but actually comes with all the tools needed to make that easy. E.g. micro payments and tipping are very easy to implement on it and you could use that to incentivize users with e.g. bonuses, tiny refunds/rebates, etc. Integrating payments into chat removes a lot of friction for the user. And once there are enough merchants adopting this that incentivize users to use this, adoption could be quite rapid. Having low transaction fees will make this very interesting for merchants.
In the Netherlands (or the EU) banking is sort of changing, we have some Fintech companies moving into the space (bunq, revolut, N26). I'm a customer at bunq and they are a breath of fresh air, I can:
* Have 25 separated accounts or savings goals
* Share any bank account (or savings goal) with anyone (using bunq)
* On the fly couple my passes to any of the accounts
* Use NFC on my Android phone to pay
* Have a website where people can transfer me money coupled to any account
* Make payment request that are (when accepted) in my account in seconds
* Make 5 virtual MasterCard to route online payments to different accounts
* Choose what they do with my savings to generate interest (I have it set to "invest in green companies")
They are mobile first (the app is first class) but they have an API (and an open source desktop client as a result). All this is more expensive than traditional banks (I pay 8 euro a month) but they do not invest in shady things and promise to respect my privacy. I imagine Libra will do the same and more (but for the privacy part). It will be more like an ecosystem.
Not that I want it. I completely agree with all the sentiments here. I chose bunq because they have the same ideology as I do.
Sorry for the Dunglish :) Exactly that, we usually use my pass when going out, I couple it to the "beer" account and send everyone a payment request, or just my bunq.me page (like https://bunq.me/freekvh (try adding an amount to the url and then a word and see the page change dynamically, i.e. https://bunq.me/freekvh/10.15/beer_money) and they can fill the beer account (iDeal is the instant payment method in the Netherlands). I set another pin code on the fly for the pass or even choose 2 pin codes to access different accounts with each. But usually one pays "contactless" in the Netherlands.
For work I do the same, create a dedicated account and after a trip I can easily export an overview to get the money back from the company.
In the Netherlands one pays with Maestro cards but for international travel I can couple a (debit) MasterCard, or the new TravelCard which is a real credit MasterCard but backed by your own money. bunq does not do debt.
You can link any of your bank cards to any of your accounts using the mobile app (change is instant AFAIK)
You can even configure different pin codes per card, where each pin code corresponds to a different account
Most payment apps are locked to a specific country. If Libra becomes "Alipay except cross-country" then a bunch of tourist-y places in (for example) southeast Asia could start using it to get tourist's money without much of a hassle (especially given how many people are already accepting QR code payments from some local app)
Similarly, cross-border payments in general are a huge PITA and affect enough people that stuff like Transferwise exists. If Libra can help assuage that there's a nice market there.
It might not be a resounding success but it could be enough to sustain an ecosystem.
When vendors see transaction fees, they pass them on to consumers. Sometimes it's in the form of "$X minimum for credit card transaction", other times it's passing the costs though silently, other times it's not accepting cards at all. In the developing worlds, what we consider trivial fees for a vendor to accept are anything but.
Reasons I'm interested, stability and transaction fees. You don't want to pay someone in a deflationary currency, as their salary will always increase. A stable coin solves this in allowing people to actually use it.
The lower fees enable micro transactions which is something that I believe the internet needs in order to move away from ads. I'd happily pay a fraction of a cent per page view, there is no good way to do that right now.
> They don't care about how the banking system works and who controls the flow of money
That's because the person controlling the flow of money hasn't taken enough away from them. History has plenty of examples where a centralized controller went "too far", causing a mass exodus.
This is very hyperbolized, but consumerism and society today is truly reminiscent of a rat inside a cage with infinite sugar water, cocaine, and a steady supply of new mates.
---
As for Libra, what is Facebooks plan? The only way I can see them winding up on top is if they make the "next Bitcoin" where they own like ~10% of the supply, kinda like Satoshi. I don't see Libra working if it's centralized.
The article seems not to mention currency conversion. So I’m sorry I still don’t understand how buying a condo helps converting rubles to dollars.
I see how buying a condo helps to launder corrupt Russian money, but it is unrelated to the currency, it works the same regardless of what the currency is, dollars or libra. I don’t think Facebook (or whichever libra provider is) would allow users sending a million dollar worth of libra to another wallet without any explanations just using a phone app.
Assuming they wanted to prevent large transactions, how will they? Is Facebook planing to be solely responsible for clearing every transaction?
Because the article literally says they plan "gradually transitioning to a permissionless state" and "Facebook will not control the network".
And, not that this is their plan anyway, but how could they prevent Libra's from crossing borders if it is permissionless?
And even if there were a limit on transfers somehow. A limit, by the way, on an automated system that presumably will involve large sellers with large volume. A limit which the word "permissionless" makes impossible. How will they prevent multiple wallets?
For laundering generally: you buy a thing with cash or the like from an incurious seller and sell it again. To grease the wheels, you could buy at over market value and sell under. Realestate is very popular, even driving up urban prices. But Persian rugs work just as well[1]. It's not currency change that is interesting but the erasing the origin of the purchasers money and replacing it with a legitimate origin: the sale of a condo.
I haven't read the article, just imagining how money laundering works, I assume you find a not too scrupulous guy with a nice apartment who needs cash. You give him some dirty money in exchange for the deed. You then take out a loan using your new place as collateral.
Extra step can be very simple: your libra wallet can be auto topped up from credit card.
> Only vendors, not customers, see those fees directly.
A lot of small shops around the world (like one next to my home) do not accept Amex because of higher Amex fees. And require cash if total cost is less then several bucks. Maybe these shops will eventually stop accepting Visa and MasterCard and/or allow libra on even smallest transactions.
> Facebook REALLY makes people nervous.
Are you talking about common people or people who visit HN frequently? I doubt common people really care about their data shared with advertisers. Even I don’t really care.
And again, Facebook will be not the only provider of libra.
> Why would anyone want to use Libra?
To be able to send money to your parents living abroad. To pay on vacation and don’t worry about conversion rates. To be able to send small debts to your friends easily. And so on.
Large parts of the world have no access to banking and can never convert from cash to digital currency. How easily can you transfer money to random individual in random developing countries who might offer their digital labor?
If they are paid in Libra, and can pay in Libra, they become part of the global economy.
Check out FX charts for Russian Ruble, Argentinian Peso, Turkish Lyra or even the British Pound. Then ask yourself which of these countries have financial institutions that allow their clients to seamlessly transact in more stable currencies like US dollar or Euro and you have your answer.
Have you read the linked article? The protocol is open, anybody can build a wallet and transact p2p without KYC with a pseudonymous account. If they get the initial market penetration through WhatsApp/Facebook then it'll be as difficult to ban as Bitcoin. Facebook alone wouldn't have the means to stop those transactions even if they wanted to, this is not PayPal.
Considering that most of those have countries have trouble enforcing the most basic tax laws, I'd like to see them try banning digital money that can be transferred over encrypted channels.
> The protocol is open, anybody can build a wallet and transact p2p without KYC with a pseudonymous account.
The protocol may be open, but the permissioning participants are (as of writing) large multinational corporations. If a country tells them that they have credible reasons to believe Libra is being used for money laundering, tax evasion, or gasp funding terrorism, they will be more than happy to close those channels down.
From the article, we also have this quote (h/t 'Lucadg)
> At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement.
I don't follow this line of argument? I already keep my investments in a UK tax-sheltered savings account invested in US securities, and my credit and debit cards work for buying things in dollars, but most of my spending is in GBP. I could have a Euro-denominated bank account if I wanted. How much more "seamless" would I want?
Then you're a part of tiny minority who both has access to these tools and figured out that this is the proper way to manage your money. Exactly zero people I personally know manage their money that way. Libra does next to nothing for you.
> Am I to believe that the benefit is "lower transaction fees"?
I don't intend to speak to various other merits (or the lack thereof) of Libra, but to this: yes?
Of course! Transaction fees are huge. If you are operating in a razor-margin business, which more and more businesses are these days, then it adds up.
FasTrak, the Bay Area toll processor, charges your card when you drop below a certain balance, and also charges you what they think your average monthly rate will be. Why? To avoid excessive transaction fees on every toll eating into their coffers.
If the only way to buy something is Libra, or if merchants prefer Libra, then folks will be using Libra. Just look at how much market share PayPal has conquered, and they're arguable garbage.
I like to argue that Libra has the potential to become a widespread "mainstream"-like Cryptocurrency. Mainstream is the important factor here.
Sending money internationally takes several days currently and comes with high fees.
If Facebook implements Libra into their platforms such as Whatsapp, Facebook Messenger, Instagram etc. this brings less familiar people in contact with Cryptocurrency.
People might start to use it because of way faster international money transfers and (most likely) less fees. I know I will because of that reason.
I wanted to see if there's anything like- 'We are not doing this to see end conversions of our Ads i.e. whether one clicks the Ad and buys the same in the a physical store'.
Like Google did(doing?) with Visa/Master card data.
Closest related statements I could find in the blog,
>while Facebook, Inc. owns and controls Calibra, it won’t see financial data from Calibra
>More commerce means ads will be more effective, and advertisers will buy more of them to grow their businesses.
Libra indeed, is such a huge win for 3rd world countries because cross border payments are way to expensive plus if you're starting a tech startup with hopes of earning from US, or Canada, it's impossible because Stripe, or Paypal are not supported, so they're left out. Libra is great for Startups with global ambitions :)
that's a valid vue from the top of the dollar pyramid, but if your much lower and your local "dollar" doesn't have kind of sway in the world, than this starts making more sense. Look at Venezuela - if the citizens opted in to buy a stable coin (which they can easily do, unlike purchasing physical US dollars, which they can not easily do) than a currency like Libra makes a lot more sense.
everyone seems to think crypto is for the first world, it's not, it's for the third worlds. will it empower the citizens like they claim? i don't know, but they definitely have a more valid use case.
Imagine you live in Zimbabwe in 2008, or Argentina now, where people have no faith in their central banks to responsibly manage their money supply. Then ask yourself what's the value of a portable, anonymous, relatively stable currency that your government can't easily manipulate or confiscate.
I have been following Libra very closely, and have read their white paper twice.
There have been a few good discussions here on HN when it launched [0], but I think most of these have been very biased against anything Facebook-related.
I find the launch of Libra a really interesting "experiment", with potentially big negative or positive consequences for the entire world.
Right now, it's really hard to judge on the technical merits (e.g. the Move language, or the architecture, or how they're going to transition to a truly permissionless and decentralized consensus).
However, I think that it's wise to follow Libra's evolution with attention, as it might, and probably will, have consequences in our lives.
When you're talking about controlling money, politics matter more than "technical merit".
Libra is invite only and they invited their business friends.
Libra consortium is based in Switzerland, so the businesses involved have guaranteed essentially zero government oversight.
Libra's owners have complete control over how much currency, the currency exchange rate, and even inflation rates (note that inflation is actually a tax on wealth).
I can't regulate it. I can't get my government to regulate it. I can't get a non-partisan consortium to regulate it (eg, Bitcoin). Businesses proven to put profits first have complete control. I have everything to lose and nothing to gain.
I don't care about the technical merit; everything about this stinks.
EDIT: and all that is before the privacy aspect. While accounts may be "anonymous", Facebook can use their data to identify you anyway. I don't like these big date companies tracking my friends or website visits. I certainly don't want them tracking my money too.
There's also the wrongthink aspect. Recent leaks from different companies seem to show them exerting political power and banning dissent. My political opinions may align with their now, but I'd bet anything that sooner or later, I'll disagree with them on something. I don't want my financial stability based on a platform that punishes me for thinking or believing "the wrong thing" (which could just be saying something critical about the companies in control).
Libra giving economic power to companies is straight out of fascism.
It certainly intends to circumvent financial controls from democratic institutions. As if someone read parts of a dystopian SciFi novel as a how to manual. So it's certainly anti-democratic.
But technically it lacks the ethnic hatred, anti-intellectualism and gleeful blood-lust of fascism.
> Libra consortium is based in Switzerland, so the businesses involved have guaranteed essentially zero government oversight.
Do you really think a massive US company using some Switzerland corporation is going to protect Facebook and their investors against any regulatory scrutiny?
Yes. Facebook is undoubtedly incorporated in other countries as well. The US could pressure Facebook, but they could move servers elsewhere.
Even if they didn't, the US would have to pressure every single company involved.
More importantly, the US can't just audit bank records from another country. They can't go after Facebook unless they can prove wrongdoing. Offshore accounts protect a lot of bad people for this very reason.
Edit: There also the long term issue. If their currency takes off, the economic power it gives also shields them. Remember too big to fail? We can hardly manage the federal reserve where the government is actually part owner. The situation here would be much worse.
> Libra is invite only and they invited their business friends.
That's a big assumption. They were able to get their business friends to sign on, probably because they are already friends. I'm sure they asked a lot of other groups that were more hesitant, it would have made the initial announcement much more powerful.
Also important to note non-profits, NGOs, and universities are included, and they don't have to pay the $10m buy-in.
> and all that is before the privacy aspect. While accounts may be "anonymous", Facebook can use their data to identify you anyway...
The way Libra is designed, that would probably be a lot more trouble than it is worth. Tracking methods without direct trackers (like 3rd-party cookies) work because there are many data points. Like in browser fingerprinting, you have user agents, JS feature availability, history, etc.
With Libra, you only have an account address and transactions to other anonymous account addresses. One dimension of data like that would be very very hard to trace back to the user, without direct participation from many many merchants.
> There's also the wrongthink aspect.
Fair, however afaik only 1 of the 28 current companies (Facebook) has this attribute.
The initial business group is invite only. My understanding is that they get to decide who else (if anyone) joins.
The real money in banking is in giving good loans. The more personal and immediate your info, the better the loan you can make. Reduced losses lower interest rates or boost profits. Facebook data is the big reason this all make sense for them.
Facebook's anonymous claim is simply a lie. Most people will have known accounts at signup. Even if not, the record of their spending habits ties in with their Facebook habits. For the rest, touching known accounts in the network means you know them or have contacted them. Even a very small number of transactions should be enough to identify the user.
> With Libra, you only have an account address and transactions to other anonymous account addresses.
In theory, you can do that. In practice, most people will have a Calibra account, tied to their FB account, and a pinky promise from Zuckerberg that they won't abuse that data.
I thought so as well, initially. But it only taxes a very specific form of wealth... money. As such this tax probably disproportionally affects those unable to transfer their wealth into other forms. Probably once again mostly the poor. Still a valuable tool, but not the great solution I once thought it to be.
Literally what they say it's designed for: giving access to the digital economy to the 500m+ people in emerging markets that have internet + phone, but no banking services.
I am confused. I live in a country with "banking services", but almost nobody here uses them. We get paid on debit cards, and then we immediately withdraw the sum in cash. We pay for everything in cash, why would we ever switch to something different? I can only see the negative consequences: the usual privacy implications (some guy can see what I spend my money on); the danger of not being able to spend money at all if they decide so (like the famous Visa/MasterCard WikiLeaks fiasco); fees (2-3% on every purchase? No, thank you.)
"Banking services" does not mean just bank accounts, it means any services that depend on money being elsewhere, not in your hands.
That debit card you use, it's backed by a bank. Most credit cards are backed by banks.
Economic censorship is certainly a valid concern, I think that's the kind of stuff we should be talking about with Libra. Fees on Libra would be way way cheaper than fees on credit cards, I don't think that's a huge concern. (most of the fees on credit cards come from the underlying banks, not the payment networks themselves)
Both of those don’t seem super essential if you don’t even have a bank account. maybe get a bank account first and then think about a subscription music service, also both amazon and Spotify sell prepaid gift cards for this purpose, which you can buy in any super market here.
It's dauntingly scary that people seem to have already forgotten that FB is known and has been ousted for abusing every bit of power and information they are given. And now you're excited that there's another aspect of your personal info, perhaps the most important part that they'll get (some kind of) control over? Increasing their power as a company overall as well.. Really mind blowing!
Might be like how people without a bank go to various businesses that will cash their check for a fee, except they'll give the business cash and get Libra transferred to their account.
>With Libra, anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services.
Bad actors will lift old exploitative models into Libra's ecosystem: payday loans with huge interest rates, wallet services that force a deposit and allow you to overspend and charge fees when you do, sign up people for accounts and services that they don't want and make commissions. Or maybe just wallet/business services that straight up scam people and disappear with no repercussions. The thing you set out to kill will just come back with a new flavor. Plus it's even easier now since you can do it all with a single click!
Then someone has to decide what to do with bad actors involved with Libra and allocate resources to actually enforce some actions against them (legislative, the cops, server bans, ISP bans, etc.). Now you've got those services paid by tax dollars dealing with a corporate currency and taking time away from other enforcement actions.
All of this is going to happen at the juicy, vulnerable threshold where the technical controls interface with the human element. I probably won't ever hack Libra/Move itself, but the human part is still there. If I can actually manage to get away with the crime and transact with a fake identity, it can't be reversed.
Bonus: that same $40 phone stops getting updated by a phone carrier and some drive-by malware swipes all of your LibraBucks with a corrupt text message and no one can reverse the transaction. Or maybe that Bloomberg supply-chain attack article will finally become a reality once there's enough economy behind Libra.
If this is widely adopted, it's going to have a pretty steep learning curve and plenty of real losses for everyone.
During the initial stages of the invasion of Afghanistan, the US would pay the ANA, just like everyone else, with cash and checks. However, it was soon discovered that the officers were the ones handing out the money. As could be expected, there was a lot of corruption and grift going on, and the grunts weren't getting their pay. Desertion rates went up by a lot. Eventually, the US figured out that you could pay the soliders in phone credits that they could redeem at 7-11 and the like. That went well for a little while, until the officers confiscated all the phones.
Which, actually, went a lot better. A lot of the common soliders would call up their relatives when they went on patrol or a mission so that their relatives knew to either stay away or come around later. A lot of relatives ended up being in the Taliban. As such, OpSec was a lot easier.
Vice news has a mini-docu on this a few years back, but I can't seem to find it online right now.
Point is, bad actors aren't sitting in cyberspace and aren't without authority. Money that you can't hold in your hands or bury in a tin can is worthless if the system you are in is corrupt. I'll wager that Libra is not going to be well adopted people in corrupt police jurisdictions.
That’s a blockchain thing. They can fork, but they aren’t going to do that if I lose $150 in Libra. If they can single reverse transactions, there’s really no point to it being a blockchain.
If it’s refundable then they are just paying for the crime itself out of their own pockets. They will still need a human layer to verify theft has occurred and it isn’t a fraudulent claim of theft where just I stole from myself.
They don't need to form the blockchain to reverse a transaction. Since they control redemption and minting, they can simply refuse to redeem from the "losing" party and mint new units to compensate the "winning" party.
>They will still need a human layer to verify theft has occurred and it isn’t a fraudulent claim of theft where just I stole from myself
Or have something similar to credit cards where you're forced into arbitration.
What are Facebook redeeming? I don't think I'll need Facebook to transact with someone else for goods and services with stolen Libra. Goods can then be exchanged for USD and the theft is complete.
They can mint, and that's not a direct debit from Facebook's wallet, but it would devalue the currency ever so slightly.
But that raises the question of 'How much needs to be stolen before I activate the minting process?' If they mint for low theft values, then I can find a way to steal from myself and that's probably a decent amount of passive income. If they only mint for high theft values, then that only helps rich people who suffer the least from theft (unless they cram all of their life savings into it).
All of this depends on how Facebook works with law enforcement to manage the criminal parts of Libra. Working closely with them means we move closer to a corporate state. Working loosely with them means Libra is more vulnerable.
>What are Facebook redeeming? I don't think I'll need Facebook to transact with someone else for goods and services with stolen Libra. Goods can then be exchanged for USD and the theft is complete.
Right, they would also have to block the funds from being moved, which shouldn't be difficult since they control all the validating nodes.
>They can mint, and that's not a direct debit from Facebook's wallet, but it would devalue the currency ever so slightly.
If the funds are frozen, those funds are effectively out of circulation (similar to cash being destroyed or cryptocurrency wallets being lost), so that would cancel out any devaluing effects.
If they block funds, that'll essentially blacklist the address from doing transactions, so it might be possible to launder it through legitimate services (otherwise Facebook blocks an entire exchange's wallet from moving Libra, thus making that exchange halt and catch fire).
What you'd need is a service that allows you to convert from Libra to an item/currency and then back to Libra, ideally with the ability to trade the intermediate item between users.
This heads off into the unexplored territory. I don't think anyone knows how they're going to handle legit services that launder Libra on the side.
Call me pessimist, but cartelized private global corporations owning and “printing” money can only bring bad things. It is centralized and is controlled by an elite.
The Fed isn't? It has more private board members than appointed board members, and some have argued that it has consistently prioritized the interests of the banks at the expense of encouraging leverage like cash is going out of style. This is closer to a battle between west coast elites and east coast elites than it is about the people versus the elites.
Well, The Fed is a bit different. It's not exactly a private corporation that is not beholden to the voting public.
More importantly, though, is your note about who this battle is between: it's a battle between groups of people who should both be viewed very skeptically when it comes to the interests of "the rest of us".
Corporate controlled money has been tried in the past; it didn't end well for workers.
Company scrip has a long and nebulous history, its great for tethering your workers to the company town (and company store) while keeping them indebted and unable to leave: https://en.wikipedia.org/wiki/Company_scrip
The Fed Board of Governors (the body that makes monetary policy) is an agency of the federal government. That means that yes, it is centralized, but it also means that it operates under a public, transparent, and democratically changeable legal structure. If Americans don't like the Fed, they can vote for a president and members of Congress who will change it.
Bitcoin has become centered on the few largest mining operations. Libra is centered on Facebook. Who elected them? How do currency holders influence them? There are no defined ways to do so.
Even if it isn't fully apparent, the people can vote out a president that controls the Fed. There is no such option to the "100 member companies". Also, the Fed is US only...so there's that.
The scary thing about Libra is that it truly has the potential for global-scale "boil the frog" ramifications.
> Even if it isn't fully apparent, the people can vote out a president that controls the Fed.
The president of the United States does not control the Fed, if that's what you're saying. The current U.S. president is extremely unhappy with the current Fed chairman and has repeatedly demanded that the Fed alter its policies, to no avail.
> The current U.S. president is extremely unhappy with the current Fed chairman and has repeatedly demanded that the Fed alter its policies, to no avail.
And yet he nominated him. What's your point? AFAIK he also technically has the power to fire him too.
> The U.S. dollar is pretty global.
Can you use the dollar to buy food at a foodstand in Germany? No. Just because certain aspects of the global economy are driven by the dollar, doesn't mean everything can be transacted with it. Libra is meant for companies to be able to transact business globally under one currency.
> Can you use the dollar to buy food at a foodstand in Germany? No
Probably not, but in a tourist place you might succeed. And there's still plenty of places where the US dollar is more welcome than local currency. It's hard money, regardless of the politics of the Fed.
You said that the U.S. president controls the Fed, and that is just objectively incorrect. My point is to correct that, so that you and anyone else reading will know better. I thought that was pretty clear.
> AFAIK he also technically has the power to fire him too.
No, he doesn't, so your knowledge doesn't go very far here.
And by the way, although the U.S. president nominates the Fed chair, he or she must be approved by the U.S. Senate. So the president can't pursue a specific monetary policy agenda via an appointee unless the Senate agrees.
> Can you use the dollar to buy food at a foodstand in Germany? No.
Sure, but the dollar is used for more international trade (e.g. oil) than any other currency, and is also a store of wealth probably more than any other currency.
For instance, many Germans hold dollars in the form of US Treasuries, because they actually pay a positive yield, unlike German government debt.
Anyway, if you are afraid of Libra, and I'm with you on that. The solution is decentralized currency like bitcoin, not fiat. The Fed is pursuing a long-term suicidal interest rate policy (too low) and the ECB is no better off. Plus, the U.S. government has started using dollar banking regulation as an international weapon (e.g. Iran sanctions), so there is a rising risk that eventually other countries will wise up and stop using the dollar, and that will destabilize it.
>Can you use the dollar to buy food at a foodstand in Germany
I don't know about Germany, but most places you can easily convert it to local currency right around the corner. Not many currencies can boast of something like that.
My biggest question right now is how many people will want to use Libra enough to pass stringent KYC checks for a wallet like Facebook’s Calibra? You’ll need to give Facebook much more information than they have on a user today, such as photo ID, address, SSN, etc (depending on country).
My cynical view is that Calibra is actually the real value to Facebook here, and they are betting that it will be the biggest wallet by far. It will allow Facebook to reconcile millions if not billions of identities in ways they have not been able to to this date.
> Is this really a blockchain? It’s not open. It’s not decentralized!
> While the initial mechanism by which organizations can run a node and become a member of the Libra Association, is definitely not as open as, say Bitcoin, where anyone can participate in the consensus algorithm, the Libra Blockchain is absolutely designed to be open.
They skip the first question: Libra is not a block chain. It uses Merkel tree accumulators for updating the state of the database, so it's definately not a block chain, it's just marketed as one.
Yes, the block of transactions is arranged in a Merkel tree, but that Merkel tree is finalized, chained to the previous block and secured by proof of work.
Libra is changing the Merkel tree over time, it is never final, which is similar to pre-Bitcoin digital currencies.
In the case where it succeeds massively as in some of Matt Levine's recent thought experiments, I'm not convinced that Facebook has captured enough of the US regulatory framework for them to turn a blind eye to a new global currency which eventually rivals or overtakes the dollar in usefulness. If we accept, for example, that needing to buy and sell oil in dollars allows for a much more effective sanctioning infrastructure then it seems unlikely they will let a corporate-controlled currency whose ideals don't align explicitly with those of the US get too powerful without a fight.
In the other case, where it just becomes a data-hoarding venmo, but initially for the unbanked global poor, I'm not convinced that a) those people are truly sitting around unable to transact while they wait for Facebook to provide the solution and b) that a payment token which is pegged to a basket of global currencies rather than their own is truly the solution that these people would be seeking.
Now, the (theoretical) implementation makes it look more like it's aimed towards the first scenario, some kind of global-corporatist dystopia which we as a society walk into blindly because it's conveniently available within WhatsApp.
And I don't doubt the value of convenience, nor that there are some very smart people behind this who may have estimated that with the right implementation and dark enough patterns, they can use their market share to break through the latter scenario and into the first. But these are interesting times - I don't expect governments to sit on their hands, and we're not exactly in the midst of a surge in the popularity of globalism right now.
You know, when the message is "this is not a facebook product", because some people confused about it and you post an "unoffical" announcement on facebook, then maybe it's not a good PR.
Probably Libra's hosting provider doesn't offer a one-click blogging plug-in that could get integrated in their website. What are they hosted on? WordPress?
I'm pretty certain WordPress is all about blogging...
So if even Libra's team isn't capable of posting on their own website, but instead have to "reach out" to Facebook, it isn't too far fetched to assume that they're sitting in Facebook's premises to begin with.
> transition to a truly permissionless and decentralized consensus
The fact that this is something that is supposed to happen at some unspecified point in the future but the "blockchain" they have cannot handle it -- I think its just a lie. It looks like it would require a massively different codebase and hardfork to get to permisionless and decentralized. They are not actually planning on doing it.
Also, the fact that its backed by Visa, Mastercard, and PayPal -- they are the absolute enemies of cryptocurrency.
Real cryptocurrencies like Bitcoin and Ethereum will be able to scale. Ethereum in particular has very advanced plans for rolling out very high scalability in a matter of months. That is what I support.
I do not think it makes sense to use a fake "cryptocurrency" just so that the old companies can continue to get a cut of my transactions and the government can more easily control my money if they want.
My immediate gut reaction to this entire thing (and again, this is only a personal viewpoint not held by others) is along the lines of: What could go wrong with giving one of the most shady corporations on the planet the permission to print its own currency?
Well I can't use Libra, because an algorithm banned me for an obvious joke post and has absolutely nothing in terms of a proper appeals process or accountability. So if I had ever depended on Libra I'd be up shit creek, I guess?
Short of transaction speed and cost, there is so little that is appealing in this compared to Bitcoin, and it has all of the centralisation and compliance pitfalls that a neutral, free (liberty), decentralised money already avoids.
Transaction cost and speed are enormous problems for bitcoin, not sure why that would only be mildly appealing to solve. Not vouching for Libra, but my understanding of bitcoin was that it caps out at something ridiculously low like 11 transactions/second, which each cost multiple USD. Clearly that is the bottleneck that needs to be addressed by whatever would lead crypto moving forward (I remember reading visa processes more than 10k transactions/s).
Bitcoin is the oldest and thus technically least advanced cryptocurrency. There are plenty of coins that are much better than Bitcoin in terms of privacy and scalability; Libra should be compared against these.
Too bad you still need to use the blockchain to get into and off of the LN. which means if BTC got widely adopted you’d still run into major scaling limits. Of course that is assuming LN will ever exist. Which it won’t. It “exists” only a way for shysters to dodge the “bitcoin can’t scale” question when pitching the blockchain to the next batch of rubes.
Also, there is a certain unavoidable irony in suggesting the way to scale bitcoin is to avoid using it.
Genuinely curious:
Does the lightning network provide all of the same guarantees that the standard Bitcoin network provides? What are the downsides? Why isn't the lightning network used all the time instead of the Bitcoin protocol?
The downside is that there is no market for watchtowers yet (so you need be online while having channels open).
Another disadvantage is that if you control your key, you must be online. Like, if you run an HTTP server, you must have a machine. With plain Bitcoin you can spend to a pubkey and it doesn't have to be online
Having to be online to be secure is a pretty big hole, don’t you think? Sure you could outsource it to some trusted party, but that feels awfully bank-like and I thought bitcoin was all about being your own bank. Am I wrong?
Watchtowers are not trusted parties and you do not have to be always online to be secure. There is a configurable period where you can broadcast a revocation transaction. Watchtowers can do it for you but it's designed so they cannot frame you. The penalty for broadcasting an out of date transaction is loss of all funds in the channel.
To summarize.
1. Attacks are extremely unlikely in the first place.
2. Watchtowers can prevent them if they do happen.
3. Watchtowers are trustless. They in no way resemble banks.
4. Without a watchtower you are not required to be always online to be secure.
Lightning is new, so that's part of the adoption story. It suffers from a centralization risk similar to banks (viz a viz using a well-connected intermediary via a wide channel to transmit to arbitrary addresses off chain with less pain that establishing a dedicated channel directly).
It requires some additional investment on the user's part.
Think of it like opening a secured credit card with cash. Faster and more convenient to use, since you can now use the credit card networks instead of the cash, but requires tying up the funds you want to use to pay with.
Also, the merchant/recipient has to be able to accept the payments, and the software is new / in beta still.
Unfortunately very few alternatives have been created which ticks the same boxes as bitcoin, but some with speed improvements. It's too bad that so many developers have stranglehold their innovations by premining, receiving development tax, keeping a percentage of all coins by themselves. Or lacking a good process for protocol innovation like BIP. Because there are some really shiny coins out there.
I thought that transaction cost and speed was a problem, but I am not so sure anymore. There are second layer solutions, like Lightning Network. And it is also possible to use current solutions like Visa, through pre-filled cards or debit cards. Of course not optimal.
It's not that long ago when we got to choose network protocols in games for example, IPX/SPX in favor of TCP/IP because of speed. Maybe it is a similar time, we'll see.
There is an extremely easy way to get over that issue. It has already been solved for all fiat currencies. When big banks transfer dollars between one another, their balances at the Fed get updated to reflect this. But this doesn't happen for 99.9% of transactions.
One thing that’s been nice since the Libra announcement is the number of knee-jerk reaction “cryptocurrency is 100% useless and look at this NIST blockchain flow chart hurrr hurrrr” comments have mostly disappeared. It seems like crypto is not totally useless after all, but the biggest threat to humanity ever created... or something...
Crypto isn't the reason why Libra is dangerous, Facebook is.
If Facebook was launching their own business-controlled currency that was backed by an SQL database, you'd see the exact same reaction. The crypto part is just an implementation detail, what people are actually upset about is corporations trying to seize control of our currency.
Currency names are not unique. How many countries use "dollar" or "peso"? Portuguese-speakers don't seem to have a problem with that, so I'm sure they will somehow find a way to deal with two "libras"
I like to think of cash as a kind of slack in the system. Yeah there's corrupt stuff going on, but I like its immediacy and utility. A digital currency that is under full surveillance would just cause the whole financial machinery to seize up like a rusted Rube Goldberg.
the moment libra is exchanged for fiat, it is under scrutiny (know your client etc). fbi routinely nails various e-gold enterprises, where clients exchange fiat for tokens and freely transact tokens across the globe. all it takes is to open a couple of libra accounts and send a transaction with "hurt as many americans as possible" in the details. a lot of people were busted for a lot less than that.
imagine high volume small denomination libra transactions between florida and colombia - fb will spend the rest of their days trying to explain to fbi they didn't mean no harm.
The FBI has no jurisdiction outside the US and you are right that cash is more safe to use for buying cocaine, ordering hit men, buying child pornography, etc. Libra is probably not going to be popular for that sort of thing. The irony of a distributed ledger is that it actually makes enforcement a lot easier. Facebook will simply point to the ledger and tell the FBI that "everything you need to know is public information". FB is also uniquely positioned to facilitate all the required KYC and AML processes.
The reason governments are worried about Libra is not his but the fact that people might choose to no longer exchange for fiat. If you are transacting and earning Libra, why would you swap for dollars/euros and pay the transaction fees for that? This is a much bigger concern for governments than the black market economy.
tell this to Vinnik, a Russian national who was arrested in Greece on behalf of FBI and extradited to US:)
if FB starts enforcing KYC, then the adoption will be very narrow - US and few other developed countries. even in US i doubt that many people will be happy to share their driver's licences and bank accounts with FB for obvious reasons. and without wide adoption there will be no libra "closed system" as you described. this is catch 22. i don't see how FB can pull this off. i don't even see any clear strategy behind libra.
> At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement.
I wonder how many people in the world can pass a KYC check right this moment.
That's not true. People who don't do KYC to their customers go to prison.
KYC exists for the same reason the drug war exists: People believe in paternalism and want to feel that there is some greater power that is in control. And there are people with guns and throw-you-in-prison capability who are happy to make it so.
The worst way to try to catch or curb money launderers is to create some kind of monetary system in which they will take no part.
Gold will not cease to exist because of a corporate “cryptocurrency”? As long as there are any fungible value stores in existence, there will be money laundering.
From the blog: "I wanted to remind everyone that Facebook, through its subsidiary Calibra, is just one of the initial 28 Founding Members that are coming together to form the Libra Association. It’s easy to assume from the headlines that Libra is only associated with Facebook, but that is not the case."
Then why is Facebook the only entity making blog posts about Libra? Except, when you assume the reader is dumb.
Facebook is asking corporate interests of different sizes, big and small, to join Libra effort. They will all have equal stake, including the founding company, Facebook. It'll be the biggest, possibly only, corporate altruism experiment in history. I think they have a small chance of succeeding if they are willing to pump in billions of dollars without expecting any return.
Presumably because power tools are high value goods that are often stolen by addicts to pay for their addictions. Then they make their way up the value chain. It doesn't really make sense though - they're not really fungible, they're pretty hard to transact with, and converting them to cash is tricky (how are you going to find a steady stream of buyers?).
Tide detergent is also used as currency, and it's better than power tools as a currency in all regards.
Let's call this for what it really is, they want to replace democracy with Corporatism.
At least with a government backed currency we get a choice on who runs the government. Even though that power is constantly being eroded.
The companies that run Libra however have 0 obligation to users of Libra but only to maximise profits for their shareholders. This is their plan:
* Dedicate a lot of resources to spread the adoption of Libra
* Change the language of what Libra is.
* Extract as much value as they possibly can from Libra users.
The proof is simple, If FB and all of those companies dedicated resources to development and adoption of Bitcoin itself then it would be able to reach the goals of Libra and be more decentralised than Libra.
David Marcus and the entire Facebook Libra team make me sick to my stomach.
Bitcoin is not more decentralized than Libra today[1]. Libra has 28 members, going to 100. The top 11 bitcoin mining pools control 99% of the hashrate.
In theory, sure. In practice, the miner implementations are the ones controlling the chain. The only difference is, I can name the CEOs and leaders of many of the Libra companies, I don't know who the leaders of the mining pools are.
Could you explain why you think democracy is important and has much to do with how U.S. currency is managed? It seems to me that voters have very little influence on decisions made by the Federal Reserve, and that's intentional. We wouldn't want a central bank to be much influenced by the latest election.
The Federal Reserve is a consortium of banks and tends to make decisions that are good for banks, so if you're worried about corporatism, it's already here.
That’s a ridiculous statement if you consider the fed a part of the government. I.e. the fire department and police both have “government enforced monopolies”. The government itself is a “government enforced monopoly”
“The alternative would be a repeal of laws establishing police, allowing consumers & businesses to choose between law enforcement providers.”
Look I’m not saying you can’t criticize the existence of the fed, but calling them a “government enforced monopoly” is inane. They are a _part_ of the government.
If using a given telephone company were mandated by the government, it would be by definition a government enforced monopoly. Similarly, legal tender laws force businesses to accept USD to settle all debts. From this point, Gresham's law also plays a role.
There is a long history of private policing in the United States.
The Federal Reserve Bank is not owned by the government. It is considered a public private partnership.
This seems like nothing but fearmongering. We don't any reason to expect that libra is going to displace "real" currencies.
Why the hell would the governments of the world give up their power over currency? It is a huge power they hold that they do not want to lose.
Have you ever heard the term "legal tender"? You are legally required to accept USD as payment in America, and every country has a similar law. The government can literally force you (with guns if need be!!) to use their currency. Is that better than what FB is doing?
Sometimes I think people get so wrapped up in dystopian fear mongering they don't analyze the current situation.
From my reading corporatism is defined as the government dictating economic policy via various syndicates. I.e. the business owner retains nominal control over the means of production, but the actual production decisions are made by an industry-wide government bureau.
Great until you bump up against that 7 transactions per second limit, the entire planet adopts it and and you get to wait multiple decades between transactions.
And before you say “lightning network” do realize that LN doesn’t exist and even if it did your solution is to avoid using bitcoin. Setting aside you still have to make transactions on the bitcoin blockchain before you can even play ball with LN.
Bitcoin/cryptocurrency is a giant scam marketed toward libertarians and certain STEM types. Why Facebook decided to hitch its horse to a giant scam is beyond me.
You think the LN doesn't exist? What? There are dozens of LN visual explores out there. Who told you this lie?
The whole point of using LN is to use Bitcoin as a settlement layer. You make one initial transaction to open a channel and that's it. In the future users will onboard directly into LN channels anyway. On chain scaling is still important. Ethereum 2.0 will likely do over 10,000 tx/sec. Don't know about Bitcoin.
I think you fundamentally misunderstand how currencies work. They are managed by central banks which are designed to be independent of the government of the day.
And corporates basically own and run the internet and it seems to be doing pretty well.
> They are managed by central banks which are designed to be independent of the government of the day.
Heh, I think you fundamentally misunderstand how central banks work.
1. The US Mint creates the supply of currency in the US, which is literally governed by the government.[0]
2. It's literally governed by presidentially appointed officials.
3. The Fed manages the banking system, which is a trusted system that utilizes fiat currency as a medium of exchange. Their focus is much more aligned to economic prosperity and policy formulation then it is about how the "currency is managed" (the two are obviously interrelated).
> And corporates basically own and run the internet and it seems to be doing pretty well.
There's a big difference between "it basically does" and "it is".
EDIT: [0] - My bad, the BEP creates currency which is overseen by the Treasury, which is in fact a government entity.
> 1. The US Mint creates the supply of currency in the US, which is literally governed by the government.
This is wrong in a couple of ways. The mint creates coins, not dollar bills. Those are federal reserve notes. But who literally mints the money doesn't matter - the Fed has always had control over the money supply. That's the power that matters.
> 2. It's literally governed by presidentially appointed officials.
This is also true of the supreme Court. This doesn't change the fact that the Fed can operate independently of the government. As an analog, how often do you worry about what your hiring manager things of you? Once you have the job, they don't have any power over you.
US Supreme Court is appointed by Congress/President.
You wouldn't say that is it "literally governed". Just like the Supreme Court the Federal Reserve has appointed positions but has in the modern era been independent. It isn't like it is a department such as Homeland Security.
And the central bank model applies in most countries not just the US.
AIUI, all it would take is an act of Congress to effect change on how the Federal Reserve does business — whereas changing the function of the Supreme Court is somewhat more constrained by the constitution. I believe "governed" is still appropriate, even though the Federal Reserve can act independently, it is only able to do so because Congress permits it.
> US Supreme Court is appointed by Congress/President.
And have life-long appointments.
> You wouldn't say that is it "literally governed".
Your conflating two ideas. I would actually say that the Supreme Court is a government entity. You said:
> independent of the government
It literally depends on the US government in order to function. Calling it independent by any stretch of the definition is disingenuous.
> And the central bank model applies in most countries not just the US.
You missed the point. Libra is offering a coin on a global scale. To compare this to one central bank is like comparing apples to oranges.
Honestly, I really don't understand your overall point. You genuinely think the Fed just sits on some island while it regulates US economic policy without any influence or dependence on anything but itself? Think about that for a second.
> 1. The US Mint creates the supply of currency in the US, which is literally governed by the government.
Congress long-since assigned that responsibility--with the exception of coinage--to the Federal Reserve. Note that our currency no longer says "United States Dollar" on it, only "Federal Reserve Note."
"At the core, we believe that a network that helps move more cash transactions — where a lot of illicit activities happen — to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement"
In other words: let us do Libra and we'll help you win the war on cash.
The biggest blow on privacy in the world's history, brought to you buy Facebook.