8 ms·

They're using cryptocurrency because - off the top of my head in no particular order: 1. Hype 2. It gives "credibility" to their currency 3. they can be regu

They're using cryptocurrency because - off the top of my head in no particular order: 1. Hype 2. It gives "credibility" to their currency 3. they can be regulated as a crypto-currency that way. 4. It enables faster transactions and reactions to the transaction states than regular currency. 5. It locks the users in to their partners because it's more friction to get money. 6. Easier to obtain the data on how users spend their money. 7. Easier to introduce new models based upon transactions/currency. 8. It can be given away for free easily.

driverdan 7y ago
All of those things except #1 can be accomplished with a standard virtual currency and a DB. There's no reason to use a blockchain.
- hackinthebochs 7y ago
  I'd much rather buy a virtual currency (pegged or not) than values in Facebook's database. A cryptocurrency gives you a certain baseline level of reliability over value and function that values in a centrally controlled database do not. It remains to be seen how much control Facebook will ultimately have over their cryptocurrency, so this point may be moot.
  - tomc1985 7y ago
    So... values in a decentralized database are worth more or something? You don't actually hold anything with cryptocurrency, it's all still line-items in a DB. E.g. the bitcoin you hold is only as good as the decentralized ledger says it is
    - EthanHeilman 7y ago
      There is a big difference between your money sitting in a single file under the control of a single party and your money sitting in three files under the control of three parties.
      - tomc1985 7y ago
        I'm not so sure. Sure you can prevent one party changing the data in the DB but the decentralized model seems to carry a lot more risk. I can't wait for the day when todays encryption can be cracked by tomorrow's commodity hardware...
        EthanHeilman 7y ago
        >Sure you can prevent one party changing the data in the DB but the decentralized model seems to carry a lot more risk. Lets say you have 7 permissioned nodes that are running a BFT protocol to establish a shared DB. I'd be interested to hear why?
        tomc1985 7y ago
        While I was originally thinking about the finance space and not the technicals of shared DBs themselves, I feel like N nodes introduces a weakest-link problem where one trusted actor subverts the rest. A hypothetically perfect BFT protocol would prevent this, I suppose, but I know nothing about them or their current state today. Are the resources guarding those seven nodes equally proportioned? How hard is it for a bad actor to potentially subvert one and cause it to pass bad-but-trusted data? Can these nodes be switched with other, potentially less-secure or hostile nodes? How are additional nodes added to the network; is there a credentialing process that could potentially be attacked? Who maintains each node, what is their level of sophistication, resourcing, and control?
        EthanHeilman 7y ago
        BFT protocols are typically secure if 2/3 of the nodes are honest. >Are the resources guarding those seven nodes equally proportioned? How hard is it for a bad actor to potentially subvert one and cause it to pass bad-but-trusted data? Can these nodes be switched with other, potentially less-secure or hostile nodes? How are additional nodes added to the network; is there a credentialing process that could potentially be attacked? These are good questions. I believe in Libra human beings decide which organizations are allowed to run a node and they build a fixed list of say 100 or so nodes one from each organization. >Who maintains each node, what is their level of sophistication, resourcing, and control? You don't want amateurs running nodes. This is normally where such proposals fail because if you don't have enough clout early on you won't get good node operators and this poisons the security argument. From my perspective Libra is the first team which has overcome this hurdle. Then again hopefully everyone doesn't just run these nodes on AWS.
  - polyomino 7y ago
    Cryptocurrency only gives you more reliability if you actually run a full node. That's impossible at facebook scale, so facebook's giftcard is what they're stuck with.
dralley 7y ago
>It enables faster transactions and reactions to the transaction states than regular currency. This is only true in the US, where the inter-bank financial system runs on mainframes and 40 year old code. The British banking system decided a while ago that they were going to update their bank communication system, and now they can send sums between bank accounts at different banks within 10 seconds.
- russdpale 7y ago
  This is what I have been saying, its not enough to be a payment system anymore, banks are catching up and people will always sacrifice security for convenience, it is simply human nature. I think where is messing up is by not allowing more nodes. The brave project is dispensing enough money for people in third world countries to pay for their internet connection. The true value of crypto currencies is exchanging computational abilities into social mobility, and I don't see where facebook coin does that. Telegram's coin won't, either, but payment/messaging system is big business right now.
- EthanHeilman 7y ago
  10 seconds is still an two orders of magnitude too slow given many use cases and the technology which is currently available. I should be able to tap my card on a subway turnstile and have it open immediately such that the subway faces zero fraud risk. A centralized system should be limited only by RTT and there are ways to overcome even that via caching layers or cryptographic techniques. You want something sub 250ms.
  - desc 7y ago
    It doesn't need to be centralised, and it doesn't even need to be limited by RTT. 'Zero fraud risk': you cannot prevent people from finding loopholes. Every system breaks. Instead, you use the same techniques that have been used for centuries in finance: keep audit logs, make it possible to fix things later, and maybe try to catch the majority of possible attacks by adding more rules. If you're processing tens of millions of transactions a second, you do not have a single point of truth. You have at least a cluster, ie. a distributed system. Fortunately finance grew up before automatic computing and telecoms even existed, so its algorithms and systems run just fine (FSpecificVO) at less than 1 FLOP/S with communication latencies measured in weeks. So you might as well just collect transactions locally, then sort them out as a batch job in the evening, with a percent or two price hike to cover liabilities due to fraud. Last time I went anywhere near London, they had the instant payment system working down there in the Tube. It's not centralised and none of the important stuff is necessarily low-latency, but it seems to work fine anyway.
xmly 7y ago
They use the crypocurrency term to avoid existing regulations and license requirements.

driverdan 7y ago

All of those things except #1 can be accomplished with a standard virtual currency and a DB. There's no reason to use a blockchain.

hackinthebochs 7y ago
I'd much rather buy a virtual currency (pegged or not) than values in Facebook's database. A cryptocurrency gives you a certain baseline level of reliability over value and function that values in a centrally controlled database do not. It remains to be seen how much control Facebook will ultimately have over their cryptocurrency, so this point may be moot.
- tomc1985 7y ago
  So... values in a decentralized database are worth more or something? You don't actually hold anything with cryptocurrency, it's all still line-items in a DB. E.g. the bitcoin you hold is only as good as the decentralized ledger says it is
  - EthanHeilman 7y ago
    There is a big difference between your money sitting in a single file under the control of a single party and your money sitting in three files under the control of three parties.
    - tomc1985 7y ago
      I'm not so sure. Sure you can prevent one party changing the data in the DB but the decentralized model seems to carry a lot more risk. I can't wait for the day when todays encryption can be cracked by tomorrow's commodity hardware...
      - EthanHeilman 7y ago
        >Sure you can prevent one party changing the data in the DB but the decentralized model seems to carry a lot more risk. Lets say you have 7 permissioned nodes that are running a BFT protocol to establish a shared DB. I'd be interested to hear why?
        tomc1985 7y ago
        While I was originally thinking about the finance space and not the technicals of shared DBs themselves, I feel like N nodes introduces a weakest-link problem where one trusted actor subverts the rest. A hypothetically perfect BFT protocol would prevent this, I suppose, but I know nothing about them or their current state today. Are the resources guarding those seven nodes equally proportioned? How hard is it for a bad actor to potentially subvert one and cause it to pass bad-but-trusted data? Can these nodes be switched with other, potentially less-secure or hostile nodes? How are additional nodes added to the network; is there a credentialing process that could potentially be attacked? Who maintains each node, what is their level of sophistication, resourcing, and control?
        EthanHeilman 7y ago
        BFT protocols are typically secure if 2/3 of the nodes are honest. >Are the resources guarding those seven nodes equally proportioned? How hard is it for a bad actor to potentially subvert one and cause it to pass bad-but-trusted data? Can these nodes be switched with other, potentially less-secure or hostile nodes? How are additional nodes added to the network; is there a credentialing process that could potentially be attacked? These are good questions. I believe in Libra human beings decide which organizations are allowed to run a node and they build a fixed list of say 100 or so nodes one from each organization. >Who maintains each node, what is their level of sophistication, resourcing, and control? You don't want amateurs running nodes. This is normally where such proposals fail because if you don't have enough clout early on you won't get good node operators and this poisons the security argument. From my perspective Libra is the first team which has overcome this hurdle. Then again hopefully everyone doesn't just run these nodes on AWS.
- polyomino 7y ago
  Cryptocurrency only gives you more reliability if you actually run a full node. That's impossible at facebook scale, so facebook's giftcard is what they're stuck with.

dralley 7y ago

>It enables faster transactions and reactions to the transaction states than regular currency. This is only true in the US, where the inter-bank financial system runs on mainframes and 40 year old code. The British banking system decided a while ago that they were going to update their bank communication system, and now they can send sums between bank accounts at different banks within 10 seconds.

russdpale 7y ago
This is what I have been saying, its not enough to be a payment system anymore, banks are catching up and people will always sacrifice security for convenience, it is simply human nature. I think where is messing up is by not allowing more nodes. The brave project is dispensing enough money for people in third world countries to pay for their internet connection. The true value of crypto currencies is exchanging computational abilities into social mobility, and I don't see where facebook coin does that. Telegram's coin won't, either, but payment/messaging system is big business right now.
EthanHeilman 7y ago
10 seconds is still an two orders of magnitude too slow given many use cases and the technology which is currently available. I should be able to tap my card on a subway turnstile and have it open immediately such that the subway faces zero fraud risk. A centralized system should be limited only by RTT and there are ways to overcome even that via caching layers or cryptographic techniques. You want something sub 250ms.
- desc 7y ago
  It doesn't need to be centralised, and it doesn't even need to be limited by RTT. 'Zero fraud risk': you cannot prevent people from finding loopholes. Every system breaks. Instead, you use the same techniques that have been used for centuries in finance: keep audit logs, make it possible to fix things later, and maybe try to catch the majority of possible attacks by adding more rules. If you're processing tens of millions of transactions a second, you do not have a single point of truth. You have at least a cluster, ie. a distributed system. Fortunately finance grew up before automatic computing and telecoms even existed, so its algorithms and systems run just fine (FSpecificVO) at less than 1 FLOP/S with communication latencies measured in weeks. So you might as well just collect transactions locally, then sort them out as a batch job in the evening, with a percent or two price hike to cover liabilities due to fraud. Last time I went anywhere near London, they had the instant payment system working down there in the Tube. It's not centralised and none of the important stuff is necessarily low-latency, but it seems to work fine anyway.

xmly 7y ago

They use the crypocurrency term to avoid existing regulations and license requirements.