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So facebook (and partners) can mint their own money. Are we supposed to be OK with that? Wasn't this issue one of the primary reasons for crypto currency existi

So facebook (and partners) can mint their own money. Are we supposed to be OK with that? Wasn't this issue one of the primary reasons for crypto currency existing in the first place. This shouldn't be allowed to exist.

riffraff 7y ago
they cannot, in most (all?) jurisdictions you cannot mint your own money. You can, however, in many places, create something that works like money for some use cases. This looks like a case of the latter, and it doesn't seem so different from stuff like Amazon Coins[0] [0] https://en.wikipedia.org/wiki/Amazon_Coin https://en.wikipedia.org/wiki/Amazon_Coin
- supermatt 7y ago
  Semantics. When I say "money", I mean Libra. If this currency is to be trusted, proof of stake should apply to all parties - having some party able to mint libra is no different to what banks do now. That libra can be converted into cash from their reserves using users funds. How can you guarantee that this wont happen? How is this regulated?
  - riffraff 7y ago
    as I understand it, the only parties authorized to buy/sell libra are resellers operating through a smart contract, while founding members act as multiple oracles for such contracts, and the minting is in the public ledger. I agree this is wildly unregulated and problems exist, but it's not just a party clicking "mint coin" and cashing out. Edit: unless you consider all parties as cooperating in the scam, which seems possible but unlikely.
    - supermatt 7y ago
      founding members acting as oracles is the whole problem. this is centralised trust and it’s ripe for abuse. that the minting is recorded is irrelevant - there’s no guarantee the backing funds exist, much in the same way a traditional bank lends money that doesn’t exist. what if this were to become the universal credit? it’s not impossible given the clout of facebook. placing trust in a few “founding corporations” is not the banking model that we should be pursuing for the future.
      - riffraff 7y ago
        The oracle acts as a verification that the statement "Jane put 1M USD in fund X" is true, but anyone else can verify the data too. The fund can be regulated normally, and will be subject to existing transparency rules on reporting its net assets. Since any observer can verify when an oracle is lying, there is a disincentive in doing that (also, the oracles are sitting on a perpetuous revenue stream if they don't fuck up, and have no interest in scaring people). Sure, the founders can change the rules as they go forward, but at the moment there is no reason to think they would create money ex aere just to cash a quick buck killing the system.
wuliwong 7y ago
In the US, cryptocurrencies are treated as assets, they are taxed every time you exchange them for something or even each other. I would disagree that libra coin is akin to Facebook and partners creating their own money.
- supermatt 7y ago
  Clearly you didnt read the whitepaper. Facebook (and partners) literally mint libra. You give them a dollar, they mint a dollars worth of libra and stick the dollar in their "reserve". What stops them minting more libra than they actually hold fiat reserves for?
  - chillacy 7y ago
    Not a new problem, it applies to bank notes and other stable coins as well right?
    - supermatt 7y ago
      So we replace one broken system with another. This wasn't the cryptocurrency promise.
- Sargos 7y ago
  This actually might be a blessing in disguise for crypto currency as Facebook will lobby hard to get that rule changed fast as people aren't going to want to report a line in their taxes for each of the hundreds of items they buy in their taxes.
kobasa 7y ago
They aren't minting their own money out of thin air - it's fully backed by existing currencies like the Dollar/Euro/Yen/Pound. They're just making it easy to send this across borders digitally.
- supermatt 7y ago
  You say its "backed", but what stops them minting more libra than they have "backing" for? Nobody would know any different unless every user attempted to remove all their funds at once. How can you be sure that this wont happen? This is EXACTLY like a bank, but without any of the regulatory protections.

riffraff 7y ago

they cannot, in most (all?) jurisdictions you cannot mint your own money. You can, however, in many places, create something that works like money for some use cases. This looks like a case of the latter, and it doesn't seem so different from stuff like Amazon Coins[0] [0] https://en.wikipedia.org/wiki/Amazon_Coin https://en.wikipedia.org/wiki/Amazon_Coin

supermatt 7y ago
Semantics. When I say "money", I mean Libra. If this currency is to be trusted, proof of stake should apply to all parties - having some party able to mint libra is no different to what banks do now. That libra can be converted into cash from their reserves using users funds. How can you guarantee that this wont happen? How is this regulated?
- riffraff 7y ago
  as I understand it, the only parties authorized to buy/sell libra are resellers operating through a smart contract, while founding members act as multiple oracles for such contracts, and the minting is in the public ledger. I agree this is wildly unregulated and problems exist, but it's not just a party clicking "mint coin" and cashing out. Edit: unless you consider all parties as cooperating in the scam, which seems possible but unlikely.
  - supermatt 7y ago
    founding members acting as oracles is the whole problem. this is centralised trust and it’s ripe for abuse. that the minting is recorded is irrelevant - there’s no guarantee the backing funds exist, much in the same way a traditional bank lends money that doesn’t exist. what if this were to become the universal credit? it’s not impossible given the clout of facebook. placing trust in a few “founding corporations” is not the banking model that we should be pursuing for the future.
    - riffraff 7y ago
      The oracle acts as a verification that the statement "Jane put 1M USD in fund X" is true, but anyone else can verify the data too. The fund can be regulated normally, and will be subject to existing transparency rules on reporting its net assets. Since any observer can verify when an oracle is lying, there is a disincentive in doing that (also, the oracles are sitting on a perpetuous revenue stream if they don't fuck up, and have no interest in scaring people). Sure, the founders can change the rules as they go forward, but at the moment there is no reason to think they would create money ex aere just to cash a quick buck killing the system.

wuliwong 7y ago

In the US, cryptocurrencies are treated as assets, they are taxed every time you exchange them for something or even each other. I would disagree that libra coin is akin to Facebook and partners creating their own money.

supermatt 7y ago
Clearly you didnt read the whitepaper. Facebook (and partners) literally mint libra. You give them a dollar, they mint a dollars worth of libra and stick the dollar in their "reserve". What stops them minting more libra than they actually hold fiat reserves for?
- chillacy 7y ago
  Not a new problem, it applies to bank notes and other stable coins as well right?
  - supermatt 7y ago
    So we replace one broken system with another. This wasn't the cryptocurrency promise.
Sargos 7y ago
This actually might be a blessing in disguise for crypto currency as Facebook will lobby hard to get that rule changed fast as people aren't going to want to report a line in their taxes for each of the hundreds of items they buy in their taxes.

kobasa 7y ago

They aren't minting their own money out of thin air - it's fully backed by existing currencies like the Dollar/Euro/Yen/Pound. They're just making it easy to send this across borders digitally.

supermatt 7y ago
You say its "backed", but what stops them minting more libra than they have "backing" for? Nobody would know any different unless every user attempted to remove all their funds at once. How can you be sure that this wont happen? This is EXACTLY like a bank, but without any of the regulatory protections.