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You all need to read the following excerpt from Matt Levine's thoughts on Libra: > So, first, Libra will be a “stablecoin,” in the sense that its value will be
by 55555 7y ago
You all need to read the following excerpt from Matt Levine's thoughts on Libra:
> So, first, Libra will be a “stablecoin,” in the sense that its value will be pinned to conventional financial assets. Unlike most stablecoins, though, it will be pinned to a basket “of low-volatility assets, including bank deposits and government securities” in different currencies, so it won’t consistently be worth one dollar or one euro or anything else. “As the value of Libra will be effectively linked to a basket of fiat currencies, from the point of view of any specific currency, there will be fluctuations in the value of Libra.”
> This strikes me as very annoying, but it has some obvious advantages for Facebook/Libra. For one thing, they’ll only need to manage one general Libra, rather than having different stablecoins corresponding to different national currencies. For another thing, if Libra gains widespread acceptance, its lack of one-to-one correspondence will give it a tendency to displace national currencies. If you mostly spend dollars, and Libra is always going up and down against the dollar, that will be annoying and you won’t want as many Libras. But if you mostly spend Libras—if Facebook is successful at making this the main currency of the internet—then that dynamic will reverse. If the dollar is always going up and down against the Libra, that will be annoying and you’ll want more Libras. The dollar will start to seem unstable and useless. If you buy most things online, and if everything online is priced in Libras, then you’ll end up living your life denominated in Libras, and only converting your Libras into dollars on your occasional touristic visits to the physical world.[4] The goal is for Libra to be more useful than any national currency, accepted in more places and with fewer complications; pegging it to a single national currency would only hold it back.
- a-nikolaev 7y agoExactly. .. It is also pretty obvious that the guy wants to become a king of the world or something like that. He couldn't do that with his network. He will do that with money. It's also a diversification strategy, shifting business from problematic facebook (for how long it will last?) to a new potentially long-term venture.
- camjohnson26 7y agoEvery currency fluctuates in value, we’re just used to talking in dollar terms. Every libra will always be worth one libra.
- treis 7y ago>The dollar will start to seem unstable and useless. If you buy most things online, and if everything online is priced in Libras, then you’ll end up living your life denominated in Libras, and only converting your Libras into dollars on your occasional touristic visits to the physical world.[4] This is so off the mark. Governments require taxes to be paid in their currency. So at minimum 30-50%, depending on the country, of all economic activity is guaranteed to take place in the local currency. Second, if the Libra fluctuates wildly with the local currency little will be priced in it. You don't want to sign a contract that could befome 20% more expensive because of a currency swing.
- cujic9 7y agoOhio Becomes First US State to Allow Taxes to Be Paid in Bitcoin https://www.coindesk.com/ohio-becomes-first-us-state-to-allow-taxes-to-be-paid-in-bitcoin https://www.coindesk.com/ohio-becomes-first-us-state-to-allo...
- treis 7y ago>which will convert bitcoins to dollars for the Treasurer’s office
- erentz 7y agoSo it won’t be 1:1 redeemable? That’s pretty critical - since the US IRS requires you to report all purchases you make with a cryptocurrency in its USD equivalent value at the time. This starts to mount very high if you are making every day purchases as presumably FB hope. So how are Facebook going to get around this? Or are they just going to ignore this problem and leave it to users to either get flagged by the IRS or for the IRS to be forced to change its rules for FBs benefit?
- tim333 7y agoBut if you mostly spend Libras... The dollar will start to seem unstable and useless. For people who do business and fill tax returns there's a big incentive to use whatever currency you have to fill out the return in to prevent it getting awful complicated.