5 ms·

What Facebook’s new currency means for the banking system

38 points by jkuria 7y ago

bassman9000 7y ago
If every Westerner held in Libra an amount equal to one-tenth of their bank deposits today, the new currency outstanding would be worth over $2trn. How worried should banks be? Realistic start to the article.
- deleted 7y ago
  [deleted]
- deleted 7y ago
  [deleted]
- codyb 7y ago
  Considering how in debt the average American seems to be (obviously not representative of the entire Western world), I wouldn’t be surprised if it’d put them in the red.
ilaksh 7y ago
Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies. Its completely tied to fiat, has no real privacy or ultimate control over the wallet, no value on its own or anti-inflation etc. It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing. The goal is for Visa, PayPal, and Mastercard (who are sponsoring it) to keep being able to profit from digital payments, and to fight against things like Bitcoin and Ethereum which are making major pushes to scale. They want to get in ahead of real cryptocurrency. Anyone in banking or government who is concerned about cryptocurrency impacting their control will eventually figure out that Libra is the best thing they could hope for. I am worried that they will eventually figure that out, and then get quite excited for Libra, then Libra will launch and really restrict uptake of Bitcoin and Ethereum. Once governments get familiar with their convenient Facebook Libra Financial Spy Portal they might even try to outlaw real cryptocurrencies.
- hi5eyes 7y ago
  facebook is really trying to copy wechat with tying everything into messaging/payments its kind if amazing with the possibility of govts/institutions getting a hard on trying to outlaw cryptocurrency they’ll only get more popular “uncensorable money” is more important in our world/internet that’s increasingly becoming consolidated
  - anonymous5133 7y ago
    It is an overall net positive. Just imagine if you live in a country with unstable currency/government. Libra might allow you to protect yourself and allow you to continue surviving (by being able to trade or buy stuff from abroad). Think Venezuela. Only problem is if you don't have a cell phone, internet or electricity.
- jakelazaroff 7y ago
  > Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies. That's not really a great selling point. So far most cryptocurrency adoption has either been for speculation or illegal activity. It hasn't caught on in the mainstream at all, either as a currency or a store of value.
  - jchw 7y ago
    While it obviously hasn’t taken off as a mainstream currency, it certainly entered the mainstream mindshare. And even if it is known for illicit purchases, it’s by no means useless for legitimate purchases. The best use case now is for privacy, which I suppose is misleading since it may lead folks to falsely believe that use of cryptocurrency alone makes them anonymous. Even still, there’s hardly any alternative for that use case. I use it to pay for VPNs just as a matter of principle. Reality: I think cryptocurrency is worse for illicit purchases than many realize and simultaneously better for legitimate purchases than many realize. Pseudonymity is more useful for average users than full anonymity. Hard to really know for sure what dominates the volume, but based on folks I know with large amounts of Bitcoin, I’d actually guess its been mostly investing for a long time. That said, I never store value in any crypto, but I do think it is underrated for more legitimate use cases.
neonate 7y ago
http://archive.is/Q5Saf http://archive.is/Q5Saf
TomMckenny 7y ago
I now have read that the Libra will have complete liquidity, will be pegged to multiple currencies and will earn interest (which goes to founding organizations). How can all these things be true? Are they just using these terms with the same freedom they use the word "crypto-currency"?.
- thoughtfunction 7y ago
  It's a multi-currency index fund consisting of deposits of currency from users. I think the goal is to make an international currency that would be stable across countries.
  - mullingitover 7y ago
    If it's pegged to multiple currencies, wouldn't that mean it's not stable against any currency?
    - gremlinsinc 7y ago
      The goal I believe is to be 1:1 in multiple currencies (or maybe 0.9:1 or 1.1:1 as close as possible -- so if you were to buy libra with japanese yen it would cost 1:1, or possibly they'd do it based on the highest of the pegged currencies, so if euro is highest they'd go w/ 1:1 euro, then when you cash out to usd directly from libra, you'd go off the current euro:usd differential. It's definitely complicated, and I think going to be a management / development nightmare. The best thing would've been just go with USD, or Euro since those are the most used funds currently then have a built in forex exchange to instantly change local currencies to libra based on their usd/euro pairing rate.
- deleted 7y ago
  [deleted]
- anonymous5133 7y ago
  Yes it is true. From what I understand if there is an excessive amount of selling then they simply fund the withdraws by taking funds out of the reserves and simply "deleting" the libra tokens. Same story if there is lots of people buying. They simply put more into reserves to create new tokens. In theory they could actually put surplus reserves (over 100%) into the backing due to interest accumulation.
mullingitover 7y ago
Libra seems like the worst of all worlds. Zero anonymity like a credit card, the untrustworthiness of Facebook, and with the paltry transaction throughput of a cyptocurrency. I saw the greatest minds of my generation destroyed by being tasked with making financial Rube Goldberg machines.
- nemild 7y ago
  But also, the distribution muscle of Facebook.
- tylersmith 7y ago
  The Libra consensus model utilizes permissioned coordinators acting within a legal framework which will certainly allow their transaction throughput to be many orders of magnitude over a traditional cryptocurrency.
- ShorsHammer 7y ago
  Can you sign me up for anonymous credit card? Surely that must be worth it's weight in gold. My current credit card provider can see the exact item purchases I made from the supermarket then sell it off to third parties while I need to ask for and keep a paper receipt to do so.
  - mantas 7y ago
    He probably meant that merchant would see your FB profile and all the associated data. Meanwhile when you pay with a credit card, merchant has access to very little data.
  - rienbdj 7y ago
    Apple Pay enables anonymous spending iirc
    - ShorsHammer 7y ago
      Find that incredibly hard to believe. I can pay money to an Iranian charity?
saravana85 7y ago
Libra could be dangerous because we could send money without letting our original name or proof
- anonymous5133 7y ago
  Libra is going to be a KYC/Anti AML coin. Not really sure how they're going to 100% enforce it though.
pseingatl 7y ago
"It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing." Exactly. Why FB added this hocus-pocus isn't clear at all it isn't needed (WeChat does fine without it). A WeChat payment system that would permit individual FB account holders to send "F-Bucks" to each other at low cost would vastly disrupt the remittance payments system.
- ilaksh 7y ago
  https://youtu.be/1ee-cHbCI0s https://youtu.be/1ee-cHbCI0s
- ThrustVectoring 7y ago
  The point of the hocus-pocus is to attempt to confuse the regulatory agencies into granting an exemption from AML/KYC laws.

38 points by jkuria 7y ago

If every Westerner held in Libra an amount equal to one-tenth of their bank deposits today, the new currency outstanding would be worth over $2trn. How worried should banks be? Realistic start to the article.

deleted 7y ago
[deleted]
deleted 7y ago
[deleted]
codyb 7y ago
Considering how in debt the average American seems to be (obviously not representative of the entire Western world), I wouldn’t be surprised if it’d put them in the red.

ilaksh 7y ago

Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies. Its completely tied to fiat, has no real privacy or ultimate control over the wallet, no value on its own or anti-inflation etc. It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing. The goal is for Visa, PayPal, and Mastercard (who are sponsoring it) to keep being able to profit from digital payments, and to fight against things like Bitcoin and Ethereum which are making major pushes to scale. They want to get in ahead of real cryptocurrency. Anyone in banking or government who is concerned about cryptocurrency impacting their control will eventually figure out that Libra is the best thing they could hope for. I am worried that they will eventually figure that out, and then get quite excited for Libra, then Libra will launch and really restrict uptake of Bitcoin and Ethereum. Once governments get familiar with their convenient Facebook Libra Financial Spy Portal they might even try to outlaw real cryptocurrencies.

hi5eyes 7y ago
facebook is really trying to copy wechat with tying everything into messaging/payments its kind if amazing with the possibility of govts/institutions getting a hard on trying to outlaw cryptocurrency they’ll only get more popular “uncensorable money” is more important in our world/internet that’s increasingly becoming consolidated
- anonymous5133 7y ago
  It is an overall net positive. Just imagine if you live in a country with unstable currency/government. Libra might allow you to protect yourself and allow you to continue surviving (by being able to trade or buy stuff from abroad). Think Venezuela. Only problem is if you don't have a cell phone, internet or electricity.
jakelazaroff 7y ago
> Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies. That's not really a great selling point. So far most cryptocurrency adoption has either been for speculation or illegal activity. It hasn't caught on in the mainstream at all, either as a currency or a store of value.
- jchw 7y ago
  While it obviously hasn’t taken off as a mainstream currency, it certainly entered the mainstream mindshare. And even if it is known for illicit purchases, it’s by no means useless for legitimate purchases. The best use case now is for privacy, which I suppose is misleading since it may lead folks to falsely believe that use of cryptocurrency alone makes them anonymous. Even still, there’s hardly any alternative for that use case. I use it to pay for VPNs just as a matter of principle. Reality: I think cryptocurrency is worse for illicit purchases than many realize and simultaneously better for legitimate purchases than many realize. Pseudonymity is more useful for average users than full anonymity. Hard to really know for sure what dominates the volume, but based on folks I know with large amounts of Bitcoin, I’d actually guess its been mostly investing for a long time. That said, I never store value in any crypto, but I do think it is underrated for more legitimate use cases.

neonate 7y ago

http://archive.is/Q5Saf http://archive.is/Q5Saf

TomMckenny 7y ago

I now have read that the Libra will have complete liquidity, will be pegged to multiple currencies and will earn interest (which goes to founding organizations). How can all these things be true? Are they just using these terms with the same freedom they use the word "crypto-currency"?.

thoughtfunction 7y ago
It's a multi-currency index fund consisting of deposits of currency from users. I think the goal is to make an international currency that would be stable across countries.
- mullingitover 7y ago
  If it's pegged to multiple currencies, wouldn't that mean it's not stable against any currency?
  - gremlinsinc 7y ago
    The goal I believe is to be 1:1 in multiple currencies (or maybe 0.9:1 or 1.1:1 as close as possible -- so if you were to buy libra with japanese yen it would cost 1:1, or possibly they'd do it based on the highest of the pegged currencies, so if euro is highest they'd go w/ 1:1 euro, then when you cash out to usd directly from libra, you'd go off the current euro:usd differential. It's definitely complicated, and I think going to be a management / development nightmare. The best thing would've been just go with USD, or Euro since those are the most used funds currently then have a built in forex exchange to instantly change local currencies to libra based on their usd/euro pairing rate.
deleted 7y ago
[deleted]
anonymous5133 7y ago
Yes it is true. From what I understand if there is an excessive amount of selling then they simply fund the withdraws by taking funds out of the reserves and simply "deleting" the libra tokens. Same story if there is lots of people buying. They simply put more into reserves to create new tokens. In theory they could actually put surplus reserves (over 100%) into the backing due to interest accumulation.

mullingitover 7y ago

Libra seems like the worst of all worlds. Zero anonymity like a credit card, the untrustworthiness of Facebook, and with the paltry transaction throughput of a cyptocurrency. I saw the greatest minds of my generation destroyed by being tasked with making financial Rube Goldberg machines.

nemild 7y ago
But also, the distribution muscle of Facebook.
tylersmith 7y ago
The Libra consensus model utilizes permissioned coordinators acting within a legal framework which will certainly allow their transaction throughput to be many orders of magnitude over a traditional cryptocurrency.
ShorsHammer 7y ago
Can you sign me up for anonymous credit card? Surely that must be worth it's weight in gold. My current credit card provider can see the exact item purchases I made from the supermarket then sell it off to third parties while I need to ask for and keep a paper receipt to do so.
- mantas 7y ago
  He probably meant that merchant would see your FB profile and all the associated data. Meanwhile when you pay with a credit card, merchant has access to very little data.
- rienbdj 7y ago
  Apple Pay enables anonymous spending iirc
  - ShorsHammer 7y ago
    Find that incredibly hard to believe. I can pay money to an Iranian charity?

saravana85 7y ago

Libra could be dangerous because we could send money without letting our original name or proof

anonymous5133 7y ago
Libra is going to be a KYC/Anti AML coin. Not really sure how they're going to 100% enforce it though.

pseingatl 7y ago

"It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing." Exactly. Why FB added this hocus-pocus isn't clear at all it isn't needed (WeChat does fine without it). A WeChat payment system that would permit individual FB account holders to send "F-Bucks" to each other at low cost would vastly disrupt the remittance payments system.

ilaksh 7y ago
https://youtu.be/1ee-cHbCI0s https://youtu.be/1ee-cHbCI0s
ThrustVectoring 7y ago
The point of the hocus-pocus is to attempt to confuse the regulatory agencies into granting an exemption from AML/KYC laws.