12 ms·

Libra, a Cyberpunk Nightmare in the Midst of Crypto Spring

172 points by NKosmatos 7y ago

foobarbecue 7y ago
"Most talked about in history"? Needs citation... And the hyperbole is constant through the midpoint of the article, where I stopped reading.
- StaticRedux 7y ago
  It's a hackernoon opinion blog post, not the New York Times. And you don't need a citation for something that is clearly meant to be hyperbole. [Citation needed] has gone from a notation about checking facts to a trendy response whenever someone doesn't like something they read in a blog post or comment.
  - devin 7y ago
    I don’t think that hyperbole, “clearly” intentional or not, should be given a free pass by readers simply because it’s an opinion piece. I also found the tone of the article a bit off, and it has nothing to do with whether I agree or disagree with any of it.
  - foobarbecue 7y ago
    If the author is going to make such extraordinary claims, I expect to see some research to back it up. There are plenty of metrics: google trends, headline count, tweet count etc. Since he hasn't done the legwork, and the claim rings false, I'm calling him out.
- deleted 7y ago
  [deleted]
- ilaksh 7y ago
  It's not hyperbole. People are completely under-reacting. If Libra succeeds, it could completely change things for the worse. It has a good chance of succeeding once governments understand that it impedes real cryptocurrencies.
verdverm 7y ago
Pretty good concessions from a crypto enthusiast, one of the better or fun libra articles I've read
gpm 7y ago
Something I haven't seen mentioned anywhere yet is the amount of power controlling the reserve will grant the libra association. They are free to move the reserve around between "low risk" investments. If the reserve grows to a large size that will mean they can prop up a (small) countries currency (and thus economy) by using the reserve to buy some of it, or it can crash a (small) countries currency that it is currently invested in by divesting. Small countries might have to start thinking much more carefully about regulating the companies controlling this if it succeeds.
- notahacker 7y ago
  Capital flight is already a thing. But large scale speculation on the economies of random small foreign countries isn't a "low risk" investment and the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to.
  - gpm 7y ago
    > Capital flight is already a thing. Sure, but if this succeeds they will have order of magnitudes more capital to do it with than is already a thing. > large scale speculation on the economies of random small foreign countries isn't a "low risk" investment They are the ones who get to define the term "low risk", as part of a basket of many such economies it deserves the term as well. > the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to. Of course it does, and not just in terms of exerting political pressure (which is an incentive which is literally the purpose of this conversation) but in terms of maintaining a safe basket of goods with as high interest rates as possible.
    - notahacker 7y ago
      I don't think Libra is going to end up with orders of magnitude more capital than the rest of the world's investors, most of whom are much more risk tolerant, and they're obviously going to define the term "low risk" as "let's make an easy profit by backing our US Libra-holders' accounts with US Treasuries instead of cash" and not "let's corner the market for Rwandan government securities to try exert political pressure on them"
buboard 7y ago
> By pegging it to a flurry of other currencies they’ve started the planet down the path of ditching the dollar as the default world currency. That's probably false. FB's coin will be at the mercy of the Fed and ECB, and most likely will be an equal or worse choice than any of the fiat currencies in the basket , considering central banks move in concert these days. It doesn't seem FB will pose any real threat to central banking unless they unpeg their currency.
- elif 7y ago
  >FB's coin will be at the mercy of the Fed and ECB Only if the currency flows out of traditional Fiat and into Libra don't substantially affect currency prices or the effect is more or less universal. For instance, if the euro loses 10% value in a given period of time while 3 other equally weighted currencies are relatively stable, libra would lose ~2.5% value in that time. Given the low risk this seems like an obvious hedge if you are heavy in euro, and momentum could easily snowball.
  - buboard 7y ago
    it could also work the other way, e.g. that the basket loses more than the USD . I dont think overall there is any benefit , but maybe there is overall reduced volatility or risk. I don't know if the central limit causes a reduction or increase of risk here. It seems like the index fund of currencies.
leshokunin 7y ago
You know, strategically, when you’re about to get super regulated and the government is touting antitrust probes: maybe don’t start something that competes with the Dollar.
- buboard 7y ago
  But how does the US get there first before china does?
- toyg 7y ago
  I thought the same, but then it makes sense if you look at it from the sort of fuck-you attitude that FB leadership tends to have: "So you want to undermine us, fine. But what if we undermine you first?"
  - olivermarks 7y ago
    My read is that it IS the USD. '...it may actually cement the dollar as the world currency once and for all. As the Association mops up all the fiat in the world they’ll likely turn it into dollars on the back end anyway, so Euros and Yen become Dollars and cents.'
    - toyg 7y ago
      But it would still give them leverage, because cutting FB to size would then hit the USD.
      - olivermarks 7y ago
        The USD and petrodollar are under great pressure as reserve curencies at this point in history, this could be an effort by the globalized elites to create a new world currency. I suspect this FB initiative will fail but set up a next generation with similar size and heft
    - est31 7y ago
      Yeah, being a western currency, Libra competes more with RMB than with Euros or Dollars. It's more what the CFP franc is to Euros than an anti-Dollar. If the power grows too big, it may get nationalized like how the BEIC got nationalized.
aakilfernandes 7y ago
Libra isn't a cypherpunk wet dream, but it moves us in that direction and thats a good thing. This article is written from the perspective that crypto mass-adoption is right around the corner (i.e. just a few UX tweaks) and that Libra will displace the crypto-utopia that could-have-been. I couldn't disagree more. The lack of adoption is a combo of a 1) network "dead-zone", 2) reversal risk, and 3) regulatory friction. FB & Co are uniquely situated to fix these 3 in a way small companies just can't. 1) Any network is useless unless people you need to use the network are using it. Cryptos are still in the "dead-zone" where there's not enough people using it where it has value as a payment platform. By integrating into existing apps (Venmo, FB Messenger, Paypal) that could change 2) Every fiat transaction has some level of reversal risk. There is legislation in the US that requires, and companies that implement, reversal of payments if the payor claims fraud or account takeover. Any company that sits in between fiat systems and the crypto systems have a huge amount of this risk cause they can't reverse crypto payments. These companies are uniquely capable of handling this risk because they already spending resources to figuring out that you're a real human being and you are who you say you are. 3) Regulatory friction (AML/KYC) is something these companies are uniquely able to tackle because they have your identity. Furthermore, they have the legal resources to find out how far they can push the line and lobbying to keep them from harm when they get too close.
- confounded 7y ago
  In cypherpunk terms, what’s dreamy about a crypto currency with no anonymity, that shifts power from international democratic governments to private US corporations?
  - _eht 7y ago
    Nothing, really.
  - aakilfernandes 7y ago
    1) Irreversibility. You have a payment system with that small companies can actually build gateways to true cryptos. Not to mention the “high risk” businesses locked out or priced out of fiat gateways 2) Cryptographic proofs of payment. With that you can do a lot of fun stuff, especially with smart contracts. Going back to #1 you can make the gateway trustless
thrwo12313 7y ago
Re: India The connections to Aadhar is far more interesting than is mentioned in the article. There is a revolving door between USAID's 'Catalyst' promoting cashless transactions, Aadhar and the people who benefited from demonetization. The Indian state has also been extremely antagonistic to Bitcoin and other such 'anarchist' platforms. https://www.globalresearch.ca/a-well-kept-open-secret-washington-is-behind-indias-brutal-demonetization-project-2/5566167 https://www.globalresearch.ca/a-well-kept-open-secret-washin... The state apparatus often grumbles about 'terrorism' and how internet has made things difficult for them. Infact, the minister incharge of IT was quoted as saying in 2011 that internet access needs to be moderated with IDs (guess which one). It's almost certain that such legislation will be authorized in the coming decade - perhaps sooner if the "i-patriot" act which is in the waiting (in the US) passes earlier. It may very well be that the retainers of the East India company (aka deep state) are planning on selling the nation for a few pieces of silver again - which would explain why policies remain uniformly the same with every dispensation. Would not be the first time, and should not be surprising. However, since history education follows the colonial model of cryptic self-justification, it should not surprise anyone that clear foreign geopolitical moves (India has close to half a trillion of IMF/WB loans) are now seen as 'nationalistic'. It'll be very interesting to see how this proceeds in India - given its hostile stance on Bitcoin. I'm betting the state will welcome it with open arms and will probably proceed to tie it to UPI. In fact this could take a big share of the foreign remittance market, and could rope in Indian banks in to influence the state. I imagine people like Nandan Nilekani, who illegally pushed the 'Big Brother' project, will play crucial roles here.
- nnnmnten 7y ago
  GlobalResearch.ca is a conspiracy website run by a pro-Russian 9/11 truther. https://en.wikipedia.org/wiki/Michel_Chossudovsky https://en.wikipedia.org/wiki/Michel_Chossudovsky
bcp2384 7y ago
When people say Cyberpunk w.r.t crypto, do they actually mean Cypherpunk? Or can someone explain what the difference is?
- cyberpunk 7y ago
  One is a very attractive bearded software developer, the other is something to do with crypto? Unless they’re referring to the dystopian feel of this whole thing, which is more likely.
  - bananocurrency 7y ago
    no that doesn't sound quite right.
- _emacsomancer_ 7y ago
  Not in this case, no. Cyberpunk literature themes generally involve massive economic discrepancies and mega-corporations functioning as governments. See, for instance, the fiction of https://en.wikipedia.org/wiki/William_gibson https://en.wikipedia.org/wiki/William_gibson
- ambicapter 7y ago
  Cyberpunk doesn't necessarily have to do with crypto, it can just be internet and VR and being a rebel while being jacked in to your nine-CRT set up in your neon-lit basement techno club. Cypherpunk refers to the same basement techno club but the freedom and rebellion comes from the privacy and inviolable secrets enabled by cryptography. edit: Better comment below me, cyberpunk is very much set in economic dystopias, and the rebels are tech hackers.
- arkades 7y ago
  In this case, I think the concern goes: FB exerts increasing control over, and insight into, financial transactions. Alongside excessive insight into most other aspects of personal lives. The result becomes the sort of MegaCorp that cyberpunk novels are built off of. Except, you know... I don't think William Gibson ever expected the future megacorp to have sprung up from an undergrad pivoting his Hot or Not rip-off.
hkt 7y ago
Libra shows what crypto and in particular blockchain is really for: allowing global megacorporations to start their assault on the nation state. It's pretty critical we undo this, while the nation state still has its monopoly on the legitimate use of force.
- antidesitter 7y ago
  Not everyone shares your adoration for "the nation state".
  - p_l 7y ago
    Nation state is still better than corporation
    - antidesitter 7y ago
      No. It’s usually much worse, actually.
- atemerev 7y ago
  Why do we need nation states?
  - p_l 7y ago
    Nation in nation state is pretty recent addition and already dying off (fortunately), but the state owing allegiance to its citizens (ever imperfect) is better than slide back to feudal-authoritarian corporation that is in no way on the hook for anything towards the common man.
    - wyoh 7y ago
      At least you can choose the corporation you want to deal with, unlike the nation state you live in.
      - 7y ago
jayd16 7y ago
Can someone explain what this provides to users over, say, a credit or debit card? You don't have the rebellious notions of sticking it to traditional banks, not do you have (completely imagined) anonymity crypto fans have gravitated to. You don't have any of the intangibles crypto fans like. It just seems like Facebook wants a central bank. Who's asking for that?
- gst 7y ago
  Direct peer-to-peer payments: Those are currently a nightmare when you regularly travel. US: Venmo, Europe: SEPA, China: Wechat, etc. If Facebook manages to sign up enough stakeholders from different countries (that provide gateways between Libra and traditional bank accounts in their respective countries) Libra would provide a viable global alternative to the currently very fragmented market.
  - hrktb 7y ago
    Can’t that be done through easily through Paypal ? (or Western Union, I just never tried)
    - deif 7y ago
      You need a bank account with Paypal still. This is direct payment into your personal virtual wallet (supposedly not linked to your real identity) avoiding all banks.
      - hrktb 7y ago
        Depending on your country you don’t. Paypal needs a bank or a card, and for instance in France cards can be prepaid (supermaket chains can make their own). All of that will be tied to a real identity, but I am not sure Libra will also be completely free of these ties. There must be a point where to use your wallet you’ll have to justify your identity (i.e. above some amount or some kind of purchases you hit KYC requirements)
    - gst 7y ago
redthrow 7y ago
At the end of the article the author is somewhat hopeful that some floss alternative will catch on, eventually. What happened to MobileCoin that Moxie was advising? When will it be integrated to Signal?
- baby 7y ago
  A cryptocurrency on top of SGX right?
Bombthecat 7y ago
It is really strange to see the world move into the direction of shadowrun...
electrotype 7y ago
I wonder: why does everybody say it's a "Facebook currency", a Facebook project, if there are +/- 30 corporations in the association? Does Facebook have more decision power than Visa, MasterCard or any other participating corporation? Or is Facebook simply the main vector Libra will be promoted with? Would Libra still be a project if Facebook was (hypothetically) shut down?
- zeroxfe 7y ago
  > why does everybody say it's a "Facebook currency", a Facebook project, if there are +/- 30 corporations in the association? Because FB launched it, and currently appears to have the most control over the project. At the same time, people don't actually take the time to understand the governance model. > Does Facebook have more decision power than Visa, MasterCard or any other participating corporation? No. They get a seat in the governance organization, which they hope will be about 100 organizations at launch (so they get ~1% of the vote.) > Or is Facebook simply the main vector Libra will be promoted with? For now, looks like it. > Would Libra still be a project if Facebook was (hypothetically) shut down? Yes, it would. Again FB will have just 1% of the control at launch.
  - microwavecamera 7y ago
    > Yes, it would. Again FB will have just 1% of the control at launch. But wouldn't FB be running/in control of the most of the infrastructure behind Libra? The stability of the currency would be dependent on FB providing the core services behind Libra. Having "just 1% of the control" doesn't matter if FB can just shut it down and/or destabilize it's value at will. It's FB actually intends for it to be an open cryptocurrency then why make a new one when we already have several options available other than being able to exert control over it?
drtillberg 7y ago
Facebook is simply making another private scrip. They're turning IMF SDRs into a private currency. Prior to this crop of entrepreneurs, when I read about scrip it seemed always to be in connection with alleged violation of law, I think legal tender laws. But, who knows, this may turn out swell.
ur--whale 7y ago
Conspicuously missing from the entire libra story is how they are actually going to manage the peg. How will they handle the custodian counter-party risk? What I mean by that is: for libra to actually be a stablecoin, for every libra unit in circulation, FB and their merry band of friends will need to stash a frozen combo of {dollar, euro, yen} somewhere. That "somewhere" is actually not easy at all to design from a financial infrastructure point of view: any institution (other than central banks) who will actually store that stash will have to: - be regularly audited by independent auditors - be risk-free (and there is no such a thing) or the peg will drift. Worse, these custodians of what is already essentially virtual money are going to be sitting on a huge pile of currency and to guarantee the peg, won't be allowed to do anything with it. I give it 6 months before that money is re-invested somewhere through some smart financial engineering.
- arawde 7y ago
  I've only read the white paper, but finance is one of my biggest hobbies, so I'm going to take a stab at addressing the concerns you mention. It's not entirely a currency peg - it's an asset peg. The assets will be Treasurys, bunds, etc. that are _representative_ of currencies, but are not direct currencies. The peg is going to drift. The history of currency pegs is filled with struggles by institutions to maintain the peg at a fixed level, only to let go of the peg and convert to floating. I think the idea behind Libra is that, while the peg will drift, Libra will still be a drastically more stable store of value compared to almost every other crypto. I would not be surprised to learn that the Libra Foundation's custodians are the people holding the assets and handling the counter-party risk. It explicitly says in the white paper that the interest earned on the reserves held by the custodians will be used to pay for expenses of maintaining the network. If I was Visa, I would be more than happy to hold a basket of bonds and take a cut in a play to try to expand my customer base, by moving more people into the transaction market space. I understand why my answer wouldn't sit well - putting trust into thesee parties and buying into the ideas behind Libra require a huge leap of faith, one that I don't think I would even participate in. But I do think that the mechanics behind how Libra manages the peg are actually not as nefarious or difficult as you laid out.
  - 7y ago
bmdavi3 7y ago
Sure it'll be nice to make easy money off the interest on deposits. And it'll be nice to make money on the analytics that can be run on all the worlds' transactions. Great. But the biggest pay off is that once consumers buy into Libra as a thing on its own, the policy can be changed to no longer link it to any basket of currencies, and it can then be issued without that annoying and expensive currency-buying-thing. Just pure profit. What am I missing?
- i_am_nomad 7y ago
  You’re missing the part where Treasury agents swarm the Libra offices and arrest everyone for various flimsy charges. If there is one single thing that enrages the government more than anything else, it is denying it revenue.
  - buboard 7y ago
    libra is in switzerland
- mr_toad 7y ago
  > it can then be issued without that annoying and expensive currency-buying-thing. Just pure profit. https://en.wikipedia.org/wiki/Seigniorage https://en.wikipedia.org/wiki/Seigniorage You can only do so much of that before you debase your currency.
gooseus 7y ago
All the big players in the Association can probably afford this gamble, but if they don't already have the government and the banks on their side, then this thing is DoA. Government only really needs to do a few things to be essential, one of those things is securing and backing the legal tender, and yes this is also one of the ways they exert authority. It's also how they maintain legitimacy, this has been true for thousands of years. What country is going to give up this power and hand it over to a consortium of multinational corporations (with 0 banks in it) led by a corporation that is controlled by a sole person? If it can't be nationalized then they won't let it be adopted and I'm sure every country (including the US) has any number of laws that will allow them to prevent the undermining of their currency. They let Bitcoin do its thing because it lacked all the things this has, which let them classify it as something closer to commodity/security, and not a currency. If this thing isn't that, then I don't see how this is going to be acceptable without the government demanding a massive hand in how it is run.
ncmncm 7y ago
The origin of physical currency -- coins -- happened 2000 years after money was invented. Coins were invented as a way to provision armies. It worked like this: soldiers were paid in coins. Taxes were required to be paid only with the new coins. The only way to get the coins, to pay your taxes with, was to sell supplies to soldiers who had coins. Armies supplied, check. Facebook has an opportunity to force its coin into use by a similar stratagem: offer advertisers a discount (at first!) if paid in Libra. Advertisers can only get Libra from Facebook account holders. Advertisers have to sell at a discount, for Libra, to get enough Libra, but they get it back in the advertising discount. If buyers want these discounts, they need to get Libra from Facebook. Soon, Facebook controls the economy of the world. It was recently explained to me that Facebook only wishes they could be as evil as Google, but they were way behind. (Google passed Microsoft sometime back.) This could leapfrog Facebook far beyond Google's dreams. Are we in for Dystopia? I can't see how not, unless they fuck up so it's both too hard to use and too easy to get ripped off.
jillesvangurp 7y ago
Where to begin. This article is full of big words and drama. I've been reading through the whitepapers and discussions and there seem to be an awful lot of people reading all sorts of things in this stuff. What worries me is that it mostly is people responding to interpretations rather than the raw facts. Big dramatic outcomes make for awesome blog articles. But that doesn't mean it's the only outcome; or even the likely outcome. I try to look at this a bit more rationally. Given that blockchains have grown economically in the last few years for reasons that you may or may not agree with philosophically, morally, etc., it is not surprising that existing entities with economic wealth are looking to get in on the action. From this point of view, what Libra is doing is entirely unsurprising. From a technical point of view, what Facebook is doing with Libra is cherry picking what seems to work in the market. Consensus models seem to work for the likes of Ripple, Stellar and a few others. There are a lot of people who object against this model for all sorts of reasons. But it undeniably works and scales quite well. A system this ambitious needs to scale. It's not optional. I don't really see how Libra could have picked anything else given the current state of the art. Mining seems a dead end in terms of scalability and off by orders of magnitude from where it needs to be. There are lots of technical issues and even when it works, things like 50% attacks, insane energy consumption, etc. make this a non starter. Ethereum has been trying to switch to proof of stake for some time now and the are also trying to introduce sharding. Maybe this is fixable, but the reality is that they are nowhere close to shipping something that scales by the time Libra intends to open for business. So, when Facebook decided to do this, building their own platform was a foregone conclusion because what's out there just isn't anywhere near good enough and basing it on consensus algorithms was the only logical choice technically. The only relevant question is, why is it just Facebook doing this and how long is it going to take for the rest of the world to react? I'm talking about the likes of Google, Apple, banks, the oil industry, anyone with economic resources basically. They'll all want in on the action and not all of them are going to be inventing their own blockchain like platform (using the term loosely here). I doubt they are going to have Facebook have all the fun. The follow up debate about the legalities and regulations is also going to be interesting. My guess is governments will react slowly and by the time they start making bigger decisions, it will be too late. Once you have a few "too big to fail" type companies doing stuff like this, they are not just going to pull the plug. So, I expect things will heat up shortly. I think this is a good thing. We need competition of ideas and approaches. If what Libra is doing bothers you, stop whining and do something better. Now is a good time to get started with that.
jshaqaw 7y ago
"Of course, those big company Association members, like Visa and Mastercard, all paid $10 million dollars for the privilege of functioning as validators on the network. Why would they do that? Because they’re going to make a lot of money." --- Long ago I was a management consultant for Amex advising on micropayments (this was decades ago). The consultants answer is always to make a bunch of small bets in a maybe emerging space to preserve optionality. It looks good on a presentation, makes the board reasonably content that they have a future looking strategy, leads to fun follow up work identifying bets which are financially irrelevant to the company if they go to zero, etc... This isn't some grand strategy of Visa and Mastercard. $10MM to those companies is a write-off FOMO punt. If they had put in 20x that amount I would be paying more attention.

172 points by NKosmatos 7y ago

"Most talked about in history"? Needs citation... And the hyperbole is constant through the midpoint of the article, where I stopped reading.

StaticRedux 7y ago
It's a hackernoon opinion blog post, not the New York Times. And you don't need a citation for something that is clearly meant to be hyperbole. [Citation needed] has gone from a notation about checking facts to a trendy response whenever someone doesn't like something they read in a blog post or comment.
- devin 7y ago
  I don’t think that hyperbole, “clearly” intentional or not, should be given a free pass by readers simply because it’s an opinion piece. I also found the tone of the article a bit off, and it has nothing to do with whether I agree or disagree with any of it.
- foobarbecue 7y ago
  If the author is going to make such extraordinary claims, I expect to see some research to back it up. There are plenty of metrics: google trends, headline count, tweet count etc. Since he hasn't done the legwork, and the claim rings false, I'm calling him out.
deleted 7y ago
[deleted]
ilaksh 7y ago
It's not hyperbole. People are completely under-reacting. If Libra succeeds, it could completely change things for the worse. It has a good chance of succeeding once governments understand that it impedes real cryptocurrencies.

verdverm 7y ago

Pretty good concessions from a crypto enthusiast, one of the better or fun libra articles I've read

gpm 7y ago

Something I haven't seen mentioned anywhere yet is the amount of power controlling the reserve will grant the libra association. They are free to move the reserve around between "low risk" investments. If the reserve grows to a large size that will mean they can prop up a (small) countries currency (and thus economy) by using the reserve to buy some of it, or it can crash a (small) countries currency that it is currently invested in by divesting. Small countries might have to start thinking much more carefully about regulating the companies controlling this if it succeeds.

notahacker 7y ago
Capital flight is already a thing. But large scale speculation on the economies of random small foreign countries isn't a "low risk" investment and the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to.
- gpm 7y ago
  > Capital flight is already a thing. Sure, but if this succeeds they will have order of magnitudes more capital to do it with than is already a thing. > large scale speculation on the economies of random small foreign countries isn't a "low risk" investment They are the ones who get to define the term "low risk", as part of a basket of many such economies it deserves the term as well. > the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to. Of course it does, and not just in terms of exerting political pressure (which is an incentive which is literally the purpose of this conversation) but in terms of maintaining a safe basket of goods with as high interest rates as possible.
  - notahacker 7y ago
    I don't think Libra is going to end up with orders of magnitude more capital than the rest of the world's investors, most of whom are much more risk tolerant, and they're obviously going to define the term "low risk" as "let's make an easy profit by backing our US Libra-holders' accounts with US Treasuries instead of cash" and not "let's corner the market for Rwandan government securities to try exert political pressure on them"

buboard 7y ago

> By pegging it to a flurry of other currencies they’ve started the planet down the path of ditching the dollar as the default world currency. That's probably false. FB's coin will be at the mercy of the Fed and ECB, and most likely will be an equal or worse choice than any of the fiat currencies in the basket , considering central banks move in concert these days. It doesn't seem FB will pose any real threat to central banking unless they unpeg their currency.

elif 7y ago
>FB's coin will be at the mercy of the Fed and ECB Only if the currency flows out of traditional Fiat and into Libra don't substantially affect currency prices or the effect is more or less universal. For instance, if the euro loses 10% value in a given period of time while 3 other equally weighted currencies are relatively stable, libra would lose ~2.5% value in that time. Given the low risk this seems like an obvious hedge if you are heavy in euro, and momentum could easily snowball.
- buboard 7y ago
  it could also work the other way, e.g. that the basket loses more than the USD . I dont think overall there is any benefit , but maybe there is overall reduced volatility or risk. I don't know if the central limit causes a reduction or increase of risk here. It seems like the index fund of currencies.

leshokunin 7y ago

You know, strategically, when you’re about to get super regulated and the government is touting antitrust probes: maybe don’t start something that competes with the Dollar.

buboard 7y ago
But how does the US get there first before china does?
toyg 7y ago
I thought the same, but then it makes sense if you look at it from the sort of fuck-you attitude that FB leadership tends to have: "So you want to undermine us, fine. But what if we undermine you first?"
- olivermarks 7y ago
  My read is that it IS the USD. '...it may actually cement the dollar as the world currency once and for all. As the Association mops up all the fiat in the world they’ll likely turn it into dollars on the back end anyway, so Euros and Yen become Dollars and cents.'
  - toyg 7y ago
    But it would still give them leverage, because cutting FB to size would then hit the USD.
    - olivermarks 7y ago
      The USD and petrodollar are under great pressure as reserve curencies at this point in history, this could be an effort by the globalized elites to create a new world currency. I suspect this FB initiative will fail but set up a next generation with similar size and heft
  - est31 7y ago
    Yeah, being a western currency, Libra competes more with RMB than with Euros or Dollars. It's more what the CFP franc is to Euros than an anti-Dollar. If the power grows too big, it may get nationalized like how the BEIC got nationalized.

aakilfernandes 7y ago

Libra isn't a cypherpunk wet dream, but it moves us in that direction and thats a good thing. This article is written from the perspective that crypto mass-adoption is right around the corner (i.e. just a few UX tweaks) and that Libra will displace the crypto-utopia that could-have-been. I couldn't disagree more. The lack of adoption is a combo of a 1) network "dead-zone", 2) reversal risk, and 3) regulatory friction. FB & Co are uniquely situated to fix these 3 in a way small companies just can't. 1) Any network is useless unless people you need to use the network are using it. Cryptos are still in the "dead-zone" where there's not enough people using it where it has value as a payment platform. By integrating into existing apps (Venmo, FB Messenger, Paypal) that could change 2) Every fiat transaction has some level of reversal risk. There is legislation in the US that requires, and companies that implement, reversal of payments if the payor claims fraud or account takeover. Any company that sits in between fiat systems and the crypto systems have a huge amount of this risk cause they can't reverse crypto payments. These companies are uniquely capable of handling this risk because they already spending resources to figuring out that you're a real human being and you are who you say you are. 3) Regulatory friction (AML/KYC) is something these companies are uniquely able to tackle because they have your identity. Furthermore, they have the legal resources to find out how far they can push the line and lobbying to keep them from harm when they get too close.

confounded 7y ago
In cypherpunk terms, what’s dreamy about a crypto currency with no anonymity, that shifts power from international democratic governments to private US corporations?
- _eht 7y ago
  Nothing, really.
- aakilfernandes 7y ago
  1) Irreversibility. You have a payment system with that small companies can actually build gateways to true cryptos. Not to mention the “high risk” businesses locked out or priced out of fiat gateways 2) Cryptographic proofs of payment. With that you can do a lot of fun stuff, especially with smart contracts. Going back to #1 you can make the gateway trustless

thrwo12313 7y ago

Re: India The connections to Aadhar is far more interesting than is mentioned in the article. There is a revolving door between USAID's 'Catalyst' promoting cashless transactions, Aadhar and the people who benefited from demonetization. The Indian state has also been extremely antagonistic to Bitcoin and other such 'anarchist' platforms. https://www.globalresearch.ca/a-well-kept-open-secret-washington-is-behind-indias-brutal-demonetization-project-2/5566167 https://www.globalresearch.ca/a-well-kept-open-secret-washin... The state apparatus often grumbles about 'terrorism' and how internet has made things difficult for them. Infact, the minister incharge of IT was quoted as saying in 2011 that internet access needs to be moderated with IDs (guess which one). It's almost certain that such legislation will be authorized in the coming decade - perhaps sooner if the "i-patriot" act which is in the waiting (in the US) passes earlier. It may very well be that the retainers of the East India company (aka deep state) are planning on selling the nation for a few pieces of silver again - which would explain why policies remain uniformly the same with every dispensation. Would not be the first time, and should not be surprising. However, since history education follows the colonial model of cryptic self-justification, it should not surprise anyone that clear foreign geopolitical moves (India has close to half a trillion of IMF/WB loans) are now seen as 'nationalistic'. It'll be very interesting to see how this proceeds in India - given its hostile stance on Bitcoin. I'm betting the state will welcome it with open arms and will probably proceed to tie it to UPI. In fact this could take a big share of the foreign remittance market, and could rope in Indian banks in to influence the state. I imagine people like Nandan Nilekani, who illegally pushed the 'Big Brother' project, will play crucial roles here.

nnnmnten 7y ago
GlobalResearch.ca is a conspiracy website run by a pro-Russian 9/11 truther. https://en.wikipedia.org/wiki/Michel_Chossudovsky https://en.wikipedia.org/wiki/Michel_Chossudovsky

bcp2384 7y ago

When people say Cyberpunk w.r.t crypto, do they actually mean Cypherpunk? Or can someone explain what the difference is?

cyberpunk 7y ago
One is a very attractive bearded software developer, the other is something to do with crypto? Unless they’re referring to the dystopian feel of this whole thing, which is more likely.
- bananocurrency 7y ago
  no that doesn't sound quite right.
_emacsomancer_ 7y ago
Not in this case, no. Cyberpunk literature themes generally involve massive economic discrepancies and mega-corporations functioning as governments. See, for instance, the fiction of https://en.wikipedia.org/wiki/William_gibson https://en.wikipedia.org/wiki/William_gibson
ambicapter 7y ago
Cyberpunk doesn't necessarily have to do with crypto, it can just be internet and VR and being a rebel while being jacked in to your nine-CRT set up in your neon-lit basement techno club. Cypherpunk refers to the same basement techno club but the freedom and rebellion comes from the privacy and inviolable secrets enabled by cryptography. edit: Better comment below me, cyberpunk is very much set in economic dystopias, and the rebels are tech hackers.
arkades 7y ago
In this case, I think the concern goes: FB exerts increasing control over, and insight into, financial transactions. Alongside excessive insight into most other aspects of personal lives. The result becomes the sort of MegaCorp that cyberpunk novels are built off of. Except, you know... I don't think William Gibson ever expected the future megacorp to have sprung up from an undergrad pivoting his Hot or Not rip-off.

hkt 7y ago

Libra shows what crypto and in particular blockchain is really for: allowing global megacorporations to start their assault on the nation state. It's pretty critical we undo this, while the nation state still has its monopoly on the legitimate use of force.

antidesitter 7y ago
Not everyone shares your adoration for "the nation state".
- p_l 7y ago
  Nation state is still better than corporation
  - antidesitter 7y ago
    No. It’s usually much worse, actually.
atemerev 7y ago
Why do we need nation states?
- p_l 7y ago
  Nation in nation state is pretty recent addition and already dying off (fortunately), but the state owing allegiance to its citizens (ever imperfect) is better than slide back to feudal-authoritarian corporation that is in no way on the hook for anything towards the common man.
  - wyoh 7y ago
    At least you can choose the corporation you want to deal with, unlike the nation state you live in.
    - 7y ago

jayd16 7y ago

Can someone explain what this provides to users over, say, a credit or debit card? You don't have the rebellious notions of sticking it to traditional banks, not do you have (completely imagined) anonymity crypto fans have gravitated to. You don't have any of the intangibles crypto fans like. It just seems like Facebook wants a central bank. Who's asking for that?

gst 7y ago
Direct peer-to-peer payments: Those are currently a nightmare when you regularly travel. US: Venmo, Europe: SEPA, China: Wechat, etc. If Facebook manages to sign up enough stakeholders from different countries (that provide gateways between Libra and traditional bank accounts in their respective countries) Libra would provide a viable global alternative to the currently very fragmented market.
- hrktb 7y ago
  Can’t that be done through easily through Paypal ? (or Western Union, I just never tried)
  - deif 7y ago
    You need a bank account with Paypal still. This is direct payment into your personal virtual wallet (supposedly not linked to your real identity) avoiding all banks.
    - hrktb 7y ago
      Depending on your country you don’t. Paypal needs a bank or a card, and for instance in France cards can be prepaid (supermaket chains can make their own). All of that will be tied to a real identity, but I am not sure Libra will also be completely free of these ties. There must be a point where to use your wallet you’ll have to justify your identity (i.e. above some amount or some kind of purchases you hit KYC requirements)
  - gst 7y ago

redthrow 7y ago

At the end of the article the author is somewhat hopeful that some floss alternative will catch on, eventually. What happened to MobileCoin that Moxie was advising? When will it be integrated to Signal?

baby 7y ago
A cryptocurrency on top of SGX right?

Bombthecat 7y ago

It is really strange to see the world move into the direction of shadowrun...

electrotype 7y ago

I wonder: why does everybody say it's a "Facebook currency", a Facebook project, if there are +/- 30 corporations in the association? Does Facebook have more decision power than Visa, MasterCard or any other participating corporation? Or is Facebook simply the main vector Libra will be promoted with? Would Libra still be a project if Facebook was (hypothetically) shut down?

zeroxfe 7y ago
> why does everybody say it's a "Facebook currency", a Facebook project, if there are +/- 30 corporations in the association? Because FB launched it, and currently appears to have the most control over the project. At the same time, people don't actually take the time to understand the governance model. > Does Facebook have more decision power than Visa, MasterCard or any other participating corporation? No. They get a seat in the governance organization, which they hope will be about 100 organizations at launch (so they get ~1% of the vote.) > Or is Facebook simply the main vector Libra will be promoted with? For now, looks like it. > Would Libra still be a project if Facebook was (hypothetically) shut down? Yes, it would. Again FB will have just 1% of the control at launch.
- microwavecamera 7y ago
  > Yes, it would. Again FB will have just 1% of the control at launch. But wouldn't FB be running/in control of the most of the infrastructure behind Libra? The stability of the currency would be dependent on FB providing the core services behind Libra. Having "just 1% of the control" doesn't matter if FB can just shut it down and/or destabilize it's value at will. It's FB actually intends for it to be an open cryptocurrency then why make a new one when we already have several options available other than being able to exert control over it?

drtillberg 7y ago

Facebook is simply making another private scrip. They're turning IMF SDRs into a private currency. Prior to this crop of entrepreneurs, when I read about scrip it seemed always to be in connection with alleged violation of law, I think legal tender laws. But, who knows, this may turn out swell.

ur--whale 7y ago

Conspicuously missing from the entire libra story is how they are actually going to manage the peg. How will they handle the custodian counter-party risk? What I mean by that is: for libra to actually be a stablecoin, for every libra unit in circulation, FB and their merry band of friends will need to stash a frozen combo of {dollar, euro, yen} somewhere. That "somewhere" is actually not easy at all to design from a financial infrastructure point of view: any institution (other than central banks) who will actually store that stash will have to: - be regularly audited by independent auditors - be risk-free (and there is no such a thing) or the peg will drift. Worse, these custodians of what is already essentially virtual money are going to be sitting on a huge pile of currency and to guarantee the peg, won't be allowed to do anything with it. I give it 6 months before that money is re-invested somewhere through some smart financial engineering.

arawde 7y ago
I've only read the white paper, but finance is one of my biggest hobbies, so I'm going to take a stab at addressing the concerns you mention. It's not entirely a currency peg - it's an asset peg. The assets will be Treasurys, bunds, etc. that are _representative_ of currencies, but are not direct currencies. The peg is going to drift. The history of currency pegs is filled with struggles by institutions to maintain the peg at a fixed level, only to let go of the peg and convert to floating. I think the idea behind Libra is that, while the peg will drift, Libra will still be a drastically more stable store of value compared to almost every other crypto. I would not be surprised to learn that the Libra Foundation's custodians are the people holding the assets and handling the counter-party risk. It explicitly says in the white paper that the interest earned on the reserves held by the custodians will be used to pay for expenses of maintaining the network. If I was Visa, I would be more than happy to hold a basket of bonds and take a cut in a play to try to expand my customer base, by moving more people into the transaction market space. I understand why my answer wouldn't sit well - putting trust into thesee parties and buying into the ideas behind Libra require a huge leap of faith, one that I don't think I would even participate in. But I do think that the mechanics behind how Libra manages the peg are actually not as nefarious or difficult as you laid out.
- 7y ago

bmdavi3 7y ago

Sure it'll be nice to make easy money off the interest on deposits. And it'll be nice to make money on the analytics that can be run on all the worlds' transactions. Great. But the biggest pay off is that once consumers buy into Libra as a thing on its own, the policy can be changed to no longer link it to any basket of currencies, and it can then be issued without that annoying and expensive currency-buying-thing. Just pure profit. What am I missing?

i_am_nomad 7y ago
You’re missing the part where Treasury agents swarm the Libra offices and arrest everyone for various flimsy charges. If there is one single thing that enrages the government more than anything else, it is denying it revenue.
- buboard 7y ago
  libra is in switzerland
mr_toad 7y ago
> it can then be issued without that annoying and expensive currency-buying-thing. Just pure profit. https://en.wikipedia.org/wiki/Seigniorage https://en.wikipedia.org/wiki/Seigniorage You can only do so much of that before you debase your currency.

gooseus 7y ago

All the big players in the Association can probably afford this gamble, but if they don't already have the government and the banks on their side, then this thing is DoA. Government only really needs to do a few things to be essential, one of those things is securing and backing the legal tender, and yes this is also one of the ways they exert authority. It's also how they maintain legitimacy, this has been true for thousands of years. What country is going to give up this power and hand it over to a consortium of multinational corporations (with 0 banks in it) led by a corporation that is controlled by a sole person? If it can't be nationalized then they won't let it be adopted and I'm sure every country (including the US) has any number of laws that will allow them to prevent the undermining of their currency. They let Bitcoin do its thing because it lacked all the things this has, which let them classify it as something closer to commodity/security, and not a currency. If this thing isn't that, then I don't see how this is going to be acceptable without the government demanding a massive hand in how it is run.

ncmncm 7y ago

The origin of physical currency -- coins -- happened 2000 years after money was invented. Coins were invented as a way to provision armies. It worked like this: soldiers were paid in coins. Taxes were required to be paid only with the new coins. The only way to get the coins, to pay your taxes with, was to sell supplies to soldiers who had coins. Armies supplied, check. Facebook has an opportunity to force its coin into use by a similar stratagem: offer advertisers a discount (at first!) if paid in Libra. Advertisers can only get Libra from Facebook account holders. Advertisers have to sell at a discount, for Libra, to get enough Libra, but they get it back in the advertising discount. If buyers want these discounts, they need to get Libra from Facebook. Soon, Facebook controls the economy of the world. It was recently explained to me that Facebook only wishes they could be as evil as Google, but they were way behind. (Google passed Microsoft sometime back.) This could leapfrog Facebook far beyond Google's dreams. Are we in for Dystopia? I can't see how not, unless they fuck up so it's both too hard to use and too easy to get ripped off.

jillesvangurp 7y ago

Where to begin. This article is full of big words and drama. I've been reading through the whitepapers and discussions and there seem to be an awful lot of people reading all sorts of things in this stuff. What worries me is that it mostly is people responding to interpretations rather than the raw facts. Big dramatic outcomes make for awesome blog articles. But that doesn't mean it's the only outcome; or even the likely outcome. I try to look at this a bit more rationally. Given that blockchains have grown economically in the last few years for reasons that you may or may not agree with philosophically, morally, etc., it is not surprising that existing entities with economic wealth are looking to get in on the action. From this point of view, what Libra is doing is entirely unsurprising. From a technical point of view, what Facebook is doing with Libra is cherry picking what seems to work in the market. Consensus models seem to work for the likes of Ripple, Stellar and a few others. There are a lot of people who object against this model for all sorts of reasons. But it undeniably works and scales quite well. A system this ambitious needs to scale. It's not optional. I don't really see how Libra could have picked anything else given the current state of the art. Mining seems a dead end in terms of scalability and off by orders of magnitude from where it needs to be. There are lots of technical issues and even when it works, things like 50% attacks, insane energy consumption, etc. make this a non starter. Ethereum has been trying to switch to proof of stake for some time now and the are also trying to introduce sharding. Maybe this is fixable, but the reality is that they are nowhere close to shipping something that scales by the time Libra intends to open for business. So, when Facebook decided to do this, building their own platform was a foregone conclusion because what's out there just isn't anywhere near good enough and basing it on consensus algorithms was the only logical choice technically. The only relevant question is, why is it just Facebook doing this and how long is it going to take for the rest of the world to react? I'm talking about the likes of Google, Apple, banks, the oil industry, anyone with economic resources basically. They'll all want in on the action and not all of them are going to be inventing their own blockchain like platform (using the term loosely here). I doubt they are going to have Facebook have all the fun. The follow up debate about the legalities and regulations is also going to be interesting. My guess is governments will react slowly and by the time they start making bigger decisions, it will be too late. Once you have a few "too big to fail" type companies doing stuff like this, they are not just going to pull the plug. So, I expect things will heat up shortly. I think this is a good thing. We need competition of ideas and approaches. If what Libra is doing bothers you, stop whining and do something better. Now is a good time to get started with that.

jshaqaw 7y ago

"Of course, those big company Association members, like Visa and Mastercard, all paid $10 million dollars for the privilege of functioning as validators on the network. Why would they do that? Because they’re going to make a lot of money." --- Long ago I was a management consultant for Amex advising on micropayments (this was decades ago). The consultants answer is always to make a bunch of small bets in a maybe emerging space to preserve optionality. It looks good on a presentation, makes the board reasonably content that they have a future looking strategy, leads to fun follow up work identifying bets which are financially irrelevant to the company if they go to zero, etc... This isn't some grand strategy of Visa and Mastercard. $10MM to those companies is a write-off FOMO punt. If they had put in 20x that amount I would be paying more attention.