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> The largest leap will come last: Libra as a genuine currency, not simply a medium for transaction. This will be function of volume in the previous two use cas

> The largest leap will come last: Libra as a genuine currency, not simply a medium for transaction. This will be function of volume in the previous two use cases, and is understandably concerning to governments all over the world. Well that's certainly an understatement. This is literally the only mention of government through-out the entire article. The only mention of banks is in the previous paragraph stating there are no banks in the coalition. Banks and governments go together like peas and carrots, they also control pretty much everything and have for hundreds and thousands of years. This control is derived from a few places, but primarily from a monopoly on the control of the currency and the monopoly on coercive force. No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. I really don't know why this isn't a larger part of this conversation. I think people need to be cracking more history books and less William Gibson and Neil Stephenson novels.

soulofmischief 7y ago
Do you worry any Libra-centric regulations will have negative impact towards true libre currencies like Bitcoin Cash?
buboard 7y ago
Banking has existed for a few centuries, and state controlled money is something recent too, it used to be that multiple sources minted coins. And bitcoin which has existed for 10 years and is far more threatening to governments has not been extinguished.
- nine_k 7y ago
  Gold coins can be minted at multiple places, or admitted foreign, because their value is gold by weight. Mass fiat money are no more than 2 centuries old, in most places less than 60 years (see Bretton-Woods). They have to be tightly controled by state.
  - RobertoG 7y ago
    >>"Gold coins can be minted at multiple places, or admitted foreign, because their value is gold by weight." If the value of the coin come from the gold in it, why mint them instead of using the gold directly?
    - dwighttk 7y ago
      (imperfect) stamp of quality and amount
    - nine_k 7y ago
      Gold was used directly, too, as ingots, and as bullion (check out the gold rush of 1849). But coins show the insignia of the state (and usually the monarch) that minted it; this is an important symbol, and also a guarantee of purity and weight, at least nominally.
  - Symmetry 7y ago
    Bills of exchange were privately issued by banks since the high middles ages in Europe and functioned a lot like dollars when convertability was still a thing. It's only relatively recently that they've been tightly controlled. they weren't in mass use like metal coinage was but they were essential to the re-establishment of long-range trade.
    - nine_k 7y ago
      They always finally had to be exchanged to gold. Current dollars have no such peg, hence inflation, "quantitative easing" and other things only possible with fiat money. No king ever dreamed of monetary power like that of FRS.
  - buboard 7y ago
    Gold was not mostly used by the aristocracy. Coins for laypeople were things like silver, copper or bronze. People also bartered.
  - tonfa 7y ago
    Even in Roman times currency were debased though. Financial technology has a pretty long history (Money Changes Everything: How Finance Made Civilization Possible, was a pretty cool read on that).
- gooseus 7y ago
  > state controlled money is something recent too, it used to be that multiple sources minted coins I don't think you're considering a long enough time scale, the minting of coins with the likeness of rulers and symbols of the power of the state is as old as the concept of currency and rulers. There have been instances where companies printed their own script and new non-authoritarian nations might struggle for a bit early on with competing banks, but it's always resolved and power is vested in the central authority. The role of currency from the point of view of the central authority is more than just economic - it's symbolic, it's propaganda, it's confidence in that government expressed by every citizen through the very act of accepting their currency as valuable.
  - buboard 7y ago
    Yeap what has changed is the scale. Never before have states exerted so strict monetary control in such vast areas. For medieval kings it was just impossible to prevent the use of other people's coins.
    - codyb 7y ago
      I’m not sure why anyone would really want to go back to a fractured system (inherently unstable, and very dominant in the early years in America) unless they live in an already unstable system. Universality of your currency is kind of the best selling point isn’t it?
      - buboard 7y ago
        Is it? i dont know. My understanding is that dominant coins exist to subsidize dominant armies, which then protect the dominant coin in a virtuous/vicious cycle. Also, barter worked very well since forever, in which every product is a different "coin", it just doesnt scale physically, while digital currencies do.
- ascendantlogic 7y ago
  Bitcoin hasn't been extinguished because it's not a replacement for fiat. Transaction scaling still isn't there and no one in their right mind spends their bitcoin on coffee when it could 10x in a year and then drop 90% from there just to 10x again. It's become an investment class and governments are fine with that because people are investing their fiat into it and then pulling it back out to fiat later. There's no threat to their sovereign monetary policy yet.
  - buboard 7y ago
    Investment class is even more concerning for governments. The vast majority of USD is not used for buying coffee but stored in T bills
    - bduerst 7y ago
      Nonsense. T-Bills have the lowest volatility because they're backed by the biggest guns on the planet. What is Bitcoin's volatility and how is that a threat again?
      - buboard 7y ago
        i m not saying that they feel threatened of course, but that investment class is even more of a reason to want to shut it down than it being used as a currency.
wavefunction 7y ago
facebook has also proposed some sort of quasi-independent regulatory body to oversee facebook in an attempt to stave off government regulation.[0] It seems they really are trying to turn the nation states of the world inside out and make them subservient to corporations. [0]https://www.nytimes.com/2019/04/07/opinion/facebook-content-moderation.html https://www.nytimes.com/2019/04/07/opinion/facebook-content-...
svd4anything 7y ago
> They're also not going to partner with an international consortium to have them replaced with something they only partially control. It seems that Libra is going to demonstrate exactly why only a decentralized design like Bitcoin’s or other similar cryptocurrencies has any chance of breaking that control. They will be much much harder to attack and shutdown once governments decide this competition in their monopoly of money is just not wanted.
- chasing 7y ago
  Government control over currency is a good thing.
  - svd4anything 7y ago
    Is that really truly settled by economists? Objectively. I mean there have sure been a lot of currency crisis and hyperinflation events in modern world history.
    - xxpor 7y ago
      I don't think pure economics are the only thing to worry about here. Anti-money laundering/sanctions/stopping terrorist financing efforts are generally a good thing that not ideal from an economic perspective.
      - svd4anything 7y ago
        > Anti-money laundering/sanctions/stopping terrorist financing efforts That looks like a pretty questionable line of logic, because, say for sake of argument, that it can be demonstrated from an economics objective that competitive private currencies produce higher levels of growth. Now the terrorists also have us hostage economically as we need to use monopoly government money as the only way to stop them! Come on, it’s lazy thinking to believe that only centralized authoritarian control of currency is how to keep everyone safe from various bad actors, terrorists, criminals and rogue nations. My intuition says that just can’t be correct, otherwise let’s also just put cameras in everyone’s homes ... just in case.
nickpsecurity 7y ago
Anyone doubting you just needs to look at what happened in 2008. They got bailed out with criminal immunity to tune of around a trillion dollars. The government doesn't usually do that. Also, Wikileaks went down not by governments but by Mastercard, VISA, and PayPal. Assange threatened to leak on a big bank. Zap! They all cut him off simultaneously. The mega banks and Goldman Sachs are the most powerful organizations in this country. Even Defense arguably served their interests in many cases.
simias 7y ago
>I really don't know why this isn't a larger part of this conversation. That's been the elephant in the room ever since Satoshi published its paper more than a decade ago. When I discuss with cryptocurrency enthusiasts I often get the impression that they think that banks are this kind of useless parasite body that somehow appears like mosquitoes around a pond in summer. That they only serve to basically operate ATMs, send you your Visa card and crash the market every other decade or so. This is of course a gross misunderstanding of what banks are, what they do, why they do it and where they come from. In particular the idea that "bitcoin is going to kill banks" (a very common sentiment in my experience in cryptocurrency circles) is about as meaningful as "this new type of snowboard is going to kill ski resorts!". No it won't, it might change some things about how they operate but after the transition period it'll be business as usual. Cryptocurrencies don't come even close to replacing most of the services offered by banks. Actually, they don't even come close to replacing most of the services offered by actual currency. It's this weird cognitive dissonance that you encounter in conspiracy theory circles: the banking system is this hellish beast that steals money from the honest middle-class worker, operated from a global circle of elites acting from the shadows and that must be destroyed at all cost to save humanity. How do you do that? By replacing their currency by your own, they'll never see that coming, those idiots.
- holy_city 7y ago
  Someone once told me that U of Chicago's business school used this classic to describe banking: https://www.youtube.com/watch?v=iPkJH6BT7dM https://www.youtube.com/watch?v=iPkJH6BT7dM
- sprafa 7y ago
  This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deustche Bank to just buy 51% of Bitcoin and make it do whatever they wanted? I could never see the potential for either fact to be avoided, as much as the frothing Bitcoin-enthusiasts would like it to.
sonnyblarney 7y ago
Actually, the US used to have any number of currencies in the 19th centuries and it was a mess. Having a centralized currency is a reasonable thing, though the Fed is a private entity, it operates ultimately like other central banks. The banks don't have any special power - if you want to open one, you can do that right now. If they did have some special sauce, VC would be pouring it, and mostly, it's not. Banks don't make their money or derive their power through the 'creation of money'. FB's move into this arena is possibly more destabilizing than anything, hopefully, the opportunities will outweigh the risks.
- radicalbyte 7y ago
  There's a really good Planet Money episode on the subject: https://www.npr.org/sections/money/2012/12/07/166747693/episode-421-the-birth-of-the-dollar-bill https://www.npr.org/sections/money/2012/12/07/166747693/epis...
- wan23 7y ago
  > Banks don't make their money or derive their power through the 'creation of money'. A bank just opened and has $0 in the vault You give the bank $1000 The bank lends me $800 Your current bank balance = $1000 My current bank balance = $800 Total money in the bank = $1800 You might say that the money wasn't created because they can't afford to pay out $1800, but if for some reason at this point they need to pay back the $1000 they can ask another bank for a loan, and point to the $800 they're owed as collateral. On top of that, both the $1000 and the $800 would be insured against the failure of the bank by the federal government. This is a simplified example of course, but when the banking system is working normally it's hard to say that they don't make their profits on the creation of money.
  - magnamerc 7y ago
    There are now decentralized systems that have monetary policy baked in, where the system can't become under-collateralized, see MakerDAO.
    - minderasure 7y ago
tlb 7y ago
Oligopolies do sometimes end when conditions change. People once thought that TV news, highly regulated by the government, would have an indefinite monopoly. Credit cards irritated incumbent banks in the 60s. It’s not inconceivable that banking’s control of money could end.
- hinkley 7y ago
  It's common trope in the history of revolutions for the lower upper class (or if available, the middle class) to position themselves as the heroes or the voices for the oppressed. Once the mob has displaced their 'betters' they step in to take over, becoming the new upper class. Technically the oligopoly is overthrown. Practically, meet the new boss, same as the old boss.
- yingw787 7y ago
  When you're talking about using a different currency, you're not replacing Bank of America or JPMorgan Chase. You're replacing the Federal Reserve, Bretton Woods, and the U.S. government. Government's grasp on what money should mean is one of the primary ways democratic governments exercise power.
  - svd4anything 7y ago
    > Government's grasp on what money should mean is one of the primary ways democratic governments exercise power. Could you explain that statement? I can’t help but counter that isn’t often the government’s control of money that enables the rise of authoritarian governments! Perhaps privatization of currency might strengthen democracy not undermine it.
    - kyshoc 7y ago
      You're not wrong, but here's the problem: government can become autocratic, and private companies will become autocratic. At least with a government you have a shot at being ruled by something other than a private entity's self-interest.
    - yingw787 7y ago
adventured 7y ago
> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. That's the point of confusion. This is not an end around. This is about extracting tolls - slivers - from economic activity. They will all comply with the status quo, they will say what needs to be said, they will bow as they need to bow, they merely want to get their little cut on a billion transactions. It's nothing more than an attempt to layer another transaction processing fee-based system into/onto the global economy. There is no other point, it's why Facebook has partners like Visa interested. These guys could not care less about replacing national currencies or doing an end run around of political control. In fact it's the exact opposite: they would want the regulators to make sure Libra is the standard that they can properly exploit, and raise the walls to other competition. That is how these companies always behave, it's rather obnoxiously predictable. They will be thrilled to work with regulators to keep things exactly as they are, with a little exception for their new baby parasite that gets 0.3% of everything (and please regulators, while you're at it, make it really hard to compete, make the regulations impossible for everybody else to comply with). They do not want the political power, responsibility and conflicts that come with national currencies. They want the money, the fat juicy profits, that come with extracting high margin tolls. It's ideal to leave the national fiat currencies intact, so they can extract additional fees everytime people want to change their money. Libra is a rider, national currencies come and go.
- YorkshireSeason 7y ago
  Very perceptive! Just today, Nick Clegg, former Deputy Prime Minister of the United Kingdom, and currently Vice-President for Global Affairs and Communications at Facebook, explicitly asks for FB to be regulated [1]: "We need governments and policymakers to engage with issues like these and help set the parameters for us". [1] https://news.sky.com/story/sir-nick-clegg-link-between-social-media-and-mental-health-problems-not-proven-11748174 https://news.sky.com/story/sir-nick-clegg-link-between-socia...
- Despegar 7y ago
  >That's the point of confusion. This is not an end around. Whether that's the intention or not doesn't matter, it has the potential to be and that is simply not acceptable. When a developing world country like India needs to use monetary policy to stimulate their economy but those transmission mechanisms aren't working because a significant part of the economy is using Libra, that's a major threat to their sovereignty. It's digital colonialism. https://www.washingtonpost.com/news/wonk/wp/2014/07/31/argentinas-insatiable-and-destructive-appetite-for-u-s-dollars/ https://www.washingtonpost.com/news/wonk/wp/2014/07/31/argen...
deleted 7y ago
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panarky 7y ago
> No government is going to let FB and any coalition do an end run around their national currency China allows WeChat Pay and Alipay to be predominant methods of payment, so it's not obvious to me that new payment methods threaten governments. What, precisely, is the threat? And what, exactly, can governments do to stop companies from offering their own scrip? Would they outlaw Venmo? Gift cards? Airline miles?
- miohtama 7y ago
  "Bottom 150" governments ability to borrow and issue money weakens, as Libra could often be more stable. When you citizens do not need or want your money the governments ability to control, e.g. tax, quickly diminishes. See usage of USD in developing nations.
lossolo 7y ago
> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. It's also strange to me that there is no discussion about that. Money is not only a currency you can use to buy goods and services. In case of US dollar it's a powerful political pressuring instrument. Most of goods on international markets are exchanged in US dollar. That's why US can print dollars and the rest of the world is paying the inflation costs. Additionally, money issuer (in this case US) can forbid anyone to use their currency, so they can shutdown Libra when they want and how they want, if pressured enough.
vulcanodon 7y ago
> I think people need to be cracking more history books and less William Gibson and Neil Stephenson novels. Any history books you would recommend?
TuringNYC 7y ago
>> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. 1. I can see the US government and perhaps the Five Eyes (https://en.wikipedia.org/wiki/Five_Eyes https://en.wikipedia.org/wiki/Five_Eyes) wanting this because it effectively reveals lots of global transactions they are not currently privy to w/o tedious work. I find it difficult to believe that all the relevant FiveEyes agencies have not been an integral part of this from the planning stage. 2. I dont see how small nations can really stop it. They can stop transfers to/from their own currency, but can they really stop closed loop Libra systems? For example, someone in Whateveristan does some work on E-Lance/Upwork and gets paid 100 Libra. They spend 100 Libra on goods online and gets it delivered -- how could the local government stop this?
- rememberdeath 7y ago
  Couldn't the local government ask libra not to operate and if it does start blocking the revenue source of members such as Facebook?
- ddalex 7y ago
  1. is tinfoil hat domain and i'll ignore it 2. the finance watchdog verifies that balance sheet must close to 0 for everybody when everything is accounted for - i.e. I have 100 libra and I want to buy a printer, there has to be somebody to deliver that printer and take the 100 libra; the gadget shop can't account for the printer disappearing from inventory without accounting for 100 libra coming in, and the chain thus complete. the only thing you'd be able to buy are services and goods outside regulated economy, so sex and drugs?
csomar 7y ago
> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. Libra is going to be backed by top currencies (probably USD, EUR, JPY, GBP). Why wouldn't the USA like that? They get to invade other countries for free. Most countries do not like the USD. And most of them are fighting it with capital controls. The US is imposing the liberation of these economies. Through both threats and cookies. Check the FATCA for example. There is no reciprocity and yet countries are implementing it. Libra could help the US and friends get into other countries easily.
epiphanitus 7y ago
Who's going to control the data that Libra generates?
User23 7y ago
> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. I disagree. Politicians from many countries have shown a willingness to sell out their own nation. With a high enough time preference it's entirely possible.

soulofmischief 7y ago

Do you worry any Libra-centric regulations will have negative impact towards true libre currencies like Bitcoin Cash?

buboard 7y ago

Banking has existed for a few centuries, and state controlled money is something recent too, it used to be that multiple sources minted coins. And bitcoin which has existed for 10 years and is far more threatening to governments has not been extinguished.

nine_k 7y ago
Gold coins can be minted at multiple places, or admitted foreign, because their value is gold by weight. Mass fiat money are no more than 2 centuries old, in most places less than 60 years (see Bretton-Woods). They have to be tightly controled by state.
- RobertoG 7y ago
  >>"Gold coins can be minted at multiple places, or admitted foreign, because their value is gold by weight." If the value of the coin come from the gold in it, why mint them instead of using the gold directly?
  - dwighttk 7y ago
    (imperfect) stamp of quality and amount
  - nine_k 7y ago
    Gold was used directly, too, as ingots, and as bullion (check out the gold rush of 1849). But coins show the insignia of the state (and usually the monarch) that minted it; this is an important symbol, and also a guarantee of purity and weight, at least nominally.
- Symmetry 7y ago
  Bills of exchange were privately issued by banks since the high middles ages in Europe and functioned a lot like dollars when convertability was still a thing. It's only relatively recently that they've been tightly controlled. they weren't in mass use like metal coinage was but they were essential to the re-establishment of long-range trade.
  - nine_k 7y ago
    They always finally had to be exchanged to gold. Current dollars have no such peg, hence inflation, "quantitative easing" and other things only possible with fiat money. No king ever dreamed of monetary power like that of FRS.
- buboard 7y ago
  Gold was not mostly used by the aristocracy. Coins for laypeople were things like silver, copper or bronze. People also bartered.
- tonfa 7y ago
  Even in Roman times currency were debased though. Financial technology has a pretty long history (Money Changes Everything: How Finance Made Civilization Possible, was a pretty cool read on that).
gooseus 7y ago
> state controlled money is something recent too, it used to be that multiple sources minted coins I don't think you're considering a long enough time scale, the minting of coins with the likeness of rulers and symbols of the power of the state is as old as the concept of currency and rulers. There have been instances where companies printed their own script and new non-authoritarian nations might struggle for a bit early on with competing banks, but it's always resolved and power is vested in the central authority. The role of currency from the point of view of the central authority is more than just economic - it's symbolic, it's propaganda, it's confidence in that government expressed by every citizen through the very act of accepting their currency as valuable.
- buboard 7y ago
  Yeap what has changed is the scale. Never before have states exerted so strict monetary control in such vast areas. For medieval kings it was just impossible to prevent the use of other people's coins.
  - codyb 7y ago
    I’m not sure why anyone would really want to go back to a fractured system (inherently unstable, and very dominant in the early years in America) unless they live in an already unstable system. Universality of your currency is kind of the best selling point isn’t it?
    - buboard 7y ago
      Is it? i dont know. My understanding is that dominant coins exist to subsidize dominant armies, which then protect the dominant coin in a virtuous/vicious cycle. Also, barter worked very well since forever, in which every product is a different "coin", it just doesnt scale physically, while digital currencies do.
ascendantlogic 7y ago
Bitcoin hasn't been extinguished because it's not a replacement for fiat. Transaction scaling still isn't there and no one in their right mind spends their bitcoin on coffee when it could 10x in a year and then drop 90% from there just to 10x again. It's become an investment class and governments are fine with that because people are investing their fiat into it and then pulling it back out to fiat later. There's no threat to their sovereign monetary policy yet.
- buboard 7y ago
  Investment class is even more concerning for governments. The vast majority of USD is not used for buying coffee but stored in T bills
  - bduerst 7y ago
    Nonsense. T-Bills have the lowest volatility because they're backed by the biggest guns on the planet. What is Bitcoin's volatility and how is that a threat again?
    - buboard 7y ago
      i m not saying that they feel threatened of course, but that investment class is even more of a reason to want to shut it down than it being used as a currency.

wavefunction 7y ago

facebook has also proposed some sort of quasi-independent regulatory body to oversee facebook in an attempt to stave off government regulation.[0] It seems they really are trying to turn the nation states of the world inside out and make them subservient to corporations. [0]https://www.nytimes.com/2019/04/07/opinion/facebook-content-moderation.html https://www.nytimes.com/2019/04/07/opinion/facebook-content-...

svd4anything 7y ago

> They're also not going to partner with an international consortium to have them replaced with something they only partially control. It seems that Libra is going to demonstrate exactly why only a decentralized design like Bitcoin’s or other similar cryptocurrencies has any chance of breaking that control. They will be much much harder to attack and shutdown once governments decide this competition in their monopoly of money is just not wanted.

chasing 7y ago
Government control over currency is a good thing.
- svd4anything 7y ago
  Is that really truly settled by economists? Objectively. I mean there have sure been a lot of currency crisis and hyperinflation events in modern world history.
  - xxpor 7y ago
    I don't think pure economics are the only thing to worry about here. Anti-money laundering/sanctions/stopping terrorist financing efforts are generally a good thing that not ideal from an economic perspective.
    - svd4anything 7y ago
      > Anti-money laundering/sanctions/stopping terrorist financing efforts That looks like a pretty questionable line of logic, because, say for sake of argument, that it can be demonstrated from an economics objective that competitive private currencies produce higher levels of growth. Now the terrorists also have us hostage economically as we need to use monopoly government money as the only way to stop them! Come on, it’s lazy thinking to believe that only centralized authoritarian control of currency is how to keep everyone safe from various bad actors, terrorists, criminals and rogue nations. My intuition says that just can’t be correct, otherwise let’s also just put cameras in everyone’s homes ... just in case.

nickpsecurity 7y ago

Anyone doubting you just needs to look at what happened in 2008. They got bailed out with criminal immunity to tune of around a trillion dollars. The government doesn't usually do that. Also, Wikileaks went down not by governments but by Mastercard, VISA, and PayPal. Assange threatened to leak on a big bank. Zap! They all cut him off simultaneously. The mega banks and Goldman Sachs are the most powerful organizations in this country. Even Defense arguably served their interests in many cases.

simias 7y ago

>I really don't know why this isn't a larger part of this conversation. That's been the elephant in the room ever since Satoshi published its paper more than a decade ago. When I discuss with cryptocurrency enthusiasts I often get the impression that they think that banks are this kind of useless parasite body that somehow appears like mosquitoes around a pond in summer. That they only serve to basically operate ATMs, send you your Visa card and crash the market every other decade or so. This is of course a gross misunderstanding of what banks are, what they do, why they do it and where they come from. In particular the idea that "bitcoin is going to kill banks" (a very common sentiment in my experience in cryptocurrency circles) is about as meaningful as "this new type of snowboard is going to kill ski resorts!". No it won't, it might change some things about how they operate but after the transition period it'll be business as usual. Cryptocurrencies don't come even close to replacing most of the services offered by banks. Actually, they don't even come close to replacing most of the services offered by actual currency. It's this weird cognitive dissonance that you encounter in conspiracy theory circles: the banking system is this hellish beast that steals money from the honest middle-class worker, operated from a global circle of elites acting from the shadows and that must be destroyed at all cost to save humanity. How do you do that? By replacing their currency by your own, they'll never see that coming, those idiots.

holy_city 7y ago
Someone once told me that U of Chicago's business school used this classic to describe banking: https://www.youtube.com/watch?v=iPkJH6BT7dM https://www.youtube.com/watch?v=iPkJH6BT7dM
sprafa 7y ago
This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deustche Bank to just buy 51% of Bitcoin and make it do whatever they wanted? I could never see the potential for either fact to be avoided, as much as the frothing Bitcoin-enthusiasts would like it to.

sonnyblarney 7y ago

Actually, the US used to have any number of currencies in the 19th centuries and it was a mess. Having a centralized currency is a reasonable thing, though the Fed is a private entity, it operates ultimately like other central banks. The banks don't have any special power - if you want to open one, you can do that right now. If they did have some special sauce, VC would be pouring it, and mostly, it's not. Banks don't make their money or derive their power through the 'creation of money'. FB's move into this arena is possibly more destabilizing than anything, hopefully, the opportunities will outweigh the risks.

radicalbyte 7y ago
There's a really good Planet Money episode on the subject: https://www.npr.org/sections/money/2012/12/07/166747693/episode-421-the-birth-of-the-dollar-bill https://www.npr.org/sections/money/2012/12/07/166747693/epis...
wan23 7y ago
> Banks don't make their money or derive their power through the 'creation of money'. A bank just opened and has $0 in the vault You give the bank $1000 The bank lends me $800 Your current bank balance = $1000 My current bank balance = $800 Total money in the bank = $1800 You might say that the money wasn't created because they can't afford to pay out $1800, but if for some reason at this point they need to pay back the $1000 they can ask another bank for a loan, and point to the $800 they're owed as collateral. On top of that, both the $1000 and the $800 would be insured against the failure of the bank by the federal government. This is a simplified example of course, but when the banking system is working normally it's hard to say that they don't make their profits on the creation of money.
- magnamerc 7y ago
  There are now decentralized systems that have monetary policy baked in, where the system can't become under-collateralized, see MakerDAO.
  - minderasure 7y ago

tlb 7y ago

Oligopolies do sometimes end when conditions change. People once thought that TV news, highly regulated by the government, would have an indefinite monopoly. Credit cards irritated incumbent banks in the 60s. It’s not inconceivable that banking’s control of money could end.

hinkley 7y ago
It's common trope in the history of revolutions for the lower upper class (or if available, the middle class) to position themselves as the heroes or the voices for the oppressed. Once the mob has displaced their 'betters' they step in to take over, becoming the new upper class. Technically the oligopoly is overthrown. Practically, meet the new boss, same as the old boss.
yingw787 7y ago
When you're talking about using a different currency, you're not replacing Bank of America or JPMorgan Chase. You're replacing the Federal Reserve, Bretton Woods, and the U.S. government. Government's grasp on what money should mean is one of the primary ways democratic governments exercise power.
- svd4anything 7y ago
  > Government's grasp on what money should mean is one of the primary ways democratic governments exercise power. Could you explain that statement? I can’t help but counter that isn’t often the government’s control of money that enables the rise of authoritarian governments! Perhaps privatization of currency might strengthen democracy not undermine it.
  - kyshoc 7y ago
    You're not wrong, but here's the problem: government can become autocratic, and private companies will become autocratic. At least with a government you have a shot at being ruled by something other than a private entity's self-interest.
  - yingw787 7y ago

adventured 7y ago

> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. That's the point of confusion. This is not an end around. This is about extracting tolls - slivers - from economic activity. They will all comply with the status quo, they will say what needs to be said, they will bow as they need to bow, they merely want to get their little cut on a billion transactions. It's nothing more than an attempt to layer another transaction processing fee-based system into/onto the global economy. There is no other point, it's why Facebook has partners like Visa interested. These guys could not care less about replacing national currencies or doing an end run around of political control. In fact it's the exact opposite: they would want the regulators to make sure Libra is the standard that they can properly exploit, and raise the walls to other competition. That is how these companies always behave, it's rather obnoxiously predictable. They will be thrilled to work with regulators to keep things exactly as they are, with a little exception for their new baby parasite that gets 0.3% of everything (and please regulators, while you're at it, make it really hard to compete, make the regulations impossible for everybody else to comply with). They do not want the political power, responsibility and conflicts that come with national currencies. They want the money, the fat juicy profits, that come with extracting high margin tolls. It's ideal to leave the national fiat currencies intact, so they can extract additional fees everytime people want to change their money. Libra is a rider, national currencies come and go.

YorkshireSeason 7y ago
Very perceptive! Just today, Nick Clegg, former Deputy Prime Minister of the United Kingdom, and currently Vice-President for Global Affairs and Communications at Facebook, explicitly asks for FB to be regulated [1]: "We need governments and policymakers to engage with issues like these and help set the parameters for us". [1] https://news.sky.com/story/sir-nick-clegg-link-between-social-media-and-mental-health-problems-not-proven-11748174 https://news.sky.com/story/sir-nick-clegg-link-between-socia...
Despegar 7y ago
>That's the point of confusion. This is not an end around. Whether that's the intention or not doesn't matter, it has the potential to be and that is simply not acceptable. When a developing world country like India needs to use monetary policy to stimulate their economy but those transmission mechanisms aren't working because a significant part of the economy is using Libra, that's a major threat to their sovereignty. It's digital colonialism. https://www.washingtonpost.com/news/wonk/wp/2014/07/31/argentinas-insatiable-and-destructive-appetite-for-u-s-dollars/ https://www.washingtonpost.com/news/wonk/wp/2014/07/31/argen...

deleted 7y ago

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panarky 7y ago

> No government is going to let FB and any coalition do an end run around their national currency China allows WeChat Pay and Alipay to be predominant methods of payment, so it's not obvious to me that new payment methods threaten governments. What, precisely, is the threat? And what, exactly, can governments do to stop companies from offering their own scrip? Would they outlaw Venmo? Gift cards? Airline miles?

miohtama 7y ago
"Bottom 150" governments ability to borrow and issue money weakens, as Libra could often be more stable. When you citizens do not need or want your money the governments ability to control, e.g. tax, quickly diminishes. See usage of USD in developing nations.

lossolo 7y ago

> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. It's also strange to me that there is no discussion about that. Money is not only a currency you can use to buy goods and services. In case of US dollar it's a powerful political pressuring instrument. Most of goods on international markets are exchanged in US dollar. That's why US can print dollars and the rest of the world is paying the inflation costs. Additionally, money issuer (in this case US) can forbid anyone to use their currency, so they can shutdown Libra when they want and how they want, if pressured enough.

vulcanodon 7y ago

> I think people need to be cracking more history books and less William Gibson and Neil Stephenson novels. Any history books you would recommend?

TuringNYC 7y ago

>> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. 1. I can see the US government and perhaps the Five Eyes (https://en.wikipedia.org/wiki/Five_Eyes https://en.wikipedia.org/wiki/Five_Eyes) wanting this because it effectively reveals lots of global transactions they are not currently privy to w/o tedious work. I find it difficult to believe that all the relevant FiveEyes agencies have not been an integral part of this from the planning stage. 2. I dont see how small nations can really stop it. They can stop transfers to/from their own currency, but can they really stop closed loop Libra systems? For example, someone in Whateveristan does some work on E-Lance/Upwork and gets paid 100 Libra. They spend 100 Libra on goods online and gets it delivered -- how could the local government stop this?

rememberdeath 7y ago
Couldn't the local government ask libra not to operate and if it does start blocking the revenue source of members such as Facebook?
ddalex 7y ago
1. is tinfoil hat domain and i'll ignore it 2. the finance watchdog verifies that balance sheet must close to 0 for everybody when everything is accounted for - i.e. I have 100 libra and I want to buy a printer, there has to be somebody to deliver that printer and take the 100 libra; the gadget shop can't account for the printer disappearing from inventory without accounting for 100 libra coming in, and the chain thus complete. the only thing you'd be able to buy are services and goods outside regulated economy, so sex and drugs?

csomar 7y ago

> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. They're also not going to partner with an international consortium to have them replaced with something they only partially control. Libra is going to be backed by top currencies (probably USD, EUR, JPY, GBP). Why wouldn't the USA like that? They get to invade other countries for free. Most countries do not like the USD. And most of them are fighting it with capital controls. The US is imposing the liberation of these economies. Through both threats and cookies. Check the FATCA for example. There is no reciprocity and yet countries are implementing it. Libra could help the US and friends get into other countries easily.

epiphanitus 7y ago

Who's going to control the data that Libra generates?

User23 7y ago