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Adding the words blockchain and cryptocurrency to this new Facebook initiative gives it an air of "innovation", the sort that reacts to criticism with "this is
by boh 7y ago
Adding the words blockchain and cryptocurrency to this new Facebook initiative gives it an air of "innovation", the sort that reacts to criticism with "this is too new and innovative for you to understand", and "stogy governments don't like to innovate like we do, so they want to stop us with old timey regulation (and consumer protections)".
Libra is essentially an ETF. It's a vehicle that will take deposits from customers and invest them in interest-yielding securities and currencies. Unlike a bank, customers forfeit their right to gain interest from their deposits and it will instead service operating costs (and any money left over goes to founder members). Libra is effectively planing to receive deposits, manage money and process transactions, despite not even attempting to meet regulatory requirements (though they plan to "shape the regulatory environment"--their words). What's so innovative about this venture is its potential for further data harvesting and potential income streams. Facebook isn't going to harvest any data produced from this venture--that is unless the customer willingly gives it to them. Why would a customer willingly provide this access to Facebook? I think anyone using FB for the past decade can answer that question--those regular TOS updates are hard to follow.
Libra isn't so much a subversion of the existing order, as it as an act of financial engineering to service a social media company. What it "could be" doesn't justify what it already is.
- thatfrenchguy 7y ago> Libra is essentially an ETF But what they invest in will be interesting: what happens when the next financial crisis comes ? When the dollar plunges ?
- 2a96eb7d685a49c 7y agoPart of the solution is that it is a basket of currencies rather than just the dollar.
- mountainofdeath 7y agoThese sorts of "currency" are typically invested in short term, low-risk deposits. Think bank certificates of deposit, US treasuries and the equivalents in foreign currencies.
- willhslade 7y agoThe buck still broke in 2008; that's what started the crisis.
- boh 7y agoThen Libra will also plunge. It's tied to USD/EUR.
- mgraczyk 7y agoWhen was the last time you used an ETF to pay for Uber Eats? Libra is not an ETF. Clearly it has different functionality and will be used differently by both Facebook and users. It would be more accurate to say that the risk profile should look to account holders like an ETF rather than a bank.
- miohtama 7y agoThe 1000 Libras question is if a currency basket backed asset is a security, commodity and such - is such a bearer note allowed? Then you might be in the domain of securities transfer agents, not money transmitters. You would need to pay capital gains tax on every transaction.
- bduerst 7y agoNever, because it's kind of absurd to create an ETF for user payments, which is kind of to GP's point. Unless of course you stand to benefit from the transactional data, which I'm not convinced this Calibra isn't a trojan horse for Facebook to get the data from.
- deleted 7y ago[deleted]
- baby 7y agoWhat’s wrong with creating an ETF that you can use as a global currency?
- jddj 7y agoI agree with the key insight here. Light touches of financial regulation (written by their lobbyists, in the most cynical case) will help Facebook immensely if they become a social payments platform. If you want to pay your rent or split that bill with your friends using Libra, it seems reasonable that you might first need to do some Airbnb/fintech style identity validation with their friendly automated systems. Just a photo of your ID and a brief video, and you can have your Libra balance within 15 minutes. And, just like that, Facebook has gained: - a real identity to associate with that tracking pixel - an extension of their network effects even further into the real-world, where you then need to maintain a (validated) account to participate in many common social transactions. It has the potential to both slow the exodus of millennials and tie a slew of real identities to their accounts. If later on they get transaction data (I agree that this seems inevitable, weren't Google already buying it from CC companies?) or their currency grows to dwarf the dollar in global utility that's just icing on the cake. For now, their model is still collecting valid + valuable personal data, then selling access to cohorts, and this plays right into that.