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But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be i
by buboard 7y ago
But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be invested)
- TheRealPomax 7y agoBut without Facebook (or any of the Libra association members that aren't already financial institutions) starting a bank, and then for obvious reasons being forced by law to split that off from their parent company as an independent entity, why would anyone expect banking laws to apply?
- buboard 7y agoIt's not banking laws at all, it is the way they set up the association, I presume precisely to avoid fears like this. I think there are not clear laws yet about this kind of backed stablecoins. However, their reserve will be 100% , which is way more than any bank.
- redorb 7y agoI feel like this is E-gold 2.0 maybe 3.0 with BTC being 2.0 https://en.wikipedia.org/wiki/E-gold https://en.wikipedia.org/wiki/E-gold
- buboard 7y agoE-gold was a scam IIRC, while libra's assets : > the assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets. And BTC is not backed by anything, it has intrinsic value now so it's wrong to call it a scam.
- benj111 7y agoWhat is the intrinsic value of btc? I can't eat it, use it to heat my house. It has value, most of it isn't intrinsic though.
- buboard 7y agou can convert it to USD, so it must have some value or else people wouldn't buy it
- benj111 7y agoYes it has value you can trade a bitcoin for $5k/$10k/$20k whatever the exchange rate is at this moment. That isn't intrinsic value though. From Wikipedia: "In finance, intrinsic value refers to the value of a company, stock, currency or product determined through fundamental analysis without reference to its market value." https://en.m.wikipedia.org/wiki/Intrinsic_value_(finance) https://en.m.wikipedia.org/wiki/Intrinsic_value_(finance)
- buboard 7y agoalright my bad. i meant some value that is not tied to an underlying asset. But equating it with a scam like e-gold is not valid either. (and no currency or investment commodity has value that is anywhere near its intrinsic value)
- teknopaul 7y agoYou can move it illegaly more easily than cash.
- Wowfunhappy 7y agoCan you do any of those things with gold?
- gridlockd 7y agoBanking and securities laws affect non-banks too. You can't just act like a bank or issue a security without following the regulations. Facebook isn't actually acting like a bank, but if they claim that their tokens are backed by real assets when they aren't, that's just plain fraud.
- elliekelly 7y agoIt seems to me that Facebook has structured Libra coin to avoid banking & securities laws. By bringing in 20 of his closest Wall Street friends Zuckerberg is attempting to rely on prior SEC commentary that BitCoin is sufficiently decentralized to keep the tokens outside of securities regulation. And even though Libra claims the tokens will be backed by a basket of global currencies they’re still acting like a bank. That basket of currency will fluctuate in value. Libra is basically offering a riskier and unregulated money market account.
- rtkwe 7y agoInvestment is circulation though. They are no longer holding the $10 you spent to buy 10 Libra but $10 worth of Apple stock say that definitely isn't always worth $10 and Apple or whoever sold that stock now has $10.
- foobarian 7y agoThey could instead deposit it into their own bank, i.e. full reserve, and let the bank do the investing/recirculation itself which it is accredited to do.
- buboard 7y agoThey could be holding it in gold instead, what difference would it make ? You can probably take a loan with 100% gold deposit in any bank legally.
- wcoenen 7y agoAccording to the whitepaper at libra.org, they won't hold stocks. The reserve is a "basket of bank deposits and short-term government securities".
- rtkwe 7y agoThere's nothing binding about that proposed setup though. It wouldn't affect the function from the chain side so there's no real way to validate that that is what their doing outside of independent audits.