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So a Libra wallet will be no different than an international 0%-interest checking account, with transaction fees. Seems like FB could have just announced that

So a Libra wallet will be no different than an international 0%-interest checking account, with transaction fees. Seems like FB could have just announced that to avoid being slaughtered by every news outlet and regulator. They've already shifted their plan by a huge amount from decentralization to centralization and succumbed to the power of governments. No reason to believe it will not continue to happen in the future. Party's over, goodnight, go home. Maybe Western Union will lose some profits though. Though I do wonder how rules for international (country A => country B, or country C => country C, where C != the US) transactions will be applied. Since FB is a US company does that mean every single Libra user will be subject to US restrictions - even those which are legal in their country? Will Iranians be able to use Libra? What about Canadians using it to buy marijuana? They said they will vet the people allowed to mine / process transactions on the network, so it seems like FB could easily be required to shut down a miner if the US government says they're doing money laundering or allowing people in Iran to buy medical supplies or allowing Canadians to buy weed or assisting with other illegal activities. I'm sure banks have already dealt with this problem extensively. Libra seems like a very non-innovative solution - just another bank, by Facebook this time.

tanderson92 7y ago
> Since FB is a US company does that mean every single Libra user will be subject to US restrictions - even those which are legal in their country? Will Iranians be able to use Libra? What about Canadians using it to buy marijuana? There is a long history of non-US banks which have operations in the US getting fined by US regulatory agencies because they violate US law somewhere else in the world with regard to money laundering / sanctions etc. The reach of US prosecutory power with respect to financial institutions is vast.
PeterisP 7y ago
That's probably inevitable - just as you can't have your cake and eat it too, you can't have a payment network that's freely usable by major companies who do business in USA and also by those under USA sanctions such as Iranians. If a system is truly permissionless and decentralized so that everyone who's willing can technically participate without restrictions, then all first world companies will be prohibited to do commerce in that system (unless it's for trivial amounts or they do their own KYC/customer analysis to implement the restrictions), and if some system is going to be implemented by first world companies, then they'll be required to ensure that it's not truly permissionless and can keep certain actors out of it.
- A4ET8a8uTh0 7y ago
  You are absolutely correct about first world companies. What about non first world? Truly open systems do not seem to pop up anywhere though. I personally think that a critical mass could be achieved beyond which governments would be hard presses to flex its muscles.
opportune 7y ago
It doesn't have nominal interest, but since it's pegged to a variety of financial instruments it will effectively bear interest (positive or negative) with respect to any currency. Facebook wants to do two things: 1 Bank the unbanked or underbanked in developing countries. This is key because anybody in these countries with a smartphone will have a good banking service and be able to pay for things like they do with WePay in China. The user experience and network effect will probably be better than anything the local banks could offer. Also the currency will be more stable and remittances will be almost frictionless. 2 Have these newly banked use Libra for their day to day transactions. The more money they put on the platform the more interest FB collects. Even if they don't do it now, FB will eventually integrate Libra with their other services like ads (both from a payments and data-gathering perspective) and FB marketplace. By making their bank account a "cryptocurrency" FB can try to circumvent the hundreds of differing banking standards and regulations around the world. But ultimately this is going to cause a death by a thousand cuts. It's actually a legitimate national security issue for many countries to have large portions of their internal economy being controlled by mostly American corporations in a foreign currency.
wmf 7y ago
Libra is owned by a Swiss organization, not Facebook.
- whateveracct 7y ago
  This is just a legal maneuver crypto projects do I believe.
  - Spivak 7y ago
    Maneuver or not this corporation would answer to all members of the consortium participating in it. It would be difficult for Facebook to maintain control while other financial behemoths also want influence.

tanderson92 7y ago

> Since FB is a US company does that mean every single Libra user will be subject to US restrictions - even those which are legal in their country? Will Iranians be able to use Libra? What about Canadians using it to buy marijuana? There is a long history of non-US banks which have operations in the US getting fined by US regulatory agencies because they violate US law somewhere else in the world with regard to money laundering / sanctions etc. The reach of US prosecutory power with respect to financial institutions is vast.

PeterisP 7y ago

That's probably inevitable - just as you can't have your cake and eat it too, you can't have a payment network that's freely usable by major companies who do business in USA and also by those under USA sanctions such as Iranians. If a system is truly permissionless and decentralized so that everyone who's willing can technically participate without restrictions, then all first world companies will be prohibited to do commerce in that system (unless it's for trivial amounts or they do their own KYC/customer analysis to implement the restrictions), and if some system is going to be implemented by first world companies, then they'll be required to ensure that it's not truly permissionless and can keep certain actors out of it.

A4ET8a8uTh0 7y ago
You are absolutely correct about first world companies. What about non first world? Truly open systems do not seem to pop up anywhere though. I personally think that a critical mass could be achieved beyond which governments would be hard presses to flex its muscles.

opportune 7y ago

It doesn't have nominal interest, but since it's pegged to a variety of financial instruments it will effectively bear interest (positive or negative) with respect to any currency. Facebook wants to do two things: 1 Bank the unbanked or underbanked in developing countries. This is key because anybody in these countries with a smartphone will have a good banking service and be able to pay for things like they do with WePay in China. The user experience and network effect will probably be better than anything the local banks could offer. Also the currency will be more stable and remittances will be almost frictionless. 2 Have these newly banked use Libra for their day to day transactions. The more money they put on the platform the more interest FB collects. Even if they don't do it now, FB will eventually integrate Libra with their other services like ads (both from a payments and data-gathering perspective) and FB marketplace. By making their bank account a "cryptocurrency" FB can try to circumvent the hundreds of differing banking standards and regulations around the world. But ultimately this is going to cause a death by a thousand cuts. It's actually a legitimate national security issue for many countries to have large portions of their internal economy being controlled by mostly American corporations in a foreign currency.

wmf 7y ago

Libra is owned by a Swiss organization, not Facebook.

whateveracct 7y ago
This is just a legal maneuver crypto projects do I believe.
- Spivak 7y ago
  Maneuver or not this corporation would answer to all members of the consortium participating in it. It would be difficult for Facebook to maintain control while other financial behemoths also want influence.