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> Hey do you mind if we just skip the paperwork part and just control currency, while actually being a social media tech giant This is a gross mischaracterizat

by bko 7y ago

> Hey do you mind if we just skip the paperwork part and just control currency, while actually being a social media tech giant This is a gross mischaracterization of what Libra is. Libra is a token that's backed 1 to 1 on some basket of currencies and mostly government bonds. The Libra foundation makes money by taking a portion of the investment return to fund themselves, much like a brokerage takes a bit of the return when they invest your cash account. Thats it.

deleted 7y ago
[deleted]
dmoy 7y ago
> portion of the investment return I'm not super on top of a lot of the details here, but I thought Libra was like a currency. What investment return?
- arethuza 7y ago
  Isn't it highly likely that any crypto currency will be seen as a vehicle for speculation?
  - wbl 7y ago
    Libra is a money market fund with a unique way of tracking ownership. That's it.
- rolltiide 7y ago
  The foundation and validators have various ways of making a return The users do not.
  - dmoy 7y ago
    Sure but how is that an investment return? Usually when you hear "take a portion of the investment returns" you're thinking expense ratios, some small fraction of the returns that the user is getting. If the user gets no additional returns, then it's just a fee, no?
    - rolltiide 7y ago
      Validators pay $10,000,000 for the privilege of processing transactions and collect transaction fees and can probably resale that privilege with a premium based on their absolute return, which would be called yield. They buy originally from the foundation, and thats how the foundation makes its first $1,000,000,000 dollars. These validators and other accredited investors also get access to a completely parallel asset called LIT, Libra Investment Token, which has value based on typical securities fundamentals. The users get the stablecoin and are resigned to only possibly trying to speculate on foreign exchange rate changes, which are entirely inferior to the other opportunities such that it shouldn't even be considered. Users only have the opportunity to be users. Probably time to read the white paper again if you really want to have a more nuanced discussion.
lostlogin 7y ago
I’ll stick to using my money as money thanks. It works fine.
- bko 7y ago
  I'm glad that you live in a country with a stable monetary supply, little to no inflation and no capital controls.
  - IGotThroughIt 7y ago
    Indeedy. My country has 7% inflation. And that calculation is done by the very state that is responsible for inflation so their word on this only means so much. Any other currency or store of value that solves this is more than welcome.
    - twistiti 7y ago
      Would it be a solution for you to buy foreign currencies with lower inflation amount (e.g. EUR)?
      - azernik 7y ago
        "capital controls" generally includes foreign exchange controls, i.e. restrictions on conversion to foreign currency and local use of foreign currency. https://en.wikipedia.org/wiki/Foreign_exchange_controls https://en.wikipedia.org/wiki/Foreign_exchange_controls
        meschi 7y ago
        And why should this be different for a private currency controlled by facebook?
        austhrow743 7y ago
        It shouldn't. All capital control is terrible. It could be different though.
jayd16 7y ago
Then create a bank. But that's not what this is. They want to make a bank that prints its own currency and skips the paperwork needed for current monetary exchange. It's just as OP has said.
- bko 7y ago
  Banks don't follow full reserve banking. They follow fractional reserve banking. When you put 1 Euro in the bank, they have discretion as to how to invest this amount and only need to keep a fraction of your money in reserves. With a bank I'm also stuck being exposed to the currency of my account. And European banks often have fees or minimum balances. Libra offers benefits to banks and is safer. [edit] The idea of a bank holding 1 to 1 reserves is called narrow banking. > It’s a “narrow banking” model that would back its deposits with 100 percent reserves, located at what is deemed by nearly everyone as the safest of safe locations —the U.S. central bank Ironically the US Federal Reserve tried to stop the creation of a narrow bank because it would undermine fractional reserve banks. [0] https://www.brookings.edu/research/the-fed-wants-to-veto-state-banking-authorities-but-is-that-legal/ https://www.brookings.edu/research/the-fed-wants-to-veto-sta...
  - jayd16 7y ago
    How is Libra a full reserve bank if investment is how they make their money? It doesn't sound any different at all except there's no regulations and no government backing (such as FDIC guarantees).
    - bko 7y ago
      Full reserve: > By fully backing each coin with a set of stable and liquid assets (described later) and by working with a competitive group of exchanges and other liquidity providers, users can have confidence that they will be able to sell any Libra coin at or close to the value of the reserve at any time. [0] They'll fund expenses from the return of the investments. > How will the reserve be invested? Users of Libra do not receive a return from the reserve. The reserve will be invested in low-risk assets that will yield interest over time. The revenue from this interest will first go to support the operating expenses of the association — to fund investments in the growth and development of the ecosystem, grants to nonprofit and multilateral organizations, engineering research, etc. [0] Brokerages do this as well and earn most of their money this way (people keep cash in brokerage account and brokerage invests and earns interest). > 57% of Schwab’s revenues are from net interest. The firm could literally give away every other service; discount the mutual fund fees to zero, do away with commissions, etc etc, and they would still be profitable. [1] [0] https://libra.org/en-US/about-currency-reserve/#the_reserve https://libra.org/en-US/about-currency-reserve/#the_reserve [1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
gjulianm 7y ago
> Libra is a token that's backed 1 to 1 on some basket of currencies and mostly government bonds And that architecture is decided by the Libra foundation, therefore they control currency.
ClumsyPilot 7y ago
That's what they promise today, a cartel of private corporations accountable to no-one, and with a legal obligation to maximise profits. They will break this promise to maximise profits, and there is sod-all you can do about it.

by bko 7y ago

deleted 7y ago

[deleted]

dmoy 7y ago

> portion of the investment return I'm not super on top of a lot of the details here, but I thought Libra was like a currency. What investment return?

arethuza 7y ago
Isn't it highly likely that any crypto currency will be seen as a vehicle for speculation?
- wbl 7y ago
  Libra is a money market fund with a unique way of tracking ownership. That's it.
rolltiide 7y ago
The foundation and validators have various ways of making a return The users do not.
- dmoy 7y ago
  Sure but how is that an investment return? Usually when you hear "take a portion of the investment returns" you're thinking expense ratios, some small fraction of the returns that the user is getting. If the user gets no additional returns, then it's just a fee, no?
  - rolltiide 7y ago
    Validators pay $10,000,000 for the privilege of processing transactions and collect transaction fees and can probably resale that privilege with a premium based on their absolute return, which would be called yield. They buy originally from the foundation, and thats how the foundation makes its first $1,000,000,000 dollars. These validators and other accredited investors also get access to a completely parallel asset called LIT, Libra Investment Token, which has value based on typical securities fundamentals. The users get the stablecoin and are resigned to only possibly trying to speculate on foreign exchange rate changes, which are entirely inferior to the other opportunities such that it shouldn't even be considered. Users only have the opportunity to be users. Probably time to read the white paper again if you really want to have a more nuanced discussion.

lostlogin 7y ago

I’ll stick to using my money as money thanks. It works fine.

bko 7y ago
I'm glad that you live in a country with a stable monetary supply, little to no inflation and no capital controls.
- IGotThroughIt 7y ago
  Indeedy. My country has 7% inflation. And that calculation is done by the very state that is responsible for inflation so their word on this only means so much. Any other currency or store of value that solves this is more than welcome.
  - twistiti 7y ago
    Would it be a solution for you to buy foreign currencies with lower inflation amount (e.g. EUR)?
    - azernik 7y ago
      "capital controls" generally includes foreign exchange controls, i.e. restrictions on conversion to foreign currency and local use of foreign currency. https://en.wikipedia.org/wiki/Foreign_exchange_controls https://en.wikipedia.org/wiki/Foreign_exchange_controls
      - meschi 7y ago
        And why should this be different for a private currency controlled by facebook?
        austhrow743 7y ago
        It shouldn't. All capital control is terrible. It could be different though.

jayd16 7y ago

Then create a bank. But that's not what this is. They want to make a bank that prints its own currency and skips the paperwork needed for current monetary exchange. It's just as OP has said.

bko 7y ago
Banks don't follow full reserve banking. They follow fractional reserve banking. When you put 1 Euro in the bank, they have discretion as to how to invest this amount and only need to keep a fraction of your money in reserves. With a bank I'm also stuck being exposed to the currency of my account. And European banks often have fees or minimum balances. Libra offers benefits to banks and is safer. [edit] The idea of a bank holding 1 to 1 reserves is called narrow banking. > It’s a “narrow banking” model that would back its deposits with 100 percent reserves, located at what is deemed by nearly everyone as the safest of safe locations —the U.S. central bank Ironically the US Federal Reserve tried to stop the creation of a narrow bank because it would undermine fractional reserve banks. [0] https://www.brookings.edu/research/the-fed-wants-to-veto-state-banking-authorities-but-is-that-legal/ https://www.brookings.edu/research/the-fed-wants-to-veto-sta...
- jayd16 7y ago
  How is Libra a full reserve bank if investment is how they make their money? It doesn't sound any different at all except there's no regulations and no government backing (such as FDIC guarantees).
  - bko 7y ago
    Full reserve: > By fully backing each coin with a set of stable and liquid assets (described later) and by working with a competitive group of exchanges and other liquidity providers, users can have confidence that they will be able to sell any Libra coin at or close to the value of the reserve at any time. [0] They'll fund expenses from the return of the investments. > How will the reserve be invested? Users of Libra do not receive a return from the reserve. The reserve will be invested in low-risk assets that will yield interest over time. The revenue from this interest will first go to support the operating expenses of the association — to fund investments in the growth and development of the ecosystem, grants to nonprofit and multilateral organizations, engineering research, etc. [0] Brokerages do this as well and earn most of their money this way (people keep cash in brokerage account and brokerage invests and earns interest). > 57% of Schwab’s revenues are from net interest. The firm could literally give away every other service; discount the mutual fund fees to zero, do away with commissions, etc etc, and they would still be profitable. [1] [0] https://libra.org/en-US/about-currency-reserve/#the_reserve https://libra.org/en-US/about-currency-reserve/#the_reserve [1] https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

gjulianm 7y ago

> Libra is a token that's backed 1 to 1 on some basket of currencies and mostly government bonds And that architecture is decided by the Libra foundation, therefore they control currency.

ClumsyPilot 7y ago

That's what they promise today, a cartel of private corporations accountable to no-one, and with a legal obligation to maximise profits. They will break this promise to maximise profits, and there is sod-all you can do about it.