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Visa, Mastercard, Stripe, and eBay exit Facebook’s Libra project

1083 points by gkolli 7y ago

undefined3840 7y ago
Other than eBay, guessing the reason why the payment cos are dropping out first is because they have the highest regulatory/compliance burden as is, and don’t need more scrutiny dealing with something they don’t even fully understand just so they can win some brownie points with FB.
- kbenson 7y ago
  Well, Ebay owned Paypal until they spun it off again. Perhaps the execs still have nightmares about dealing with financial regulations (or trying to walk the line so they didn't have to) and don't want to deal with it again.
  - xemdetia 7y ago
    I'm more of the opinion that there was a Q2/Q3 deadline to get some sane regulatory framework by the Libra team and they just whiffed on it or it was wholly insufficient for normal international banking standards (which was probably laid out by all the parties that left). The fact that everyone seemed to bail all at once sounds like there was just a lack of commitment/slipped deadline by the Libra side. Generally as a new thing is being stood up under a regulated framework there is some slack provided to get the ship in order while other interested parties look on, but at a certain point major requirements must be done. If you are one of the interested parties and it doesn't look like the other side is making sane progress, the hammer drops swiftly.
justinzollars 7y ago
I'm actually kind of bummed out about this. I may not like FB, but I like the idea of a digital currency backed by a floating basket of currencies.
- echelon 7y ago
  Not one that isn't regulated and that is controlled by a company with a penchant for walking the legal gray area line.
  - diogenescynic 7y ago
    Agree, Facebook is a malicious actor. They are a surveillance and propaganda platform. I don’t want them controlling a currency as they’d likely just abuse it.
  - unethical_ban 7y ago
    A lack of regulation is a bit of the draw, isn't it? Let's not pretend any of the processors are doing this because they have ethical issues with Facebook. They are likely doing it at the behest of the Fed, the Treasury and other international currencies. It's about power.
  - lazzlazzlazz 7y ago
    Let's remind ourselves that the entire point of the Calibra organization from which these companies have withdrawn their applications is to decentralize the governance of the coin. Facebook would not have unilateral control by any stretch of the imagination.
    - zajd 7y ago
      No, just a bunch of multinationals with a proven track record of doing anything and everything to improve their bottom lines. Should be a great group of chaps to have take over monetary policy. Who needs democracy anyways?
    - carlosdp 7y ago
      Calibra = Facebook's Libra wallet subsidiary Libra Association is the organization these companies have withdrawn from.
    - throwaway_law 7y ago
      >Facebook would not have unilateral control by any stretch of the imagination. At minimum they are the registered owner the Libra federal trademarks...that's a funny first step for a "decentralized" project. Satoshi Nakamoto never trademarked bitcoin or blockchain for that matter.
CathedralBorrow 7y ago
I wonder how much of this is companies distancing themselves from Facebook rather than being purely about the cryptocurrency project.
- Matthias247 7y ago
  On the other hand if it weren't facebook they likely would not even have been interested in yet-another cryptocurrency. Especially if it's even not available, but just a work-in-progress thing.
  - judge2020 7y ago
    If they had created this without FB (and didn't announce it at all), FB could have snuck in later and they would have taken over payments without anyone noticing
    - gl00pp 7y ago
      But no one would have taken it seriously without FB pushing it.
  - nostrademons 7y ago
    They've been interested for a while - Stripe used to accept Bitcoin, and various Stripe employees have said they're watching developments in the space. For that matter, a number of other big tech companies (notably Apple) said they're watching the space. I think the main issue is that cryptocurrency still has a few unsolved research & regulatory problems (like how to handle more than 10 TPS, or how to record taxes transparently) before it's ready for mainstream adoption. No big company wants to take the risk that an unsolved research problem may not have a solution, and so they wait and see how the space evolves rather than committing large amounts of resources to it. (Other than FB, who has resources to burn.) If it starts taking off they'll buy a bunch of startups and then start throwing engineers at it; otherwise they risk nothing.
    - lawn 7y ago
qwerty456127 7y ago
Cowards just are fleeing as government bullies said they won't tolerate loosing control over citizens' money.
- bdibs 7y ago
  What's the alternative?
- journalctl 7y ago
  Call me old-fashioned, but I would rather have a government manage my money. Buying groceries with Facebook scrip isn’t my idea of a good time.
  - qwerty456127 7y ago
    I don't insist on being sure it is actually going to work this way and Facebook isn't going to have the power over Libra yet the available concept says it's not meant to. Libra is meant to set you free (libre), not to be managed by Facebook or anybody. I am and many are totally sick of PayPal blocking accounts for no reason, requiring residence verification, charging ridiculous commissions, etc. Libra was supposed to become electronic cash, kind of like BitCoin was supposed to but you know, BitCoin has its problems making so it can't be used like cash any more. Do you really not want a currency you can use like cash (which can by used by anybody, everywhere, instantly and anonymously) but electronically.
    - electriclove 7y ago
      We do, just not anything of the sort from Facebook.
      - qwerty456127 7y ago
        Then who else? It can hardly be built and promoted efficiently without somebody big behind it. Which corporation would sound better than Facebook? Banks certainly are not better than Facebook - they have been tracking and limiting us for much longer than Facebook exists and they seemingly lack modern tech expertise as well as progressive attitude.
raister 7y ago
I guess people had issues of the currency being used to all sort of illegal things, e.g., human enslaving, human organ trafficking, and so on...
- jasoncartwright 7y ago
  If this is true, then it was true when they signed up initially. What changed?
  - raister 7y ago
    Because raw ideas seem good, then when people ponder it may turn out to be bad ones... Have you ever heard of the Solar Powered Highway in France?
    - wolfgke 7y ago
      I have quite some difficulties with the mentality of first very publicly announcing that you will join the project, then very soon realizing that it might be a bad idea, and then (also quite publicly) exiting the project. Why not evaluate this beforehand before very publicly announcing that you join the (Libra) project?!
alibert 7y ago
I guess that why one of the first investor in Libra - famous Xavier Niel - published this editorial [1] (small reminder for people who don't know him, he created the ISP french "Free" that kind of totally changed the telecom market in France (DSL and mobile), he also owns Scaleway (cloud), Kima Ventures (VC)) [1] https://www.theblockcrypto.com/linked/42886/libra-is-inevitable-better-to-embrace-it-says-its-investor-a-french-billionaire https://www.theblockcrypto.com/linked/42886/libra-is-inevita... [2] Original : https://www.lesechos.fr/idees-debats/cercle/europeens-libra-nous-de-choisir-1139165 https://www.lesechos.fr/idees-debats/cercle/europeens-libra-...
- baby 7y ago
  He also completely disrupted/killed the monopole that existed in telecommunication. Giving French people absurdly cheaper phone plans.
chillacy 7y ago
In 6 months: Visa Mastercard Stripe and Ebay create new stablecoin
csomar 7y ago
I see this is starting to playing out as I'm thinking it should play out*. Now, I'm waiting for Facebook to stick to its gun. 2020 will be an interesting year. x- https://news.ycombinator.com/item?id=21162607 https://news.ycombinator.com/item?id=21162607
buboard 7y ago
Wow .. they re bound to see some competition.
jeremyjh 7y ago
It looks like a misstep followed by a hasty and ignominious retreat because thats exactly what happened - no one anticipated the reaction from lawmakers and rules agencies. Its kind of hard to see this from the perspective of people who follow tech and HN, but Libra really may have been the first occasion that the possibility of crypto as anything other than an investment instrument - e.g. an actual usage as currency - penetrated the awareness of top national political leadership. Yes the ICO's got some attention but in many ways that attention seemed to suggest that crypto would be tolerated. And probably it will be, as long as it is simply another category of asset. It will not be tolerated as currency, and governments will destroy any crypto that threatens to become one. For now, BTC is safe because its usage as a currency is minuscule and threatens no one. If it were to become successful, it will be destroyed. I've always known that was a possibility but now I'm sure of it.
- Barrin92 7y ago
  >no one anticipated the reaction from lawmakers and rules agencies. if that's really the case at the Facebook headquarters they need to do some soul searching about how in touch they are with the world at large. Because when I read that the biggest social network on the planet is going to try to introduce its own currency it took me and I think a lot of other people exactly two seconds to figure out that Uncle Sam and the EU would have none of it.
  - jeremyjh 7y ago
    Why would Visa, Mastercard and others agree to participate if they believed it was doomed in this way? I do not think it was nearly so obvious as you suggest. The way rules agencies had treated crypto so far looked accommodating.
    - Swenrekcah 7y ago
      I think there are two strategic reasons for joining even if they believed it was doomed. 1. Like someone said above, know your enemy. 2. In the 0.1% offchance that it took off they really don’t want to be left out.
dagaci 7y ago
The current financial system worldwide looks quite suspect right now, negative interest rates could soon become a new norm in the EU even officially in retail. Most importantly political leaders in the US(and EU) have scaled up their massive money-printing schemes designed to keep their banking-financial overlords in business. With that in mind, the very last thing the EU and US authorities want is for the people who (mostly unwittingly) underpin the actual value to have an Exit from this type of controlled use of inflation into an alternative currency backed by say gold and other hard to inflate commodities, because allowing any significant amount of that.. (remember the true impact is inverse of the real fractional-reserve in play) would lead to a collapse in the power of the existing political-financial hegemony.
lacker 7y ago
I hope this doesn't cause Facebook to give up on Libra. I personally have no desire to own Libra. But traditional bank accounts kind of suck as a product and I would like to see more tech companies competing with them. The problems with bank accounts: 1. They charge you fees for things 2. They try to upsell me stupid financial products 3. They are not easy to use in other countries 4. Typing in my credit card number sucks 5. Typing in my credit card number isn't secure None of that has really gotten any better in the past ten years. It feels like banks have mostly given up on making their product better. Instead of improving their product, they just buy more expensive retail locations. I would probably rather use a financial product produced by Google, Microsoft, or Amazon than a financial product produced by Facebook. I just don't want the rules to end up being, big tech companies are not permitted to compete with crappy banks.
- capableweb 7y ago
  Traditional banking replaced by company focused on good technology, sure, that sounds good. That's not what Libra aim(ed) for though. Libra was designed as a currency to take over the world, replacing the rest. You do not want a for-profit company to run a global currency. Sure, let them run banks, one bank won't rule the world. But the one who holds all the money, will.
  - lacker 7y ago
    I do want a for-profit company to run a global currency. I would rather there be hundreds of global currencies, with me free to choose which one I would rather use, if any.
    - capableweb 7y ago
      If a for-profit company is running the currency, the users of the currency are in a loosing position. Remember, the for-profit company wants profit, so good luck fighting with them about the currency. "hundreds of global currencies" sounds like a good idea to me too, as long as they are out of the hands of for-profit companies.
john_moscow 7y ago
Call me cynical, but the whole idea of Libra would be disruptive to the existing international payment businesses, such as the ones that just exited. So the only reason for them to join in the first place would be to basically "know your enemy" - make certain you get the first-person intel on the project's vitals and to know what to expect. Now that a couple of governments made it clear that there would be roadblocks in deploying Libra according to the original roadmap, it is no longer seen as a threat, so anyone without a direct monetization interest (Facebook itself?) is going to leave.
- _bxg1 7y ago
  Probably true, but that doesn't mean it isn't a good thing. Despite the marketing about distribution, this was a power-grap by Facebook.
- snotrockets 7y ago
  And here I thought the whole idea of Libra is to take marketshare from WeChat & M-Pesa.
  - jpwgarrison 7y ago
    Put more simply, it is about increasing total addressable market.
  - hanniabu 7y ago
    I'd argue the real reason behind it is to skirt GDPR-like privacy laws. If microfees are used for certain interactions, even if they are negligible amounts, Facebook would be required to retain the data attached to it as it's part of the transaction.
- deleted 7y ago
  [deleted]
celticninja 7y ago
The centralisation of Libra made it easy to kill. Bitcoin can be hampered but not outright killed, at least not over night. A death by a thousand cuts is the most likely solution but by no means guarantees Victory.
- CamelCaseName 7y ago
  Bitcoin can be "killed" in the sense that it can become useless for the 99.99%. Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange. At that point, Bitcoin would be essentially dead as a rival to any currency.
  - capableweb 7y ago
    > Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange. This is commonly a argument for having drugs illegal too. "If we hunt them down, eventually there will be no one left" What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it.
    - rifung 7y ago
      > What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it. It's not as though drugs became more popular because they became illegal. Prices may have gone up because they were harder to obtain and there's less competition. Demand was still there because.. well people like doing drugs or are addicted to them. With Bitcoin, why would a business risk legal action to accept it? There's very little incentive as far as I can tell.
      - rmilejczz 7y ago
        But they didn’t become less popular either, and instead continued to rise and grow in popularity. That’s the point, outlawing it won’t stop it. If bitcoins were illegal then I imagine they would probably only be used in illegal transactions.
haylel 7y ago
I'm sure Libra would be useful for payments / economy inside Facebook Horizon.
CodiePetersen 7y ago
I'm actually glad it's dead/dying. It was always going to be controlled by an elite group who answered to no one but themselves. They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions. People keep saying oh this is proof crypto can't ever work because government. This was never a true crypto currency. It was just a private ledger tracking where actual money went. It was a stable coin at best. Its centralization is what got it killed.
- xabotage 7y ago
  >They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions. Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs. (Edit) I think it's fair to not trust Facebook with your currency, but keep in mind the players in the current system (governments, Banks, and credit companies) have hardly proven more trustworthy.
  - SkyMarshal 7y ago
    >Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs. You should just get a new credit card or bank, whatever you're using is really out of date. Most modern cards and banks have websites or phone apps you can submit a travel notice on. Takes all of 2m and prevents you getting blocked for charges in that country.
    - mark_l_watson 7y ago
lucasverra 7y ago
David Marcus update [1] : Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz. I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up. [1]https://twitter.com/davidmarcus/status/1182775728431087623 https://twitter.com/davidmarcus/status/1182775728431087623
- throwawaysunday 7y ago
  What are you talking about it isn't great news. It is fantastic news for most people, who honestly do not want their money being controlled and monitored by the whims of those who run a social media company, with a history of not putting customers first. Any financial institution wanting to be on the right side of history should run, not walk from this project. That isn't to say there is no place in the future for purely electronic currency, but it sure hell better not be this. Change of this magnitude is hard because frankly... black mirror
- throwaway2048 7y ago
  This is good for libra(coin)?
  - sremani 7y ago
    He is re-framing it to "when the times get tough the tough get going" mode. Its also a signal, that they are going to move forward what ever that is. Good or Bad, its hard to tell for the project but at least you are left with the feeling that Libra team is formidable and preparing to weather the storm. If I have to guess, something is going to come out it from this project, either a policy clarity from governments or while tinkering Libra team may pivot into some useful use case etc.
    - catalogia 7y ago
lifeisstillgood 7y ago
I honestly don't see how to reconcile two desirable aspects of digital currency - Frictionless, fee-less digital transfer of a medium of value. To be able to transfer money natively over the internet. - To keep it secure for 7 billion people - reversible, auditable etc - the benefits we have of a curated financial system. I am sure there are lots of reading on this available - but those two do seem incompatible
- swift532 7y ago
  You achieve the first by having a distributed, decentralized, fully censorship resistant base layer in which the rule set is more or less like the current Bitcoin rule set. You achieve the second by building upon this base layer. Just like how in the real world the base layer is physical transfer of cash and assets (not very reversible), and we have a financial and legal system built upon that (to simplify, it's doubtful how relevant physical transfer is any more).
  - tsimionescu 7y ago
    But the only way to do the second is to keep a separate 'ledger' associating real people/companies with network wallets, and to ban the use of wallets whose ownership is not known. And this automatically brings back a lot of hassle with verifying paperwork, it again allows people to be barred from the network, and it again prevents people withput paperwork from owning currency.
- rimliu 7y ago
  I have both with my bank.
jtms 7y ago
There was absolutely no reason for this to project to exist. The only feature of digital currencies that make some of them interesting is that they are fully distributed and based on absolutely zero trust of other users on the network. What Facebook was trying to do here was take something that could be implemented in a standard centralized database, stick some marketing on it, and try to ride a hype wave that has since (rightfully) died down.
- osrec 7y ago
  Absolutely. My definition of a decentralised system is not one that's controlled by a handful of entities...
  - hinkley 7y ago
    And yet, a lot of people have been confused into thinking things like The Cloud are decentralized. I’m not sure how this got broken, but a few powerful companies seem to be running with it.
    - core-questions 7y ago
      Well, relative to the tiny datacenter you might have for an office, it's "decentralized"... but yes, only in a marketing sense.
    - SI_Rob 7y ago
      The bar for grasping decentralization fatally flexible and bends very low. As in "If you can't immediately name the individual who has the majority of leverage over the operation of X, then X is decentralized" low. It's little more than an incantation at this point; the only proven implementation is as a sort of verbal ink blot test for identifying marks.
    - jeromebaek 7y ago
      Sorry, who in their right mind thinks the Cloud is decentralized? It is literally the opposite.
  - 7y ago
FailMore 7y ago
I think FB should take a lesson from this - be less respectful. They have done everything not to tread on anyone's toes, but that is not what innovation is about. They have the userbase and the ability to give this a shot all on their own. Do it and make something great, then deal with the consequences.
twright 7y ago
I wonder what would have happened if Facebook had simply announced Libra and released it a week later. Would the legislative backlash have been stronger? Or would the quick release bring to light the (always preached about but not always demonstrable) advantages of cryptocurrencies. I'm not (yet) doubting that Libra will eventually be released, but I can see it being shutdown before or sometime after release.
- FillardMillmore 7y ago
  I think the legislative backlash would've been much stronger, and I have nothing to back this up so take it with a grain of salt - just my opinion. Considering the many negative press stories about Facebook concerning things like privacy rights, I don't think Facebook would take a risk like that to begin with, but if they did, the US government would likely want to make an example out of them to deter future companies eager to act first and ask for permission later. Especially when it comes to something like this that could very well disrupt global currencies. There would be many ensuing battles of litigation and I would imagine the cost for Facebook, if they truly held steadfast in support of Libra, would be quite tremendous.
aazaa 7y ago
> A Visa spokesperson told The Verge. “Visa has decided not to join the Libra Association at this time,” the spokesperson said. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.” I suspect the regulatory pushback was the least of the problem. These companies (and PayPal) have everything to lose and nothing to gain by helping to advance Libra. The entire business model is to capture value from financial system friction. Eliminating the friction eliminates their reason for being. It's a classic innovator's dilemma: the action that will save these companies is building the thing that will destroy their business models. They can't do it because established companies are set up to eject people persisting with such notions. That leaves the field open for an out-of-left field solution that does away with the friction and the business models it spawned. The source of the friction is regulatory. AML. KYC. All the laws that deputize financial institutions as extensions of law enforcement. It's quite expensive. The only way to eliminate the friction is to eliminate the regulatory liability. And that's what has been happening with Bitcoin for some time. What is surprising was that these companies ever lent their names to the project in the first place.
- pmarreck 7y ago
  Open-source cryptocurrencies that (ideally) no single entity mainly profits from, are still the future, IMHO. I don't get why people would get excited about Libra who weren't already excited by some other cryptocurrency. Violate an arbitrary rule in financial institutions? Guilty until proven innocent. (I have real-world experience, here) Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.)
  - lmm 7y ago
    > Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.) The argument goes through just the same? Cash, gold, cryptocurrencies and bearer bonds are all popular with criminals and crazies.
dana321 7y ago
Isn't it kind of pointless anyway: a large corporation with vast resources creating a cryptocurrency, why don't they just make their own bank?
- wolfgke 7y ago
  > Isn't it kind of pointless anyway: a large corporation with vast resources creating a cryptocurrency, why don't they just make their own bank? Because Facebook senses an opportunity that in the long-term they could make a lot more money than if they founded a bank.
dwoozle 7y ago
Well, this died.
ufo_kid_zero 7y ago
“If you take this on,” the letters read, “you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.” I wonder who paid them to say this?
wpdev_63 7y ago
facebook would better service itself by help small businesses in timely transactions of cryptocurrencies. With the government debt project to go to $30 trillion within the decade there will be alot of people hedging against the dollar with cryptocurrency and whoever is able to help in transactions with mom and pop stores will make a fortunes. Also it does help you aren't _directly_ competing with the federal reserve. People have been killed for less.
capocannoniere 7y ago
I'd argue the outcome of this will be that Facebook will launch their own payments infrastructure on top of WhatsApp. There was no need for crypto or a Libra association to begin with. According to the leaked Facebook all-hands audio, Facebook is already planning to launch payments in Mexico by end of 2019 (https://qz.com/1719731/zuckerberg-confirms-facebook-payment-tests-in-india-mexico-in-verge-leak/ https://qz.com/1719731/zuckerberg-confirms-facebook-payment-...). I wouldn't be surprised if this goes extremely well for Facebook and WhatsApp payments becomes WeChat Pay / AliPay for the rest of the world.
- AlEinstein 7y ago
  Exactly this. Facebook will definitely move forward with some kind of payment system. Libra would have been fantastic for them if it had worked out but it was never their only option. They won't give up on Libra yet though.
- anonimouse5t43w 7y ago
  Just look at what Wechat is currently doing and you can get an idea of what Facebook will be doing in the future.
- hanniabu 7y ago
  > There was no need for crypto or a Libra association to begin with. If you're in control of the currency it provides you more flexibility and the blockchain aspect arguably makes it easier to manage the accounting as well.
- buboard 7y ago
  I d certainly download whatsapp if they did. It's just mad that there is no such service in the west. It makes a lot of sense really, they 'd avoid the whole negative publicitly and they could have released it as quietly as they did with facebook credits long ago
- davidgerard 7y ago
  WhatsApp Pay's trial in India has been delayed yet again: https://www.moneycontrol.com/news/business/whatsapp-pay-launch-in-india-likely-to-be-delayed-report-4513591.html https://www.moneycontrol.com/news/business/whatsapp-pay-laun... reason - 100% regulatory issues. I would take that "2019" as "2020 or later."
narrator 7y ago
If Facebook wants a currency they should start a country. Given that they are an organizing platform for various insurgent groups... I could almost see the headline: "victorious insurgent group 'ZucLiberationFront' agrees to partner with Facebook to run their country's currency system using Libra. Reasons cited were gratitude for free Facebook advertising that helped them recruit rebel fighters"
dnprock 7y ago
I think given enough time, Libra project can succeed. But it has to jump through many hurdles. It will require a lot more investment than Facebook anticipate. I advocate for a new type of crypto: digital native and decentralized stablecoin. By adding a constant inflation rate, coin price can become somewhat stable. The tradeoff is worthy for permissionless, digital native and decentralization. I outline the benefits of this new type of cryptocurrency in this article: The Next Big Thing in Crypto: Using Inflation to Create Stablecoin https://bitflate.org/post/2019/10/10/the-next-big-thing-in-crypto-using-inflation-to-create-stablecoin.html https://bitflate.org/post/2019/10/10/the-next-big-thing-in-c...
Lucadg 7y ago
I don't like Libra but I wouldn't dismiss it just yet. - Governments: We'll ban Libra. - Facebook: Let us do Libra and we'll give you access to the financial transactions which otherwise would go dark with Bitcoin or Wechat.
- tsimionescu 7y ago
  - Governments: oh yes, we'll trade our ability to set monetary policies for the off-chance that someone who wanted to hide from regulators will choose to trust Facebook with their shady transactions, and will continue to do so after the first time we catch them in the act based on data Facebook provided to us.
  - Lucadg 7y ago
    - Facebook: you are going to lose the ability to set monetary policy anyway. That ship has sailed.
mrmcd 7y ago
In other words every actual payment company didn't want to get a colonoscopy from every regulator on Earth for Zuck's Spruce Goose hobby.
kerng 7y ago
I found it interesting that Visa and Mastercard were actually on board in the beginning. Might have been some fear of missing out on something novel and important (especially since competitors joined Libra also). Now that the initial dust and Libra is a bit better understood they are seemingly jointly pulling out.
shakkhar 7y ago
I have no interest in Libra, but the fact that government basically bullied these companies out of this initiative is alarming. If the regulators think that they should scrutinize these companies deeper, being involved in Libra should not matter. It's like saying, "withdraw from Libra and we'll continue to look the other way on your sketchy non-Libra activities".
- repolfx 7y ago
  Regulators have very little to do with how law is meant to work in theory, especially in the USA. Financial regulators are pure extensions of arbitrary government power: they can make up new laws on the fly without Congress, and many rules are phrased vaguely enough that anyone could be violating them if they want it that way. Basically financial regulators can fine or imprison anyone in the financial system at any time for any reason or even no reason, unaccountably so. Not surprisingly this power gets abused. These firms were told they would be attacked and punished for working with Facebook, so of course they baked away.
jacquesm 7y ago
Why was Stripe even in it in the first place?
elif 7y ago
No surprise. The revolution will not be international clearing housed.
mark_l_watson 7y ago
I wonder if this was government pressure. I think it was only going to be 50% denominated in US dollar. Making it easy to effectively (partially) transact in other currencies must not have gone over well. EDIT: I assumed that Libra would be for many, many small transactions so banking know your customer KYC regulations imposed on banks in all countries by the US and other governments would not really apply. Also, does something like Apple Pay also fit the need for people paying people in other countries small amounts of money?
faggotassfucker 7y ago
fuck you
elmar 7y ago
Pegging Libra to just the Dollar could soothe regulators, a16z says https://techcrunch.com/2019/10/11/libra-denominated-in-dollars/ https://techcrunch.com/2019/10/11/libra-denominated-in-dolla...
- JumpCrisscross 7y ago
  > Pegging Libra to just the Dollar could soothe regulators, a16z says Baskets of currencies are nothing novel. The problem goes down to whether this is a Facebook-controlled currency (which is troubling, given Facebook’s track record) or a nobody-controlled currency that Facebook profits from (which is troubling, given the money-laundering concerns).
mesozoic 7y ago
And the end of the world pushes a bit further away
rajacombinator 7y ago
Major punt by Facebook like many others like Oculus. But you nail one like IG and it’s all good!
wpdev_63 7y ago
damn shame with the dollar approaching a $30 trillion dollar deficit within the next decade[0], it would be very prudent to invest into a competitor. [0]:https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-us-debt-hitting-30-trillion-2028 https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-...
speedplane 7y ago
I don't like Facebook, but I do give them credit for being very smart. They managed to lock a billion eye-balls on their platform and that doesn't happen automatically. That's what makes this whole Libra thing so shocking. I just can't believe Facebook would be so naive to just shout "digital cross-border currency" and then expect everyone to cheer them on. Bitcoin has been around for years, and controversies surrounding it are well known. PayPal has been around for decades and everyone understands the potential of electronic payments. The fact that Facebook did not expect this ambivalence / skepticism and address it upfront is a pretty surprising misstep.
vbo 7y ago
I'm puzzled by HN's attitude towards Libra. I can understand being wary of having Facebook run the world's money and how a metacurrency such as Libra could break world economics as we know it, but I can't help be excited about the prospect of widespread digital money usage and FB is one of the few companies that can drive that. Perhaps HN draws its animosity towards Libra from all the cryptocurrency shenanigans of the last few years, but given this community is comfortable with innovation and risk, I would expect HN to be imagining usecases and scenarios for digital money rather than dismiss the whole concept based on emotion related to Facebook and/or cryptocurrencies. If the world does move ahead with central bank issued digital currencies - and it seems there's a lot of chatter in that area - then a metacurrency will no doubt pop up at some point anyway. Because that's what I expect hackers will find fascinating and because it will suddenly become possible. So we'll get Libra one way or another, but it may not be Facebook's. A full fledged digital currency ecosystem will be incompatible with the status quo to a large degree, but that's no reason for dismissal. Doesn't all innovation challenge the status quo? Ultimately, the cat it out of the bag and the question is not if, but how digital scarcity, whether trustful or trustless (or a mix of the two), will impact our definition and use of money. We'll have to ensure AML rules evolve to fit the new paradigm and that's fine. But we shouldn't look at existing AML frameworks and refuse innovation because our solutions for the past don't fit our possibilities for the future. And regardless of the outcome of Libra, Facebook is making huge inroads in prompting conversations and ultimately regulating digital money, which in itself is a huge win. Given the negative govt and public reactions and their standing ground on the matter, they're doing it at their own expense and I'll give them kudos for that. I don't see any of the existing forces in the finance ecosystem do anything close to this. Money and payments have stood still amidst the digital revolution. Imagine micropayments for consuming online content and how they could address some of the biggest issues prompted by the attention economy. The likes of visa and mastercard could've made this a real at any moment in the last 20 years or so. I welcome anyone trying to do something bold. It's progress, regardless of the outcome of any specific project.
- CJefferson 7y ago
  My fundamental issue is simple. Money, who owns it and how it moves around, is fundamental to our society. I don't want that power owned by a company who might decide one day, without warning or reason, to close my account.
buboard 7y ago
I wonder why Stripe followed them? They re positive on crypto in general, and they would have an immediate competitive advantage if they stayed
- vinniejames 7y ago
  Because politicians threatened them with increased regulatory scrutiny across all of their business
  - buboard 7y ago
    It s possible that the benefit would outweigh the risk - after all they are already in the payments busines and know how AML works etc. They 've done it for bitcoin. So, i would assume they were threatened a little less politely than i imagined.
    - vinniejames 7y ago
      It's possible yes, but why jeopardize the gold mine you already have in one of the most valuable tech startups? Stripe ended Bitcoin support almost 2 years ago https://stripe.com/en-ee/blog/ending-bitcoin-support https://stripe.com/en-ee/blog/ending-bitcoin-support
    - vinniejames 7y ago
      Threat letters from the Senate: https://www.schatz.senate.gov/imo/media/doc/Signed%20Letters%20re%20Libra%20to%20Patrick%20Collison,%20Ajaypal%20Banga,%20and%20Alfred%20Kelly.pdf https://www.schatz.senate.gov/imo/media/doc/Signed%20Letters...
      - buboard 7y ago
        What a joke of a letter. "But think of child abuse". I can't believe they linked libra to child sexual abuse ... how would that even work? Didn't they admit last week that facebook's own detection algorithms are far better at detecting child abuse than anything else? How does that work.
robkon 7y ago
Bye libra
MH15 7y ago
That was quick.
keymone 7y ago
I hope Facebook manages to launch Libra and that’ll be the final trigger for regulators to chime in, slap them on the wrist and break up all the giant corps. The degree to which they are invading our privacy and are greedy for power and control over people’s lives is beyond scary.
Yuioup 7y ago
I guess that's it for Facebucks
WouterZ 7y ago
Tst
Zetaphor 7y ago
Notable that OP left Mercado Pago out of the headline, despite it being in the opening sentence. Mercado Pago is the largest payment provider in South America. In case you forgot, South America is the fourth largest continent and contains 12 countries.
ur-whale 7y ago
Interesting to ee Nick Szabo actually answer David Marcus tweets. https://twitter.com/davidmarcus/status/1182775728431087623 https://twitter.com/davidmarcus/status/1182775728431087623
equalunique 7y ago
One would think Facebook's Libra was a country sanctioned by the US.
azizul8692 7y ago
playstore game purchases

1083 points by gkolli 7y ago

Other than eBay, guessing the reason why the payment cos are dropping out first is because they have the highest regulatory/compliance burden as is, and don’t need more scrutiny dealing with something they don’t even fully understand just so they can win some brownie points with FB.

kbenson 7y ago
Well, Ebay owned Paypal until they spun it off again. Perhaps the execs still have nightmares about dealing with financial regulations (or trying to walk the line so they didn't have to) and don't want to deal with it again.
- xemdetia 7y ago
  I'm more of the opinion that there was a Q2/Q3 deadline to get some sane regulatory framework by the Libra team and they just whiffed on it or it was wholly insufficient for normal international banking standards (which was probably laid out by all the parties that left). The fact that everyone seemed to bail all at once sounds like there was just a lack of commitment/slipped deadline by the Libra side. Generally as a new thing is being stood up under a regulated framework there is some slack provided to get the ship in order while other interested parties look on, but at a certain point major requirements must be done. If you are one of the interested parties and it doesn't look like the other side is making sane progress, the hammer drops swiftly.

justinzollars 7y ago

I'm actually kind of bummed out about this. I may not like FB, but I like the idea of a digital currency backed by a floating basket of currencies.

echelon 7y ago
Not one that isn't regulated and that is controlled by a company with a penchant for walking the legal gray area line.
- diogenescynic 7y ago
  Agree, Facebook is a malicious actor. They are a surveillance and propaganda platform. I don’t want them controlling a currency as they’d likely just abuse it.
- unethical_ban 7y ago
  A lack of regulation is a bit of the draw, isn't it? Let's not pretend any of the processors are doing this because they have ethical issues with Facebook. They are likely doing it at the behest of the Fed, the Treasury and other international currencies. It's about power.
- lazzlazzlazz 7y ago
  Let's remind ourselves that the entire point of the Calibra organization from which these companies have withdrawn their applications is to decentralize the governance of the coin. Facebook would not have unilateral control by any stretch of the imagination.
  - zajd 7y ago
    No, just a bunch of multinationals with a proven track record of doing anything and everything to improve their bottom lines. Should be a great group of chaps to have take over monetary policy. Who needs democracy anyways?
  - carlosdp 7y ago
    Calibra = Facebook's Libra wallet subsidiary Libra Association is the organization these companies have withdrawn from.
  - throwaway_law 7y ago
    >Facebook would not have unilateral control by any stretch of the imagination. At minimum they are the registered owner the Libra federal trademarks...that's a funny first step for a "decentralized" project. Satoshi Nakamoto never trademarked bitcoin or blockchain for that matter.

CathedralBorrow 7y ago

I wonder how much of this is companies distancing themselves from Facebook rather than being purely about the cryptocurrency project.

Matthias247 7y ago
On the other hand if it weren't facebook they likely would not even have been interested in yet-another cryptocurrency. Especially if it's even not available, but just a work-in-progress thing.
- judge2020 7y ago
  If they had created this without FB (and didn't announce it at all), FB could have snuck in later and they would have taken over payments without anyone noticing
  - gl00pp 7y ago
    But no one would have taken it seriously without FB pushing it.
- nostrademons 7y ago
  They've been interested for a while - Stripe used to accept Bitcoin, and various Stripe employees have said they're watching developments in the space. For that matter, a number of other big tech companies (notably Apple) said they're watching the space. I think the main issue is that cryptocurrency still has a few unsolved research & regulatory problems (like how to handle more than 10 TPS, or how to record taxes transparently) before it's ready for mainstream adoption. No big company wants to take the risk that an unsolved research problem may not have a solution, and so they wait and see how the space evolves rather than committing large amounts of resources to it. (Other than FB, who has resources to burn.) If it starts taking off they'll buy a bunch of startups and then start throwing engineers at it; otherwise they risk nothing.
  - lawn 7y ago

qwerty456127 7y ago

Cowards just are fleeing as government bullies said they won't tolerate loosing control over citizens' money.

bdibs 7y ago
What's the alternative?
journalctl 7y ago
Call me old-fashioned, but I would rather have a government manage my money. Buying groceries with Facebook scrip isn’t my idea of a good time.
- qwerty456127 7y ago
  I don't insist on being sure it is actually going to work this way and Facebook isn't going to have the power over Libra yet the available concept says it's not meant to. Libra is meant to set you free (libre), not to be managed by Facebook or anybody. I am and many are totally sick of PayPal blocking accounts for no reason, requiring residence verification, charging ridiculous commissions, etc. Libra was supposed to become electronic cash, kind of like BitCoin was supposed to but you know, BitCoin has its problems making so it can't be used like cash any more. Do you really not want a currency you can use like cash (which can by used by anybody, everywhere, instantly and anonymously) but electronically.
  - electriclove 7y ago
    We do, just not anything of the sort from Facebook.
    - qwerty456127 7y ago
      Then who else? It can hardly be built and promoted efficiently without somebody big behind it. Which corporation would sound better than Facebook? Banks certainly are not better than Facebook - they have been tracking and limiting us for much longer than Facebook exists and they seemingly lack modern tech expertise as well as progressive attitude.

raister 7y ago

I guess people had issues of the currency being used to all sort of illegal things, e.g., human enslaving, human organ trafficking, and so on...

jasoncartwright 7y ago
If this is true, then it was true when they signed up initially. What changed?
- raister 7y ago
  Because raw ideas seem good, then when people ponder it may turn out to be bad ones... Have you ever heard of the Solar Powered Highway in France?
  - wolfgke 7y ago
    I have quite some difficulties with the mentality of first very publicly announcing that you will join the project, then very soon realizing that it might be a bad idea, and then (also quite publicly) exiting the project. Why not evaluate this beforehand before very publicly announcing that you join the (Libra) project?!

alibert 7y ago

I guess that why one of the first investor in Libra - famous Xavier Niel - published this editorial [1] (small reminder for people who don't know him, he created the ISP french "Free" that kind of totally changed the telecom market in France (DSL and mobile), he also owns Scaleway (cloud), Kima Ventures (VC)) [1] https://www.theblockcrypto.com/linked/42886/libra-is-inevitable-better-to-embrace-it-says-its-investor-a-french-billionaire https://www.theblockcrypto.com/linked/42886/libra-is-inevita... [2] Original : https://www.lesechos.fr/idees-debats/cercle/europeens-libra-nous-de-choisir-1139165 https://www.lesechos.fr/idees-debats/cercle/europeens-libra-...

baby 7y ago
He also completely disrupted/killed the monopole that existed in telecommunication. Giving French people absurdly cheaper phone plans.

chillacy 7y ago

In 6 months: Visa Mastercard Stripe and Ebay create new stablecoin

csomar 7y ago

I see this is starting to playing out as I'm thinking it should play out*. Now, I'm waiting for Facebook to stick to its gun. 2020 will be an interesting year. x- https://news.ycombinator.com/item?id=21162607 https://news.ycombinator.com/item?id=21162607

buboard 7y ago

Wow .. they re bound to see some competition.

jeremyjh 7y ago

It looks like a misstep followed by a hasty and ignominious retreat because thats exactly what happened - no one anticipated the reaction from lawmakers and rules agencies. Its kind of hard to see this from the perspective of people who follow tech and HN, but Libra really may have been the first occasion that the possibility of crypto as anything other than an investment instrument - e.g. an actual usage as currency - penetrated the awareness of top national political leadership. Yes the ICO's got some attention but in many ways that attention seemed to suggest that crypto would be tolerated. And probably it will be, as long as it is simply another category of asset. It will not be tolerated as currency, and governments will destroy any crypto that threatens to become one. For now, BTC is safe because its usage as a currency is minuscule and threatens no one. If it were to become successful, it will be destroyed. I've always known that was a possibility but now I'm sure of it.

Barrin92 7y ago
>no one anticipated the reaction from lawmakers and rules agencies. if that's really the case at the Facebook headquarters they need to do some soul searching about how in touch they are with the world at large. Because when I read that the biggest social network on the planet is going to try to introduce its own currency it took me and I think a lot of other people exactly two seconds to figure out that Uncle Sam and the EU would have none of it.
- jeremyjh 7y ago
  Why would Visa, Mastercard and others agree to participate if they believed it was doomed in this way? I do not think it was nearly so obvious as you suggest. The way rules agencies had treated crypto so far looked accommodating.
  - Swenrekcah 7y ago
    I think there are two strategic reasons for joining even if they believed it was doomed. 1. Like someone said above, know your enemy. 2. In the 0.1% offchance that it took off they really don’t want to be left out.

dagaci 7y ago

The current financial system worldwide looks quite suspect right now, negative interest rates could soon become a new norm in the EU even officially in retail. Most importantly political leaders in the US(and EU) have scaled up their massive money-printing schemes designed to keep their banking-financial overlords in business. With that in mind, the very last thing the EU and US authorities want is for the people who (mostly unwittingly) underpin the actual value to have an Exit from this type of controlled use of inflation into an alternative currency backed by say gold and other hard to inflate commodities, because allowing any significant amount of that.. (remember the true impact is inverse of the real fractional-reserve in play) would lead to a collapse in the power of the existing political-financial hegemony.

lacker 7y ago

I hope this doesn't cause Facebook to give up on Libra. I personally have no desire to own Libra. But traditional bank accounts kind of suck as a product and I would like to see more tech companies competing with them. The problems with bank accounts: 1. They charge you fees for things 2. They try to upsell me stupid financial products 3. They are not easy to use in other countries 4. Typing in my credit card number sucks 5. Typing in my credit card number isn't secure None of that has really gotten any better in the past ten years. It feels like banks have mostly given up on making their product better. Instead of improving their product, they just buy more expensive retail locations. I would probably rather use a financial product produced by Google, Microsoft, or Amazon than a financial product produced by Facebook. I just don't want the rules to end up being, big tech companies are not permitted to compete with crappy banks.

capableweb 7y ago
Traditional banking replaced by company focused on good technology, sure, that sounds good. That's not what Libra aim(ed) for though. Libra was designed as a currency to take over the world, replacing the rest. You do not want a for-profit company to run a global currency. Sure, let them run banks, one bank won't rule the world. But the one who holds all the money, will.
- lacker 7y ago
  I do want a for-profit company to run a global currency. I would rather there be hundreds of global currencies, with me free to choose which one I would rather use, if any.
  - capableweb 7y ago
    If a for-profit company is running the currency, the users of the currency are in a loosing position. Remember, the for-profit company wants profit, so good luck fighting with them about the currency. "hundreds of global currencies" sounds like a good idea to me too, as long as they are out of the hands of for-profit companies.

john_moscow 7y ago

Call me cynical, but the whole idea of Libra would be disruptive to the existing international payment businesses, such as the ones that just exited. So the only reason for them to join in the first place would be to basically "know your enemy" - make certain you get the first-person intel on the project's vitals and to know what to expect. Now that a couple of governments made it clear that there would be roadblocks in deploying Libra according to the original roadmap, it is no longer seen as a threat, so anyone without a direct monetization interest (Facebook itself?) is going to leave.

_bxg1 7y ago
Probably true, but that doesn't mean it isn't a good thing. Despite the marketing about distribution, this was a power-grap by Facebook.
snotrockets 7y ago
And here I thought the whole idea of Libra is to take marketshare from WeChat & M-Pesa.
- jpwgarrison 7y ago
  Put more simply, it is about increasing total addressable market.
- hanniabu 7y ago
  I'd argue the real reason behind it is to skirt GDPR-like privacy laws. If microfees are used for certain interactions, even if they are negligible amounts, Facebook would be required to retain the data attached to it as it's part of the transaction.
deleted 7y ago
[deleted]

celticninja 7y ago

The centralisation of Libra made it easy to kill. Bitcoin can be hampered but not outright killed, at least not over night. A death by a thousand cuts is the most likely solution but by no means guarantees Victory.

CamelCaseName 7y ago
Bitcoin can be "killed" in the sense that it can become useless for the 99.99%. Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange. At that point, Bitcoin would be essentially dead as a rival to any currency.
- capableweb 7y ago
  > Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange. This is commonly a argument for having drugs illegal too. "If we hunt them down, eventually there will be no one left" What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it.
  - rifung 7y ago
    > What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it. It's not as though drugs became more popular because they became illegal. Prices may have gone up because they were harder to obtain and there's less competition. Demand was still there because.. well people like doing drugs or are addicted to them. With Bitcoin, why would a business risk legal action to accept it? There's very little incentive as far as I can tell.
    - rmilejczz 7y ago
      But they didn’t become less popular either, and instead continued to rise and grow in popularity. That’s the point, outlawing it won’t stop it. If bitcoins were illegal then I imagine they would probably only be used in illegal transactions.

haylel 7y ago

I'm sure Libra would be useful for payments / economy inside Facebook Horizon.

CodiePetersen 7y ago

I'm actually glad it's dead/dying. It was always going to be controlled by an elite group who answered to no one but themselves. They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions. People keep saying oh this is proof crypto can't ever work because government. This was never a true crypto currency. It was just a private ledger tracking where actual money went. It was a stable coin at best. Its centralization is what got it killed.

xabotage 7y ago
>They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions. Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs. (Edit) I think it's fair to not trust Facebook with your currency, but keep in mind the players in the current system (governments, Banks, and credit companies) have hardly proven more trustworthy.
- SkyMarshal 7y ago
  >Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs. You should just get a new credit card or bank, whatever you're using is really out of date. Most modern cards and banks have websites or phone apps you can submit a travel notice on. Takes all of 2m and prevents you getting blocked for charges in that country.
  - mark_l_watson 7y ago

lucasverra 7y ago

David Marcus update [1] : Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz. I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up. [1]https://twitter.com/davidmarcus/status/1182775728431087623 https://twitter.com/davidmarcus/status/1182775728431087623

throwawaysunday 7y ago
What are you talking about it isn't great news. It is fantastic news for most people, who honestly do not want their money being controlled and monitored by the whims of those who run a social media company, with a history of not putting customers first. Any financial institution wanting to be on the right side of history should run, not walk from this project. That isn't to say there is no place in the future for purely electronic currency, but it sure hell better not be this. Change of this magnitude is hard because frankly... black mirror
throwaway2048 7y ago
This is good for libra(coin)?
- sremani 7y ago
  He is re-framing it to "when the times get tough the tough get going" mode. Its also a signal, that they are going to move forward what ever that is. Good or Bad, its hard to tell for the project but at least you are left with the feeling that Libra team is formidable and preparing to weather the storm. If I have to guess, something is going to come out it from this project, either a policy clarity from governments or while tinkering Libra team may pivot into some useful use case etc.
  - catalogia 7y ago

lifeisstillgood 7y ago

I honestly don't see how to reconcile two desirable aspects of digital currency - Frictionless, fee-less digital transfer of a medium of value. To be able to transfer money natively over the internet. - To keep it secure for 7 billion people - reversible, auditable etc - the benefits we have of a curated financial system. I am sure there are lots of reading on this available - but those two do seem incompatible

swift532 7y ago
You achieve the first by having a distributed, decentralized, fully censorship resistant base layer in which the rule set is more or less like the current Bitcoin rule set. You achieve the second by building upon this base layer. Just like how in the real world the base layer is physical transfer of cash and assets (not very reversible), and we have a financial and legal system built upon that (to simplify, it's doubtful how relevant physical transfer is any more).
- tsimionescu 7y ago
  But the only way to do the second is to keep a separate 'ledger' associating real people/companies with network wallets, and to ban the use of wallets whose ownership is not known. And this automatically brings back a lot of hassle with verifying paperwork, it again allows people to be barred from the network, and it again prevents people withput paperwork from owning currency.
rimliu 7y ago
I have both with my bank.

jtms 7y ago

There was absolutely no reason for this to project to exist. The only feature of digital currencies that make some of them interesting is that they are fully distributed and based on absolutely zero trust of other users on the network. What Facebook was trying to do here was take something that could be implemented in a standard centralized database, stick some marketing on it, and try to ride a hype wave that has since (rightfully) died down.

osrec 7y ago
Absolutely. My definition of a decentralised system is not one that's controlled by a handful of entities...
- hinkley 7y ago
  And yet, a lot of people have been confused into thinking things like The Cloud are decentralized. I’m not sure how this got broken, but a few powerful companies seem to be running with it.
  - core-questions 7y ago
    Well, relative to the tiny datacenter you might have for an office, it's "decentralized"... but yes, only in a marketing sense.
  - SI_Rob 7y ago
    The bar for grasping decentralization fatally flexible and bends very low. As in "If you can't immediately name the individual who has the majority of leverage over the operation of X, then X is decentralized" low. It's little more than an incantation at this point; the only proven implementation is as a sort of verbal ink blot test for identifying marks.
  - jeromebaek 7y ago
    Sorry, who in their right mind thinks the Cloud is decentralized? It is literally the opposite.
- 7y ago

FailMore 7y ago

I think FB should take a lesson from this - be less respectful. They have done everything not to tread on anyone's toes, but that is not what innovation is about. They have the userbase and the ability to give this a shot all on their own. Do it and make something great, then deal with the consequences.

twright 7y ago

I wonder what would have happened if Facebook had simply announced Libra and released it a week later. Would the legislative backlash have been stronger? Or would the quick release bring to light the (always preached about but not always demonstrable) advantages of cryptocurrencies. I'm not (yet) doubting that Libra will eventually be released, but I can see it being shutdown before or sometime after release.

FillardMillmore 7y ago
I think the legislative backlash would've been much stronger, and I have nothing to back this up so take it with a grain of salt - just my opinion. Considering the many negative press stories about Facebook concerning things like privacy rights, I don't think Facebook would take a risk like that to begin with, but if they did, the US government would likely want to make an example out of them to deter future companies eager to act first and ask for permission later. Especially when it comes to something like this that could very well disrupt global currencies. There would be many ensuing battles of litigation and I would imagine the cost for Facebook, if they truly held steadfast in support of Libra, would be quite tremendous.

aazaa 7y ago

> A Visa spokesperson told The Verge. “Visa has decided not to join the Libra Association at this time,” the spokesperson said. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.” I suspect the regulatory pushback was the least of the problem. These companies (and PayPal) have everything to lose and nothing to gain by helping to advance Libra. The entire business model is to capture value from financial system friction. Eliminating the friction eliminates their reason for being. It's a classic innovator's dilemma: the action that will save these companies is building the thing that will destroy their business models. They can't do it because established companies are set up to eject people persisting with such notions. That leaves the field open for an out-of-left field solution that does away with the friction and the business models it spawned. The source of the friction is regulatory. AML. KYC. All the laws that deputize financial institutions as extensions of law enforcement. It's quite expensive. The only way to eliminate the friction is to eliminate the regulatory liability. And that's what has been happening with Bitcoin for some time. What is surprising was that these companies ever lent their names to the project in the first place.

pmarreck 7y ago
Open-source cryptocurrencies that (ideally) no single entity mainly profits from, are still the future, IMHO. I don't get why people would get excited about Libra who weren't already excited by some other cryptocurrency. Violate an arbitrary rule in financial institutions? Guilty until proven innocent. (I have real-world experience, here) Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.)
- lmm 7y ago
  > Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.) The argument goes through just the same? Cash, gold, cryptocurrencies and bearer bonds are all popular with criminals and crazies.

dana321 7y ago

Isn't it kind of pointless anyway: a large corporation with vast resources creating a cryptocurrency, why don't they just make their own bank?

wolfgke 7y ago
> Isn't it kind of pointless anyway: a large corporation with vast resources creating a cryptocurrency, why don't they just make their own bank? Because Facebook senses an opportunity that in the long-term they could make a lot more money than if they founded a bank.

dwoozle 7y ago

Well, this died.

ufo_kid_zero 7y ago

“If you take this on,” the letters read, “you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.” I wonder who paid them to say this?

wpdev_63 7y ago

facebook would better service itself by help small businesses in timely transactions of cryptocurrencies. With the government debt project to go to $30 trillion within the decade there will be alot of people hedging against the dollar with cryptocurrency and whoever is able to help in transactions with mom and pop stores will make a fortunes. Also it does help you aren't _directly_ competing with the federal reserve. People have been killed for less.

capocannoniere 7y ago

I'd argue the outcome of this will be that Facebook will launch their own payments infrastructure on top of WhatsApp. There was no need for crypto or a Libra association to begin with. According to the leaked Facebook all-hands audio, Facebook is already planning to launch payments in Mexico by end of 2019 (https://qz.com/1719731/zuckerberg-confirms-facebook-payment-tests-in-india-mexico-in-verge-leak/ https://qz.com/1719731/zuckerberg-confirms-facebook-payment-...). I wouldn't be surprised if this goes extremely well for Facebook and WhatsApp payments becomes WeChat Pay / AliPay for the rest of the world.

AlEinstein 7y ago
Exactly this. Facebook will definitely move forward with some kind of payment system. Libra would have been fantastic for them if it had worked out but it was never their only option. They won't give up on Libra yet though.
anonimouse5t43w 7y ago
Just look at what Wechat is currently doing and you can get an idea of what Facebook will be doing in the future.
hanniabu 7y ago
> There was no need for crypto or a Libra association to begin with. If you're in control of the currency it provides you more flexibility and the blockchain aspect arguably makes it easier to manage the accounting as well.
buboard 7y ago
I d certainly download whatsapp if they did. It's just mad that there is no such service in the west. It makes a lot of sense really, they 'd avoid the whole negative publicitly and they could have released it as quietly as they did with facebook credits long ago
davidgerard 7y ago
WhatsApp Pay's trial in India has been delayed yet again: https://www.moneycontrol.com/news/business/whatsapp-pay-launch-in-india-likely-to-be-delayed-report-4513591.html https://www.moneycontrol.com/news/business/whatsapp-pay-laun... reason - 100% regulatory issues. I would take that "2019" as "2020 or later."

narrator 7y ago

If Facebook wants a currency they should start a country. Given that they are an organizing platform for various insurgent groups... I could almost see the headline: "victorious insurgent group 'ZucLiberationFront' agrees to partner with Facebook to run their country's currency system using Libra. Reasons cited were gratitude for free Facebook advertising that helped them recruit rebel fighters"

dnprock 7y ago

I think given enough time, Libra project can succeed. But it has to jump through many hurdles. It will require a lot more investment than Facebook anticipate. I advocate for a new type of crypto: digital native and decentralized stablecoin. By adding a constant inflation rate, coin price can become somewhat stable. The tradeoff is worthy for permissionless, digital native and decentralization. I outline the benefits of this new type of cryptocurrency in this article: The Next Big Thing in Crypto: Using Inflation to Create Stablecoin https://bitflate.org/post/2019/10/10/the-next-big-thing-in-crypto-using-inflation-to-create-stablecoin.html https://bitflate.org/post/2019/10/10/the-next-big-thing-in-c...

Lucadg 7y ago

I don't like Libra but I wouldn't dismiss it just yet. - Governments: We'll ban Libra. - Facebook: Let us do Libra and we'll give you access to the financial transactions which otherwise would go dark with Bitcoin or Wechat.

tsimionescu 7y ago
- Governments: oh yes, we'll trade our ability to set monetary policies for the off-chance that someone who wanted to hide from regulators will choose to trust Facebook with their shady transactions, and will continue to do so after the first time we catch them in the act based on data Facebook provided to us.
- Lucadg 7y ago
  - Facebook: you are going to lose the ability to set monetary policy anyway. That ship has sailed.

mrmcd 7y ago

In other words every actual payment company didn't want to get a colonoscopy from every regulator on Earth for Zuck's Spruce Goose hobby.

kerng 7y ago

I found it interesting that Visa and Mastercard were actually on board in the beginning. Might have been some fear of missing out on something novel and important (especially since competitors joined Libra also). Now that the initial dust and Libra is a bit better understood they are seemingly jointly pulling out.

shakkhar 7y ago

I have no interest in Libra, but the fact that government basically bullied these companies out of this initiative is alarming. If the regulators think that they should scrutinize these companies deeper, being involved in Libra should not matter. It's like saying, "withdraw from Libra and we'll continue to look the other way on your sketchy non-Libra activities".

repolfx 7y ago
Regulators have very little to do with how law is meant to work in theory, especially in the USA. Financial regulators are pure extensions of arbitrary government power: they can make up new laws on the fly without Congress, and many rules are phrased vaguely enough that anyone could be violating them if they want it that way. Basically financial regulators can fine or imprison anyone in the financial system at any time for any reason or even no reason, unaccountably so. Not surprisingly this power gets abused. These firms were told they would be attacked and punished for working with Facebook, so of course they baked away.

jacquesm 7y ago

Why was Stripe even in it in the first place?

elif 7y ago

No surprise. The revolution will not be international clearing housed.

mark_l_watson 7y ago

I wonder if this was government pressure. I think it was only going to be 50% denominated in US dollar. Making it easy to effectively (partially) transact in other currencies must not have gone over well. EDIT: I assumed that Libra would be for many, many small transactions so banking know your customer KYC regulations imposed on banks in all countries by the US and other governments would not really apply. Also, does something like Apple Pay also fit the need for people paying people in other countries small amounts of money?

faggotassfucker 7y ago

fuck you

elmar 7y ago

Pegging Libra to just the Dollar could soothe regulators, a16z says https://techcrunch.com/2019/10/11/libra-denominated-in-dollars/ https://techcrunch.com/2019/10/11/libra-denominated-in-dolla...

JumpCrisscross 7y ago
> Pegging Libra to just the Dollar could soothe regulators, a16z says Baskets of currencies are nothing novel. The problem goes down to whether this is a Facebook-controlled currency (which is troubling, given Facebook’s track record) or a nobody-controlled currency that Facebook profits from (which is troubling, given the money-laundering concerns).

mesozoic 7y ago

And the end of the world pushes a bit further away

rajacombinator 7y ago

Major punt by Facebook like many others like Oculus. But you nail one like IG and it’s all good!

wpdev_63 7y ago

damn shame with the dollar approaching a $30 trillion dollar deficit within the next decade[0], it would be very prudent to invest into a competitor. [0]:https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-us-debt-hitting-30-trillion-2028 https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-...

speedplane 7y ago

I don't like Facebook, but I do give them credit for being very smart. They managed to lock a billion eye-balls on their platform and that doesn't happen automatically. That's what makes this whole Libra thing so shocking. I just can't believe Facebook would be so naive to just shout "digital cross-border currency" and then expect everyone to cheer them on. Bitcoin has been around for years, and controversies surrounding it are well known. PayPal has been around for decades and everyone understands the potential of electronic payments. The fact that Facebook did not expect this ambivalence / skepticism and address it upfront is a pretty surprising misstep.

vbo 7y ago

I'm puzzled by HN's attitude towards Libra. I can understand being wary of having Facebook run the world's money and how a metacurrency such as Libra could break world economics as we know it, but I can't help be excited about the prospect of widespread digital money usage and FB is one of the few companies that can drive that. Perhaps HN draws its animosity towards Libra from all the cryptocurrency shenanigans of the last few years, but given this community is comfortable with innovation and risk, I would expect HN to be imagining usecases and scenarios for digital money rather than dismiss the whole concept based on emotion related to Facebook and/or cryptocurrencies. If the world does move ahead with central bank issued digital currencies - and it seems there's a lot of chatter in that area - then a metacurrency will no doubt pop up at some point anyway. Because that's what I expect hackers will find fascinating and because it will suddenly become possible. So we'll get Libra one way or another, but it may not be Facebook's. A full fledged digital currency ecosystem will be incompatible with the status quo to a large degree, but that's no reason for dismissal. Doesn't all innovation challenge the status quo? Ultimately, the cat it out of the bag and the question is not if, but how digital scarcity, whether trustful or trustless (or a mix of the two), will impact our definition and use of money. We'll have to ensure AML rules evolve to fit the new paradigm and that's fine. But we shouldn't look at existing AML frameworks and refuse innovation because our solutions for the past don't fit our possibilities for the future. And regardless of the outcome of Libra, Facebook is making huge inroads in prompting conversations and ultimately regulating digital money, which in itself is a huge win. Given the negative govt and public reactions and their standing ground on the matter, they're doing it at their own expense and I'll give them kudos for that. I don't see any of the existing forces in the finance ecosystem do anything close to this. Money and payments have stood still amidst the digital revolution. Imagine micropayments for consuming online content and how they could address some of the biggest issues prompted by the attention economy. The likes of visa and mastercard could've made this a real at any moment in the last 20 years or so. I welcome anyone trying to do something bold. It's progress, regardless of the outcome of any specific project.

CJefferson 7y ago
My fundamental issue is simple. Money, who owns it and how it moves around, is fundamental to our society. I don't want that power owned by a company who might decide one day, without warning or reason, to close my account.

buboard 7y ago

I wonder why Stripe followed them? They re positive on crypto in general, and they would have an immediate competitive advantage if they stayed

vinniejames 7y ago
Because politicians threatened them with increased regulatory scrutiny across all of their business
- buboard 7y ago
  It s possible that the benefit would outweigh the risk - after all they are already in the payments busines and know how AML works etc. They 've done it for bitcoin. So, i would assume they were threatened a little less politely than i imagined.
  - vinniejames 7y ago
    It's possible yes, but why jeopardize the gold mine you already have in one of the most valuable tech startups? Stripe ended Bitcoin support almost 2 years ago https://stripe.com/en-ee/blog/ending-bitcoin-support https://stripe.com/en-ee/blog/ending-bitcoin-support
  - vinniejames 7y ago
    Threat letters from the Senate: https://www.schatz.senate.gov/imo/media/doc/Signed%20Letters%20re%20Libra%20to%20Patrick%20Collison,%20Ajaypal%20Banga,%20and%20Alfred%20Kelly.pdf https://www.schatz.senate.gov/imo/media/doc/Signed%20Letters...
    - buboard 7y ago
      What a joke of a letter. "But think of child abuse". I can't believe they linked libra to child sexual abuse ... how would that even work? Didn't they admit last week that facebook's own detection algorithms are far better at detecting child abuse than anything else? How does that work.

robkon 7y ago

Bye libra

MH15 7y ago

That was quick.

keymone 7y ago

I hope Facebook manages to launch Libra and that’ll be the final trigger for regulators to chime in, slap them on the wrist and break up all the giant corps. The degree to which they are invading our privacy and are greedy for power and control over people’s lives is beyond scary.

Yuioup 7y ago

I guess that's it for Facebucks

WouterZ 7y ago

Tst

Zetaphor 7y ago

Notable that OP left Mercado Pago out of the headline, despite it being in the opening sentence. Mercado Pago is the largest payment provider in South America. In case you forgot, South America is the fourth largest continent and contains 12 countries.

ur-whale 7y ago

Interesting to ee Nick Szabo actually answer David Marcus tweets. https://twitter.com/davidmarcus/status/1182775728431087623 https://twitter.com/davidmarcus/status/1182775728431087623

equalunique 7y ago

One would think Facebook's Libra was a country sanctioned by the US.

azizul8692 7y ago

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