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It wasn’t implemented as a proof of work currency, but as a small distributed database. At its core it’s a multicurrency fiat currency fund that you can trade
by novok 7y ago
It wasn’t implemented as a proof of work currency, but as a small distributed database. At its core it’s a multicurrency fiat currency fund that you can trade ownership units of, like an ETF. But internationally on no specific stock exchange. And when you buy units of it, the currency you put into it gets added to the fund, so it isnt dilutive.
It’s basically creating a global currency out of the worlds fiat currencies, like banks did with gold long time ago. It’s quite clever and I could see the economic value and issues of something like market created globobucks.
- bobthepanda 7y agoThe premise is alright until you realize that Facebook and friends couldn't possibly have enough capital to be a "bank of last resort", and financial crises without one have historically just spun out of control and wrecked economies for extended periods of time.
- throwaway1777 7y agoThe point is there doesn’t need to be a bank of last resort with libra.
- bobthepanda 7y agoWhat about it indicates that? Libra is backed by a basket of currencies or investments designed to spread risk around, which is a great idea unless a huge chunk goes belly up at the same time. And then what? We repeat the subprime mortgage crisis, where people also thought that there would never be mass defaults across the system at the same time?
- throwaway1777 7y agoLibra is not a bank, it’s a currency that’s pegged to other currencies. The asset backing is only because the initial value has to come from somewhere. It can’t default. It could decrease in value, but there’s no debt or counter party risk.
- bobthepanda 7y agoA run on a currency is still pretty disastrous for everybody involved, hence the need for a bank of last resort to shore up the currency when that happens. All these alternative currencies look like they're solving a political science problem, not any actual problems that people have.
- htfu 7y agoA run on the currency just becomes a run on the underlying currencies, which, as a basket of global currencies, cannot all be run at once since each one is inherently relative to the others. Second point is right on the money though!
- novok 7y agoI'm thinking it's more about solving developing country problems vs. developed country problems. If your local currency is becoming zimbawbe, WhatsApp has a stable currency you can buy into with the local money changers and still is as convenient as mpesa.
- htfu 7y agoBut if a huge chunk of major global currencies go belly-up at the same time the world has much larger issues than Libra taking a, say 20% dive - the volatility in all kinds of sectors would dwarf that. All other aspects of the design strike me as either dumb, redundant or dangerous, but this would be the one part of the system not to worry about.