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The fate of Libra isn't tied to Visa/Mastercard's withdrawal. It's ultimately about whether there is a market for a new mechanism for international money transf

The fate of Libra isn't tied to Visa/Mastercard's withdrawal. It's ultimately about whether there is a market for a new mechanism for international money transfers. As someone who runs a business that has (small) offices both in EU and North America, let me share a quick overview of the current state of things. When you want to transfer a non-trivial amount of money between 2 countries, you have likely received it in the originating country's currency and are planning to spend it in the destination currency. Now because you don't want to pay ~3% currency exchange fees to your bank, the only reasonable way to do this is to get an account with a business forex broker, that will offer you a rate in the ballpark of 0.5% off the spot price. You will have to do the KYC/AML [0], but the complexity of the whole transfer is basically this: 1. Do a domestic wire to your broker's office in the originating economic zone. 2. Wait for them to call you and confirm the exchange rate. 3. Receive a domestic wire from the broker's office in the destination economic zone. You often need to show the invoices/contracts showing the origin of the funds and the purpose of the transfer, but if you are running a legitimate business that pays taxes, you will need those for accounting reasons anyway. Now the 0.5% fee charged by the forex trader (that is bound to a bunch of rules and regulations making it harder for it to run away with your funds) is not worth putting your trust into a fully automated distributed ledger, where a lost password or a hacked computer could permanently eat away your money without any legal recourse. So the only potential audience of a new international coin would be people actively trying to evade KYC/AML and that's exactly why the governments will do their best to prevent it from getting adoption (which is very easy since you can outright ban the fiat endpoints in your jurisdiction). On the other end, there's a bunch of people who have never written a response to an AML inquiry and have hardly done any business outside of their own state, that are hoping to get rich quick by grabbing a stake at something they haven't fully researched and later reselling it at a profit to someone who will actually need it. I wouldn't see any reason for it to be successful long-term, sorry. [0] https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer

lyqwyd 7y ago
What do you consider non-trivial? I transfer money to Africa on a regular basis, and I don’t have these same issues other than the difference between published exchange rate and realized, which is about 1-1.5%. Transfer fees are minimal. I transfer about $3,000 per month, but no I could go up to at least $10K without issue. Occasionally it can have a bit of a delay, but normally it closes in less than a minute, and I get email and text updates on the status, no calls needed.
- trakout 7y ago
  Which service, something like transferwise?
  - edoceo 7y ago
    +1 transferwise
  - kevinyun 7y ago
    I recently tried helping someone transfer $10k from US to different country. Only after signing up, filling in all the details, and going through the entire process, was there an error message that showed a Max of $800 could be transferred. I then just advised to use their local bank's wire transfer, which they had to visit in person at the local branch, as they had originally intended. Nowhere in my Google searches and Transferwise articles did I see any limitations upfront. Nor did I figure out how to raise these limits after searching post-filling-out-everything. Very disappointed to say the least. But if anyone knows if I can raise the limit, would be happy to try this again.
    - sumedh 7y ago
      Is this some account specific limit or a country specific limit?
- wglb 7y ago
  Wave?
- masternda 7y ago
  It is trivial when you are transferring from a Western country to an African country using services like Transferwise, Worldremit, etc but I consider transferring money from Africa to a western country non-trivial. I have personally experienced this when parents are trying to pay for tuition fees, upkeep allowance, etc. This is one of the great advantages I see Libra bringing.
  - tuananh 7y ago
lacker 7y ago
It seems silly to say there is no audience because it’s already possible to transfer money. Facebook is all about cloning an existing product and making it easy for millions of people use it by putting it in an app they already use for an hour every day. I think if they are permitted to launch, they will get a lot of people to use it.
- john_moscow 7y ago
  I am a happy customer of both a bank and a grocery store. If one day the grocery store decides to also open a bank, I won't suddenly move my accounts there just because I go to the grocery store every week. That's why the grocery stores trying to offer credit cards usually have some loyalty programs (e.g. points/discounts for in-store purchases). And BTW, they typically just partner with existing banks and not try to butt into a heavily regulated market with no previous experience. And if I never needed to have a bank account before, just being able to open it while paying for my food won't suddenly create the need for it.
  - throwaway1777 7y ago
    That’s not an apples to apples comparison. A grocery store doesn’t have a network effect, Facebook does. That’s a powerful thing when we’re talking about products that exchange value with other parties in the network.
  - alasdair_ 7y ago
    You are not the target customer. Grocery store handle a surprisingly large amount of money transfers and act as pseudo-banks to many of the unbanked. Some of them have their own banks on top and others have bank branches in them. Lots of people use these services.
    - WC3w6pXxgGd 7y ago
      How do grocery stores act as pseudo-banks? I've never seen my local Jewel-Osco give out loans.
  - 7y ago
xtracto 7y ago
>1. Do a domestic wire to your broker's office in the originating economic zone. >2. Wait for them to call you and confirm the exchange rate. > 3. Receive a domestic wire from the broker's office in the destination economic zone. > You often need to show the invoices/contracts showing the origin of the funds and the purpose of the transfer, but if you are running a legitimate business that pays taxes, you will need those for accounting reasons anyway When my father used to do research in the 60/70s the way they got a paper was to write a (paper) letter to an author asking him for a copy, put it in the mail, wait for a couple of weeks, and then get an answer from the author with the paper. It was simple, easy and straightforward. Fast forward 50 years, we have access to millions of articles at our fingertips in a second with the likes of scholar.google.com.
- TheDong 7y ago
  Just because something is faster and more convenient doesn't mean it succeeds. Here, I can do it too: 50 years ago, I'd make fresh-squeezed juice by hand over the course of about 2 hours. Fast forward to a couple years ago, and juicero let me create fresh juice in under 5 minutes with no effort. Yet, somehow, juicero no longer exists and had very few users. Or again, 50 years ago I'd wire money to people via a bank transfer which would take multiple days, and back in 2012 I could use liberty reserve to do the same thing instantly. And yet, somehow, liberty reserve no longer exists and had almost no users. Comparisons that are as glancingly related as "more convenient" or "are new technology" are absolutely worthless.
  - arcticbull 7y ago
    Uh liberty reserve no longer exists because it was set up as a way to launder money and evade regulations. It had plenty of users doing exactly that which is why it was shut down mercilessly by federal prosecutors under the Patriot Act. Their CTO is due out of prison this year and their CEO is in the slammer until 2036 give it take. I’d suggest perusing the Wikipedia page. If you did use it you’re probably on a very sad list right now. Juicero no longer exists because people realized they didn’t need the insanely expensive subscription juicer machine and could squeeze the juice bags with their hands to obtain the juice. Hilarity ensued. Further details are available on their Wikipedia article, too. I’d caution you not to read into these two data points.
vkou 7y ago
This is my experience with doing such transactions, minus the call from the broker. (It was all via a webapp.) AML/KYC requirements took a scan of my passport, and two days to get verified. At which point, I was good to go.
buboard 7y ago
One potentially huge market is online payments and small transactions. If libra is embedded into the browser, millions of blogs could start charging for frictionless access to their content, and thousands of games would improve their experience and revenue. That s a huge and largely unserved area, unless you think that entering card numbers and private data with every spent penny is a good situation. I think Libra is going after this kind of use cases, the ones that are not possible today. If that works, and it catches on, then yeah, they ll go after the 0.5% because people will want that too. A blockchain is also a digital signature, a verifiable programmable general purpose ledger for smart contracts. Just giving each FB user a wallet id, even without money, has a lot of potential.
- pxlpshr 7y ago
  The 'problem' you just described has nothing to do with crypto-currency as the 'solution'. Apple Pay is the most frictionless payment system I've used, can integrate with the browser, and attached to any of my credit cards. Paying for 'bits' of content is already a thing, you can buy single article access on many of the newspaper websites today.
- davidgerard 7y ago
  Micropayments of this sort are one of those use cases that people have been trying to put into place forever, and they always founder on the fact that users hate them.
  - buboard 7y ago
    I paid the other day with metamask and i loved it. the concept made sense and was way too easy
  - jpindar 7y ago
    Virtual world users like them. I put on virtual pyrotechnics shows in various grids and and get paid or tipped in either the grid's own digital currency or in Gloebits. Gloebits are better since they can be spent on various different grids and by all my accounts. I also take paypal. https://gloebit.com/about-gloebit/ https://gloebit.com/about-gloebit/
jimnotgym 7y ago
This is a good summary. I just wanted to add that it can be easier even than that. I look after this sort of thing sometimes. I would normally have USD, GBP, EUR accounts at my local bank. Any money from abroad can be wired directly in to those accounts. If I want to trade between currencies I can then do it through my bank, which can cost me '20 pips', which means on a GBPUSD deal I pay 0.0020 over spot atm (trading around $4m a year. YMMV). This is at the click of a button, or a phone call. But I can do other convenient things through the same platform to hedge risk. I can hedge, for instance I can agree to buy sterling sell dollars at $100k a month for the next year at agreed rates to protect a contract from fx risk. I can swap currency with the bank for a few days for even more trivial fees, swaps are useful when you have too much of the one currency this week, but need it back to pay a supplier next week, or indeed if your forward contracts are arriving and you are not ready for them yet. In summary I agree, it is not hard in NA or EMEA to send intentional funds
mrb 7y ago
«a lost password or a hacked computer could permanently eat away your money» If it happens less than 0.5% of the time, then you are losing more money in fees with your forex broker. Also don't forget the massive cashflow advantage of dealing in crypto only. Minutes to send crypto vs 24-48h + weekends/holiday delays incurred by your broker wires. That's especially true of businesses who transact with their partners/suppliers/contractors in crypto so they even avoid the fiat<>crypto conversion step. «any legal recourse» There is always legal recourse. Plenty of crypto thieves have been, are being, and will be prosecuted.
- short_sells_poo 7y ago
  Fast transfers are not something that cryptocurrencies uniquely enable, so I think it is unfair to highlight that as a feature. Transfers could (and often are) instant without cryptocurrencies too. Inside Europe most transfers clear within minutes. The main reason why some transfers are slow is due to KYC rules which cryptos do not implement. With the same procedures in place, they'd be just as slow.

lyqwyd 7y ago

What do you consider non-trivial? I transfer money to Africa on a regular basis, and I don’t have these same issues other than the difference between published exchange rate and realized, which is about 1-1.5%. Transfer fees are minimal. I transfer about $3,000 per month, but no I could go up to at least $10K without issue. Occasionally it can have a bit of a delay, but normally it closes in less than a minute, and I get email and text updates on the status, no calls needed.

trakout 7y ago
Which service, something like transferwise?
- edoceo 7y ago
  +1 transferwise
- kevinyun 7y ago
  I recently tried helping someone transfer $10k from US to different country. Only after signing up, filling in all the details, and going through the entire process, was there an error message that showed a Max of $800 could be transferred. I then just advised to use their local bank's wire transfer, which they had to visit in person at the local branch, as they had originally intended. Nowhere in my Google searches and Transferwise articles did I see any limitations upfront. Nor did I figure out how to raise these limits after searching post-filling-out-everything. Very disappointed to say the least. But if anyone knows if I can raise the limit, would be happy to try this again.
  - sumedh 7y ago
    Is this some account specific limit or a country specific limit?
wglb 7y ago
Wave?
masternda 7y ago
It is trivial when you are transferring from a Western country to an African country using services like Transferwise, Worldremit, etc but I consider transferring money from Africa to a western country non-trivial. I have personally experienced this when parents are trying to pay for tuition fees, upkeep allowance, etc. This is one of the great advantages I see Libra bringing.
- tuananh 7y ago

lacker 7y ago

It seems silly to say there is no audience because it’s already possible to transfer money. Facebook is all about cloning an existing product and making it easy for millions of people use it by putting it in an app they already use for an hour every day. I think if they are permitted to launch, they will get a lot of people to use it.

john_moscow 7y ago
I am a happy customer of both a bank and a grocery store. If one day the grocery store decides to also open a bank, I won't suddenly move my accounts there just because I go to the grocery store every week. That's why the grocery stores trying to offer credit cards usually have some loyalty programs (e.g. points/discounts for in-store purchases). And BTW, they typically just partner with existing banks and not try to butt into a heavily regulated market with no previous experience. And if I never needed to have a bank account before, just being able to open it while paying for my food won't suddenly create the need for it.
- throwaway1777 7y ago
  That’s not an apples to apples comparison. A grocery store doesn’t have a network effect, Facebook does. That’s a powerful thing when we’re talking about products that exchange value with other parties in the network.
- alasdair_ 7y ago
  You are not the target customer. Grocery store handle a surprisingly large amount of money transfers and act as pseudo-banks to many of the unbanked. Some of them have their own banks on top and others have bank branches in them. Lots of people use these services.
  - WC3w6pXxgGd 7y ago
    How do grocery stores act as pseudo-banks? I've never seen my local Jewel-Osco give out loans.
- 7y ago

xtracto 7y ago

>1. Do a domestic wire to your broker's office in the originating economic zone. >2. Wait for them to call you and confirm the exchange rate. > 3. Receive a domestic wire from the broker's office in the destination economic zone. > You often need to show the invoices/contracts showing the origin of the funds and the purpose of the transfer, but if you are running a legitimate business that pays taxes, you will need those for accounting reasons anyway When my father used to do research in the 60/70s the way they got a paper was to write a (paper) letter to an author asking him for a copy, put it in the mail, wait for a couple of weeks, and then get an answer from the author with the paper. It was simple, easy and straightforward. Fast forward 50 years, we have access to millions of articles at our fingertips in a second with the likes of scholar.google.com.

TheDong 7y ago
Just because something is faster and more convenient doesn't mean it succeeds. Here, I can do it too: 50 years ago, I'd make fresh-squeezed juice by hand over the course of about 2 hours. Fast forward to a couple years ago, and juicero let me create fresh juice in under 5 minutes with no effort. Yet, somehow, juicero no longer exists and had very few users. Or again, 50 years ago I'd wire money to people via a bank transfer which would take multiple days, and back in 2012 I could use liberty reserve to do the same thing instantly. And yet, somehow, liberty reserve no longer exists and had almost no users. Comparisons that are as glancingly related as "more convenient" or "are new technology" are absolutely worthless.
- arcticbull 7y ago
  Uh liberty reserve no longer exists because it was set up as a way to launder money and evade regulations. It had plenty of users doing exactly that which is why it was shut down mercilessly by federal prosecutors under the Patriot Act. Their CTO is due out of prison this year and their CEO is in the slammer until 2036 give it take. I’d suggest perusing the Wikipedia page. If you did use it you’re probably on a very sad list right now. Juicero no longer exists because people realized they didn’t need the insanely expensive subscription juicer machine and could squeeze the juice bags with their hands to obtain the juice. Hilarity ensued. Further details are available on their Wikipedia article, too. I’d caution you not to read into these two data points.

vkou 7y ago

This is my experience with doing such transactions, minus the call from the broker. (It was all via a webapp.) AML/KYC requirements took a scan of my passport, and two days to get verified. At which point, I was good to go.

buboard 7y ago

One potentially huge market is online payments and small transactions. If libra is embedded into the browser, millions of blogs could start charging for frictionless access to their content, and thousands of games would improve their experience and revenue. That s a huge and largely unserved area, unless you think that entering card numbers and private data with every spent penny is a good situation. I think Libra is going after this kind of use cases, the ones that are not possible today. If that works, and it catches on, then yeah, they ll go after the 0.5% because people will want that too. A blockchain is also a digital signature, a verifiable programmable general purpose ledger for smart contracts. Just giving each FB user a wallet id, even without money, has a lot of potential.

pxlpshr 7y ago
The 'problem' you just described has nothing to do with crypto-currency as the 'solution'. Apple Pay is the most frictionless payment system I've used, can integrate with the browser, and attached to any of my credit cards. Paying for 'bits' of content is already a thing, you can buy single article access on many of the newspaper websites today.
davidgerard 7y ago
Micropayments of this sort are one of those use cases that people have been trying to put into place forever, and they always founder on the fact that users hate them.
- buboard 7y ago
  I paid the other day with metamask and i loved it. the concept made sense and was way too easy
- jpindar 7y ago
  Virtual world users like them. I put on virtual pyrotechnics shows in various grids and and get paid or tipped in either the grid's own digital currency or in Gloebits. Gloebits are better since they can be spent on various different grids and by all my accounts. I also take paypal. https://gloebit.com/about-gloebit/ https://gloebit.com/about-gloebit/

jimnotgym 7y ago

This is a good summary. I just wanted to add that it can be easier even than that. I look after this sort of thing sometimes. I would normally have USD, GBP, EUR accounts at my local bank. Any money from abroad can be wired directly in to those accounts. If I want to trade between currencies I can then do it through my bank, which can cost me '20 pips', which means on a GBPUSD deal I pay 0.0020 over spot atm (trading around $4m a year. YMMV). This is at the click of a button, or a phone call. But I can do other convenient things through the same platform to hedge risk. I can hedge, for instance I can agree to buy sterling sell dollars at $100k a month for the next year at agreed rates to protect a contract from fx risk. I can swap currency with the bank for a few days for even more trivial fees, swaps are useful when you have too much of the one currency this week, but need it back to pay a supplier next week, or indeed if your forward contracts are arriving and you are not ready for them yet. In summary I agree, it is not hard in NA or EMEA to send intentional funds

mrb 7y ago

«a lost password or a hacked computer could permanently eat away your money» If it happens less than 0.5% of the time, then you are losing more money in fees with your forex broker. Also don't forget the massive cashflow advantage of dealing in crypto only. Minutes to send crypto vs 24-48h + weekends/holiday delays incurred by your broker wires. That's especially true of businesses who transact with their partners/suppliers/contractors in crypto so they even avoid the fiat<>crypto conversion step. «any legal recourse» There is always legal recourse. Plenty of crypto thieves have been, are being, and will be prosecuted.

short_sells_poo 7y ago
Fast transfers are not something that cryptocurrencies uniquely enable, so I think it is unfair to highlight that as a feature. Transfers could (and often are) instant without cryptocurrencies too. Inside Europe most transfers clear within minutes. The main reason why some transfers are slow is due to KYC rules which cryptos do not implement. With the same procedures in place, they'd be just as slow.