5 ms·

Libra still needs more baking

58 points by hhs 7y ago

Barrin92 7y ago
Given that it seems like Libra wants to be an actual currency and comply with pretty much the demands of a national currency, which is to say stability, availability of monetary policy, features to clamp down on terrorism finance and compliance with domestic law, wouldn't it be much more sensible to elevate this entire project from Facebook to a national one? Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency?
- zdragnar 7y ago
  > and then make it the e-dollar Correct me if I'm wrong here, but isn't most of our money already digital? What do we gain, other than exchange fees if we want paper dollars and cheques?
  - Barrin92 7y ago
    Ideally, no transfer fees I suppose and universal access for every citizen which was supposed to be one of the distinguishing points compared to say credit cards. It would have the potential to cut a lot of the middlemen out. I always found it curious that with cash we basically take it for granted that there's a ubiquitous, legally guaranteed payment infrastructure but with digital currencies it's more like a splintered set of services that take a quite considerable cut. Also a very practical, relevant case. In a situation like this corona crisis, there'd be a trivial way to send everyone their 1200 bucks.
    - warkdarrior 7y ago
      A digital currency needs an infrastructure to run on, so there will be always fees of some sort. Credit cards have fees, Bitcoin has fees.
    - staplers 7y ago
      Those middlemen run the federal reserve. Good luck trying to remove banks from power without migrating to a different currency altogether.
    - stephen_g 7y ago
      A lot of that is more a failing of the US financial system than financial systems in general, of course. In my country (Australia), our Government could deposit money into the bank account that paid their last tax return with in less than a day... We have no transfer fees and real-time transfers (you can link a phone number to your account too). For international, things like TransferWise are pretty compelling and have crazy low fees...
      - fidelramos 7y ago
        There are people who don't have and cannot open bank accounts, especially in third-world countries. Cryptocurrencies (I'm talking about Bitcoin and friends) give them a way to receive money from anywhere in the world and store it safely.
  - kumarvvr 7y ago
    What do you mean digital? Every number in yhe digital realm is currently backed by an asset or a reserve currency like the USD. Sure, transactions are digital, but the underlying nature is still physical.
    - lalaland1125 7y ago
      There are dollars that only exist as digital entries in the Fed's books and don't correspond to any physical printed bills. There is no fundamental "physical" backing for USD anymore. USD is already a digital currency.
    - LASR 7y ago
      It’s certainly not. The money multiplier is a very basic macroeconomic concept. Almost very little of all the “money” is actually grounded in a tangible form. For all intents and purposes, almost all money is indeed digital. It’s not digital as a cryptocurrency, but more as rows in database tables. As a simple example, if everyone wanted to withdraw their money, all at once, very few people would actually be able to.
- wmf 7y ago
  Would central bank digital currencies (CBDC) be better than stablecoins? Yes, but governments still aren't issuing them.
  - LASR 7y ago
    They are. Look at the stimulus plans all over the world. They’re not printing notes for these.
- lmm 7y ago
  > Given that it seems like Libra wants to be an actual currency and comply with pretty much the demands of a national currency, which is to say stability, availability of monetary policy, features to clamp down on terrorism finance and compliance with domestic law, wouldn't it be much more sensible to elevate this entire project from Facebook to a national one? Having it tied to the US dollar would be a huge pain. Many of us live elsewhere and use other currencies; also using dollars brings in a huge regulatory regime that people may not want to be involve with (e.g. if buying/selling Libra means I have to file a US tax return then it's a non-starter for me). > Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency? What are those people going to bring to the table that Facebook et al aren't already doing? They have a bunch of major payment networks involved, they've got the institutional connections and huge legal compliance departments already. Being tied to a particular national government would likely be more of a handicap than a help, as the project would then be exposed to much bigger political considerations.
arthurcolle 7y ago
I would never use Libra, and I'm not sure there are many who would. But good luck to Zuckerberg, I'm holding 190c 5/1s, so hope they make some smashing announcement come earnings!
- bvandewalle 7y ago
  I would also think so mainly on privacy ground and on the fact that Facebook is one of the companies that I trust the least. But I'm not keeping my hopes high when I see how people buy Facebook Portal for example (their tentative clone of Amazon Echo).
  - dhosek 7y ago
    Has anyone bought a Facebook Portal? I've had the impression that it has all the market penetration of the Fire Phone.
    - arthurcolle 7y ago
      I wouldn't use one if it was given to me for free.
- spurdoman77 7y ago
  Remains to be seen what Libra actually would be. It is mostly at drawing board for now. I could use it if it had some compelling use cases. There isnt much privacy with financial transactions anyway.
  - arthurcolle 7y ago
    Not especially simple to buy contraband using dollars electronically, over the internet. If we assume those contraints, there are existing solutions that actually work without as much immediate interference. A dollar replacement with zero additional benefits (like those mentioned above) seems like the exact "solution without a problem" that existing "blockchain" tech was pretending to not be. TL;DR - this won't work!
skylarchunk 7y ago
Really, really worried about the above-law-and-regulatory-measures governance that Facebook is exercising nowadays
- wmf 7y ago
  That's the opposite of what's happening here. Libra has been changed to make it 100% compliant with various regulations.
  - twomoretime 7y ago
    Do you believe the regulations are sufficient for protecting people from FB? Do you believe that FB is operating in good faith and not finding alternative means by which to gather and exercise the soft power that comes with hosting a private, global currency? I tend to lean against regulation but this is one of those cases where I wouldn't mind seeing FB somehow banned from anything related to currency.
- fnord77 7y ago
  we're in an age when big corporations are starting to wield more power than governments. And nobody elected them. They'll have their own armed forces, soon enough
  - searchableguy 7y ago
    Samsung and few others already do.
  - Hermel 7y ago
    No, we're in an age in which innovative projects are suffocated by shady politics before they even onboarded their first user. Remember the letter sent to Libra consortium members by US senators? [1] They threatened Visa, Mastercard and Stripe with extreme regulatory scrutiny of all their payment business (not only Libra-related) in case they would stay on the project. The threat worked and the threatened companies left the consortium soon after. This is right out of the playbook of despotic governance: create laws so complex that everyone is probably violating some of them all the time and then selectively enforce the law against those you don't like. [1]: https://www.brown.senate.gov/newsroom/press/release/brown-schatz-warn-payments-providers-of-risks-with-libra-association https://www.brown.senate.gov/newsroom/press/release/brown-sc...
Mengkudulangsat 7y ago
Libra is going down the same rabbit hole as Liberty Reserve. Designing a private currency always leads to insurmountable regulatory pressure. There is nothing moral about agencies such as the FATF. They are products of geopolitics, not user interests. Expect compliance requirements to get more and more byzantine with no end in sight. You can either comply (a losing battle) or you immunize (a-la Bitcoin).
- JumpCrisscross 7y ago
  > you immunize (a-la Bitcoin) Honest question: do Bitcoin proponents honestly believe it “immunises” them against the law?
  - mathiasrw 7y ago
    Some might, but it is really a misunderstanding. What it "immunises" against is some of the consequences of monetary policy - like interest rates and (hyper)inflation from adjusting the money supply.
  - brazzy 7y ago
    I'm fairly sure GP meant that Bitcoin itself is designe to be immune to legal interference. Individual users are not, although by employing a very strict security regime, they can in principle stay completely anonymous.
    - ac29 7y ago
      > by employing a very strict security regime, they can in principle stay completely anonymous Doesn't that necessarily require avoiding legitimate financial institutions at all costs?
      - lmm 7y ago
        You can interact with legitimate financial institutions in the normal way under your public identity. You've just got to make sure you don't share that identity with your bitcoin counterparties, which will limit your ability to exchange bitcoin for things of value such as fiat currency.
mehrdadn 7y ago
What is Facebook's supposedly compelling justification for for being behind Libra? On its face it makes about as much sense as having Facebook provide health insurance or a grocery store.
- latchkey 7y ago
  WeChat Pay
- kumarvvr 7y ago
  Make FB a platform to exchange money globally. If successful, FB can reap billions in transaction fees to allow users to transact on their platform, be it for money transfer or for ecommerce. I would not be surprised if Zuckerberg sees a future where the reserve currency is a digital one instead of the USDollar, where global currencies are valued in relation to Libra, rather than the $
- ac29 7y ago
  > Facebook provide health insurance or a grocery store Amazon does both of those. (some) Modern tech companies want to be everything platforms.
- lmm 7y ago
  Sending money to friends/family around the world is still a lot more difficult than it should be. Facebook is already the central hub for lots of families and communities, so being able to easily send money over Facebook would be nice, and having that tied to a specific traditional currency would be a bit inconvenient.
  - Panini_Jones 7y ago
    Hmm. That makes more sense now.
- noxer 7y ago
  Facebooks business is ads. Facebooks largest growing market is the third world. Ads are worthless there because people have no money to spend on sh*t they don't need. Now if FB makes micro transaction possible and cheap and even available for the unbaked, suddenly the poorest of the world are potential customers and thus can be targeted with ads. They may only have fractions of dollars to spend but they are literally billions so it ads up. TL;DR Banking the unbanked with cheap micro transaction makes them milkable.
lgl 7y ago
Wouldn't it be simpler for facebook and for its users if they just implemented some sort of "FB Pay" equivalent to WeChat Pay that's tied to their messenger app and be done with it? I'm definitely missing a lot here as I haven't kept up with the latest libra updates but I seriously fail to see why making or calling this a cryptocurrency is the way they chose to go although I'm pretty sure there's a fair amount of greed and powerplay behind this. Tbh, it is starting to sound a lot like some sort of real world e-coin that is tied to some of the least privacy concerned corporations, banks and governments and with none of the advantages of an actual decentralized cryptocurrency. It looks as it will basically be just an analogous to marked dollar bills but with easier digital traceability? Or am I going too much into conspiracy theory territory?
dschuetz 7y ago
Good, let Libra die for good.

58 points by hhs 7y ago

Given that it seems like Libra wants to be an actual currency and comply with pretty much the demands of a national currency, which is to say stability, availability of monetary policy, features to clamp down on terrorism finance and compliance with domestic law, wouldn't it be much more sensible to elevate this entire project from Facebook to a national one? Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency?

zdragnar 7y ago
> and then make it the e-dollar Correct me if I'm wrong here, but isn't most of our money already digital? What do we gain, other than exchange fees if we want paper dollars and cheques?
- Barrin92 7y ago
  Ideally, no transfer fees I suppose and universal access for every citizen which was supposed to be one of the distinguishing points compared to say credit cards. It would have the potential to cut a lot of the middlemen out. I always found it curious that with cash we basically take it for granted that there's a ubiquitous, legally guaranteed payment infrastructure but with digital currencies it's more like a splintered set of services that take a quite considerable cut. Also a very practical, relevant case. In a situation like this corona crisis, there'd be a trivial way to send everyone their 1200 bucks.
  - warkdarrior 7y ago
    A digital currency needs an infrastructure to run on, so there will be always fees of some sort. Credit cards have fees, Bitcoin has fees.
  - staplers 7y ago
    Those middlemen run the federal reserve. Good luck trying to remove banks from power without migrating to a different currency altogether.
  - stephen_g 7y ago
    A lot of that is more a failing of the US financial system than financial systems in general, of course. In my country (Australia), our Government could deposit money into the bank account that paid their last tax return with in less than a day... We have no transfer fees and real-time transfers (you can link a phone number to your account too). For international, things like TransferWise are pretty compelling and have crazy low fees...
    - fidelramos 7y ago
      There are people who don't have and cannot open bank accounts, especially in third-world countries. Cryptocurrencies (I'm talking about Bitcoin and friends) give them a way to receive money from anywhere in the world and store it safely.
- kumarvvr 7y ago
  What do you mean digital? Every number in yhe digital realm is currently backed by an asset or a reserve currency like the USD. Sure, transactions are digital, but the underlying nature is still physical.
  - lalaland1125 7y ago
    There are dollars that only exist as digital entries in the Fed's books and don't correspond to any physical printed bills. There is no fundamental "physical" backing for USD anymore. USD is already a digital currency.
  - LASR 7y ago
    It’s certainly not. The money multiplier is a very basic macroeconomic concept. Almost very little of all the “money” is actually grounded in a tangible form. For all intents and purposes, almost all money is indeed digital. It’s not digital as a cryptocurrency, but more as rows in database tables. As a simple example, if everyone wanted to withdraw their money, all at once, very few people would actually be able to.
wmf 7y ago
Would central bank digital currencies (CBDC) be better than stablecoins? Yes, but governments still aren't issuing them.
- LASR 7y ago
  They are. Look at the stimulus plans all over the world. They’re not printing notes for these.
lmm 7y ago
> Given that it seems like Libra wants to be an actual currency and comply with pretty much the demands of a national currency, which is to say stability, availability of monetary policy, features to clamp down on terrorism finance and compliance with domestic law, wouldn't it be much more sensible to elevate this entire project from Facebook to a national one? Having it tied to the US dollar would be a huge pain. Many of us live elsewhere and use other currencies; also using dollars brings in a huge regulatory regime that people may not want to be involve with (e.g. if buying/selling Libra means I have to file a US tax return then it's a non-starter for me). > Get more economists on board to design the institutional infrastructure, people to get the legal compliance right, and then make it the e-dollar. (or something more global in cooperation with other states). Isn't this at the end of the day what people want out of this, the digital equivalent of a normal currency? What are those people going to bring to the table that Facebook et al aren't already doing? They have a bunch of major payment networks involved, they've got the institutional connections and huge legal compliance departments already. Being tied to a particular national government would likely be more of a handicap than a help, as the project would then be exposed to much bigger political considerations.

arthurcolle 7y ago

I would never use Libra, and I'm not sure there are many who would. But good luck to Zuckerberg, I'm holding 190c 5/1s, so hope they make some smashing announcement come earnings!

bvandewalle 7y ago
I would also think so mainly on privacy ground and on the fact that Facebook is one of the companies that I trust the least. But I'm not keeping my hopes high when I see how people buy Facebook Portal for example (their tentative clone of Amazon Echo).
- dhosek 7y ago
  Has anyone bought a Facebook Portal? I've had the impression that it has all the market penetration of the Fire Phone.
  - arthurcolle 7y ago
    I wouldn't use one if it was given to me for free.
spurdoman77 7y ago
Remains to be seen what Libra actually would be. It is mostly at drawing board for now. I could use it if it had some compelling use cases. There isnt much privacy with financial transactions anyway.
- arthurcolle 7y ago
  Not especially simple to buy contraband using dollars electronically, over the internet. If we assume those contraints, there are existing solutions that actually work without as much immediate interference. A dollar replacement with zero additional benefits (like those mentioned above) seems like the exact "solution without a problem" that existing "blockchain" tech was pretending to not be. TL;DR - this won't work!

skylarchunk 7y ago

Really, really worried about the above-law-and-regulatory-measures governance that Facebook is exercising nowadays

wmf 7y ago
That's the opposite of what's happening here. Libra has been changed to make it 100% compliant with various regulations.
- twomoretime 7y ago
  Do you believe the regulations are sufficient for protecting people from FB? Do you believe that FB is operating in good faith and not finding alternative means by which to gather and exercise the soft power that comes with hosting a private, global currency? I tend to lean against regulation but this is one of those cases where I wouldn't mind seeing FB somehow banned from anything related to currency.
fnord77 7y ago
we're in an age when big corporations are starting to wield more power than governments. And nobody elected them. They'll have their own armed forces, soon enough
- searchableguy 7y ago
  Samsung and few others already do.
- Hermel 7y ago
  No, we're in an age in which innovative projects are suffocated by shady politics before they even onboarded their first user. Remember the letter sent to Libra consortium members by US senators? [1] They threatened Visa, Mastercard and Stripe with extreme regulatory scrutiny of all their payment business (not only Libra-related) in case they would stay on the project. The threat worked and the threatened companies left the consortium soon after. This is right out of the playbook of despotic governance: create laws so complex that everyone is probably violating some of them all the time and then selectively enforce the law against those you don't like. [1]: https://www.brown.senate.gov/newsroom/press/release/brown-schatz-warn-payments-providers-of-risks-with-libra-association https://www.brown.senate.gov/newsroom/press/release/brown-sc...

Mengkudulangsat 7y ago

Libra is going down the same rabbit hole as Liberty Reserve. Designing a private currency always leads to insurmountable regulatory pressure. There is nothing moral about agencies such as the FATF. They are products of geopolitics, not user interests. Expect compliance requirements to get more and more byzantine with no end in sight. You can either comply (a losing battle) or you immunize (a-la Bitcoin).

JumpCrisscross 7y ago
> you immunize (a-la Bitcoin) Honest question: do Bitcoin proponents honestly believe it “immunises” them against the law?
- mathiasrw 7y ago
  Some might, but it is really a misunderstanding. What it "immunises" against is some of the consequences of monetary policy - like interest rates and (hyper)inflation from adjusting the money supply.
- brazzy 7y ago
  I'm fairly sure GP meant that Bitcoin itself is designe to be immune to legal interference. Individual users are not, although by employing a very strict security regime, they can in principle stay completely anonymous.
  - ac29 7y ago
    > by employing a very strict security regime, they can in principle stay completely anonymous Doesn't that necessarily require avoiding legitimate financial institutions at all costs?
    - lmm 7y ago
      You can interact with legitimate financial institutions in the normal way under your public identity. You've just got to make sure you don't share that identity with your bitcoin counterparties, which will limit your ability to exchange bitcoin for things of value such as fiat currency.

mehrdadn 7y ago

What is Facebook's supposedly compelling justification for for being behind Libra? On its face it makes about as much sense as having Facebook provide health insurance or a grocery store.

latchkey 7y ago
WeChat Pay
kumarvvr 7y ago
Make FB a platform to exchange money globally. If successful, FB can reap billions in transaction fees to allow users to transact on their platform, be it for money transfer or for ecommerce. I would not be surprised if Zuckerberg sees a future where the reserve currency is a digital one instead of the USDollar, where global currencies are valued in relation to Libra, rather than the $
ac29 7y ago
> Facebook provide health insurance or a grocery store Amazon does both of those. (some) Modern tech companies want to be everything platforms.
lmm 7y ago
Sending money to friends/family around the world is still a lot more difficult than it should be. Facebook is already the central hub for lots of families and communities, so being able to easily send money over Facebook would be nice, and having that tied to a specific traditional currency would be a bit inconvenient.
- Panini_Jones 7y ago
  Hmm. That makes more sense now.
noxer 7y ago
Facebooks business is ads. Facebooks largest growing market is the third world. Ads are worthless there because people have no money to spend on sh*t they don't need. Now if FB makes micro transaction possible and cheap and even available for the unbaked, suddenly the poorest of the world are potential customers and thus can be targeted with ads. They may only have fractions of dollars to spend but they are literally billions so it ads up. TL;DR Banking the unbanked with cheap micro transaction makes them milkable.

lgl 7y ago

Wouldn't it be simpler for facebook and for its users if they just implemented some sort of "FB Pay" equivalent to WeChat Pay that's tied to their messenger app and be done with it? I'm definitely missing a lot here as I haven't kept up with the latest libra updates but I seriously fail to see why making or calling this a cryptocurrency is the way they chose to go although I'm pretty sure there's a fair amount of greed and powerplay behind this. Tbh, it is starting to sound a lot like some sort of real world e-coin that is tied to some of the least privacy concerned corporations, banks and governments and with none of the advantages of an actual decentralized cryptocurrency. It looks as it will basically be just an analogous to marked dollar bills but with easier digital traceability? Or am I going too much into conspiracy theory territory?

dschuetz 7y ago

Good, let Libra die for good.