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This article focuses heavily on Facebook’s Libra, which to my knowledge has recently scaled back from offering a currency balanced by (and collateralized agains

This article focuses heavily on Facebook’s Libra, which to my knowledge has recently scaled back from offering a currency balanced by (and collateralized against) a basket of commodities to offering a handful of 1-to-1 fiat-anchored stablecoins.[1] This is way less technically ambitious, and seems pretty similar to the old Facebook Credits system of in-app purchases. Where this gets interesting for me is 1) stablecoins like DAI, which collateralize using other cryptocurrencies, 2) projects like Celo, which are doing something similar to Libra but with way less initial runway for backing EU-sanctioned reserves, and 3) projects like Reserve Protocol, which aim for something similar to Libra’s original goal (achieving “stability” relative to an algorithmic balance between the real value of currencies, goods, etc). From the article it’s not obvious to me whether a lot of this could be evaded simply by not marketing your project as a stablecoin. [1] https://fortune.com/2020/04/16/facebook-libra-multiple-single-currency-coins/ https://fortune.com/2020/04/16/facebook-libra-multiple-singl...

jillesvangurp 6y ago
The problem blockchain companies have is that at some level they need to interact with the traditional financial system to make money. That means dealing with legal entities in various states and dealing with lots of pesky regulations that those states have around investing and transacting. Basically, in most civilized places, if you want to be a bank there are some rules to be taken into account. That's why stablecoins are so hard to do because as soon as you start transacting, you are exposed to those rules because you basically become a bank like entity. So, authorities wake up and start paying attention as soon as you do that. The projects you name are interesting because they are all based in the US and are being built with good old investor cash raised from the usual suspects (i.e. VCs). So, they have share holders and are operating under US law. Basically all three are really talking about building similar things but as an outsider you have to wonder who wins if their token business is successful: the share holders or the token holders? There's a bit of friction here between the marketing on one hand projecting some kind of utopian decentralized thing and the obvious desire of the investors to turn this thing into a very centralized money funnel straight into their pockets. The reality is of course that these are companies and not charities and the reason investments are so high is that they are looking to tap into significant streams of cash. Just like banks.

jillesvangurp 6y ago

The problem blockchain companies have is that at some level they need to interact with the traditional financial system to make money. That means dealing with legal entities in various states and dealing with lots of pesky regulations that those states have around investing and transacting. Basically, in most civilized places, if you want to be a bank there are some rules to be taken into account. That's why stablecoins are so hard to do because as soon as you start transacting, you are exposed to those rules because you basically become a bank like entity. So, authorities wake up and start paying attention as soon as you do that. The projects you name are interesting because they are all based in the US and are being built with good old investor cash raised from the usual suspects (i.e. VCs). So, they have share holders and are operating under US law. Basically all three are really talking about building similar things but as an outsider you have to wonder who wins if their token business is successful: the share holders or the token holders? There's a bit of friction here between the marketing on one hand projecting some kind of utopian decentralized thing and the obvious desire of the investors to turn this thing into a very centralized money funnel straight into their pockets. The reality is of course that these are companies and not charities and the reason investments are so high is that they are looking to tap into significant streams of cash. Just like banks.