This should be blocked by lawmakers if they are serious about their recent tech monopoly chatter
Facebook plans cryptocurrency debut
311–320 of 345 posts
Re: Facebook plans cryptocurrency debut
#312Earlier quoted context omitted.
A "Blockchain" is merely a public database. That's it. Git is a Blockchain. Do you think that git is useless?
Well that's precisely what I have issue with. No I don't think a "blockchain" is merely a public database nor that git is a "blockchain". The term "blockchain" was initially defined as the proof-of-work data structure that Bitcoin uses to store transactions and its definition was later slightly expanded to describe that same data structure used in other cryptocurrencies. If it now just means "public database" then we…
Proof of work is merely one form of consensus algorithms.
There are many forms of consensus algorithms.
> Git also uses merkle trees
Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
People try to make these concepts way more complicated than they actually are. A lot of this crypto stuff is actually quite simple.
Re: Facebook plans cryptocurrency debut
#313Earlier quoted context omitted.
I don't understand your point. No one is disagreeing about the contribution that big finance has made in shaping our current systems. FB raised money, got listed. There's tons of financial system which helped them and help everyone from invoices to making a trip everyday. But that doesn't mean something better can't come up. People don't hate banks for the monolith but their monopoly like nature that had stifled inno…
> Banks are more regulatory and defend my turf play than a technology play. There's layers and layers of clutter. Why do you think this is? Do you think its just because "hur hur they're evil"? I'm not saying there isn't some of that. But I am saying: 1. The big banks have discovered something that the small, modern banks haven't. YET. They will. Its that banking sucks, and we need the regulatory hurdles. 2. If you t…
> Maybe we need a better system. Maybe we dislike the system we have, but we can't have a better one. Maybe we need better people. But, you can't change human nature.
Do you have some sort of evidence for that? "We can't have a better (system)" is a pretty bold statement to make without some kind of supporting evidence. Absolute truths require absolute evidence.
Re: Facebook plans cryptocurrency debut
#314Can anyone explain what the point of a pegged cryptocurrency is? Since you are dependent on the issuing entity to honour the stated peg, why not just have your balance be an entry in a regular database maintained by that entity? What exactly does the blockchain gain you here? One thing it does _not_ get you is censorship resistance. If the central authority wants to take away coins from a wallet, all it needs to do i…
The few reasons to use blockchain at this time is to maintain an optic of trust: that even if you don't fully trust the provider of the token, you can trust the transparency provided by the technology. My judgment is that FB is positioning itself to be ready for when or if the space finds its "mosaic" moment. Otherwise, it is still an investment in a novel tech that is already proven useful for money transference; large sums of money have already been put up by the sector to mitigate and update regulatory risk and compliance.
Re: Facebook plans cryptocurrency debut
#315Can anyone explain what the point of a pegged cryptocurrency is? Since you are dependent on the issuing entity to honour the stated peg, why not just have your balance be an entry in a regular database maintained by that entity? What exactly does the blockchain gain you here? One thing it does _not_ get you is censorship resistance. If the central authority wants to take away coins from a wallet, all it needs to do i…
On paper, you're basically entirely right. Stablecoins including FB are all smokescreens to sell managing fiat on an internal database for you with "blockchain" wrapped around it. This project and stablecoins in general have nothing to do with cryptocurrencies. With that said i can tell you at least one solid reason why any issuer would do it. At a bare minimum they can earn overnight on the holdings since stablecoin…
>There's one remote reason I can think of that people would flip to stablecoins vs fiat if they had some tax view that that wasn't a constructive sale and it could benefit from some likekind kind of treatment since its a "crypto" and not a "fiat". It's obviously a silly argument and there's no way the IRS would fall for it (nor do they even accept it between regular cryptos) but i can't speak for other jurisdictions.
The IRS have already made explicit that crypto to crypto is taxable and treated as capital gains/loss. Some stay in stablecoin so that they can be more liquid in the ecosystem. Simply, there are more exchange pairs for stablecoins, and some stablecoin allow storage in personal hardware wallet rather than exchanges.
Re: Facebook plans cryptocurrency debut
#316Earlier quoted context omitted.
I agree, but [more general] cryptocurrencies do already check a few boxes: - is cash you can email - prevents hostile monetary policy from stealing your wealth (inflation, negative interest rates, haircuts, etc) - keeps working when you travel (unlike Paypal / credit cards which often get frozen) - uncensorable transactions that ignore borders - can send large $ amounts anywhere for ridiculously cheap - more vertigo…
“cash you can email” may be a cool-sounding bumper-sticker but it's not how I'd describe something which requires operating a complex multi-party system. Similarly, “large amounts for ridiculously cheap” has historically not been true and given how much highly-visible and easily blocked infrastructure a blockchain requires to be online in order to operate, “uncensorable” is more of a hypothetical aspirational goal th…
I'll bite on the first one. Cash has a complex infrastructure underpinning it - legislating, printing, securing, distributing, managing policy / rates, etc. It keeps the dollar you get today (mostly) spendable tomorrow. You're simply so accustomed to it you ignore it. Same way most people don't think about the pistons on their car, now that the user experience of driving is straighforward. Eventually folks will do the same for the complexity underpinning crypto.
Case in point: I bought a new phone from overseas a few weeks ago. Paypal / wire fees were expensive, and after three days TransferWise (suggested by the seller) still couldn't make my new account work. I wound up paying in crypto, took about 5 minutes and cost me less than a buck. So yeah: cash I emailed.
Re: Facebook plans cryptocurrency debut
#317Earlier quoted context omitted.
On paper, you're basically entirely right. Stablecoins including FB are all smokescreens to sell managing fiat on an internal database for you with "blockchain" wrapped around it. This project and stablecoins in general have nothing to do with cryptocurrencies. With that said i can tell you at least one solid reason why any issuer would do it. At a bare minimum they can earn overnight on the holdings since stablecoin…
You might be interested to learn about MakerDAO / DAI[0], which is a stablecoin pegged to USD using CDPs (collateralized debt positions) and decentralized governance. 0: https://makerdao.com/en/dai
This is an interesting project. The big question for Maker is, will decentralized governance work across the life cycle of this product? The nightmare scenario for a stablecoin is volatility, and governance in this space have historically resulted in volatility.
Re: Facebook plans cryptocurrency debut
#318Re: Facebook plans cryptocurrency debut
#319Earlier quoted context omitted.
“cash you can email” may be a cool-sounding bumper-sticker but it's not how I'd describe something which requires operating a complex multi-party system. Similarly, “large amounts for ridiculously cheap” has historically not been true and given how much highly-visible and easily blocked infrastructure a blockchain requires to be online in order to operate, “uncensorable” is more of a hypothetical aspirational goal th…
I'll bite on the first one. Cash has a complex infrastructure underpinning it - legislating, printing, securing, distributing, managing policy / rates, etc. It keeps the dollar you get today (mostly) spendable tomorrow. You're simply so accustomed to it you ignore it. Same way most people don't think about the pistons on their car, now that the user experience of driving is straighforward. Eventually folks will do th…
But it really depends on being able to transact at one of the very limited set of vendors who would accept crypto, especially overseas.
It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.
So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.
Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.
You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.
I doubt this will be the case, even if the “scaling issue” is solved.
I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.
A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.
The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.
This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.
That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.
For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.
Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.
Crypto currency has two properties competing digital currencies lack.
True peer to peer transactions and censorship resistance.
They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.
But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.
When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.
Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.
They will be subject to as many regulations as PayPal, Apple, Venmo, etc.
They will also have the same need for security and fraud protection.
Re: Facebook plans cryptocurrency debut
#320Earlier quoted context omitted.
ATMs have security measures like daily download limits, unusual locations triggering denials or ID checks, etc. which cryptocurrencies lack. There's a really big difference between your potential losses being capped zero to a few hundred dollars vs. “everything you own and half of the community will say it was your fault”.
No reason you couldn't have some of these features in a crypto wallet. Lots of schemes are being created with with multisig, smart contracts, and social recovery methods. Here is one around freezing transfers not to a known address. https://www.coindesk.com/ethereum-startups-team-to-offer-ban...
In reality, the attack surface with crypto’s is ever expanding.
There’s no free lunch, and the minimal security provided with crypto currencies is provided at a high cost.