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Facebook, Libra, and the Long Game

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Re: Facebook, Libra, and the Long Game

#121

Post by Symmetry »

nine_k wrote: post #78
buboard wrote: post #60

Earlier quoted context omitted.

Banking has existed for a few centuries, and state controlled money is something recent too, it used to be that multiple sources minted coins. And bitcoin which has existed for 10 years and is far more threatening to governments has not been extinguished.

Gold coins can be minted at multiple places, or admitted foreign, because their value is gold by weight. Mass fiat money are no more than 2 centuries old, in most places less than 60 years (see Bretton-Woods). They have to be tightly controled by state.

Bills of exchange were privately issued by banks since the high middles ages in Europe and functioned a lot like dollars when convertability was still a thing. It's only relatively recently that they've been tightly controlled. they weren't in mass use like metal coinage was but they were essential to the re-establishment of long-range trade.

Re: Facebook, Libra, and the Long Game

#122

Post by camgunz »

aserafini wrote: post #79
camgunz wrote: post #30

Earlier quoted context omitted.

> The developing world would hugely benefit from a scalable technology that can efficiently service digital transactions. The piece demonstrates this with how quickly WeChat Pay and Alipay penetrated China. I hear this a lot in cryptocurrency threads, and I vehemently disagree. There's no doubt that using "some other currency" (currency or cryptocurrency) is better than using a corrupt, authoritarian regime's currenc…

Regarding a country’s ability to manipulate their own currency or execute monetary policy which is mostly in the direction of printing more: the end game of crypto seems to take this option off the table for all governments in the long term. Why? Because assuming all other things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflat…

> assuming all other things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation. An individual is never going to generously allow their government to erode X% of their liquid cash voluntarily.

"All other things being equal" will never happen. Too many things change. For example, maybe the world economy is on the brink of depression (2008), in which people would prefer their governments do something about the crisis, despite the risk of inflation. Or maybe you're trying to manipulate your currency to gain a trade advantage. Etc. etc. It's just not a useful thing to consider.

And although this is kind of anecdata, I'm perfectly happy for my (US) government to execute monetary policy that potentially devalues my savings and investments as long as it's justified. Hell I usually make it back with wage/benefit increases (although the same can't be said for most US workers) and interest on investments.

> This future doesn’t require any crypto ‘dictating’ its money supply policy, it just requires at least one fixed supply crypto to exist in your country that is as convenient as existing cash / online payment to make governmental monetary policy useless.

No one's saying what the future does or doesn't require. All I'm saying is that people who are extolling the virtues of a fixed currency should earnestly research why we moved off fixed currencies. There are a lot of really good reasons. No serious economist advocates for a return to a fixed supply of currency.

> The problem for governments is: the genie is out of the bottle regarding fixed supply.

This is comically untrue. It may be true in cryptocurrency circles, but it's absolutely not true in economic circles. It's an idea that's been widely considered and roundly dismissed as very bad. Its support in cryptocurrency circles is driven largely by libertarian ideology.

> Note that I’m not saying it’s good or bad that countries cannot effectively control money supply anymore but it seems inevitable they can’t in the long term.

On the contrary, countries that cannot effectively control money supply will continue to be at a disadvantage with countries that can. It's precisely because of its usefulness that countries will continue to employ it. What could possibly make you think otherwise?

Re: Facebook, Libra, and the Long Game

#123

Post by Despegar »

adventured wrote: post #84
gooseus wrote: post #45

> The largest leap will come last: Libra as a genuine currency, not simply a medium for transaction. This will be function of volume in the previous two use cases, and is understandably concerning to governments all over the world. Well that's certainly an understatement. This is literally the only mention of government through-out the entire article. The only mention of banks is in the previous paragraph stating the…

> No government is going to let FB and any coalition do an end run around their national currency and their banking institutions. That's the point of confusion. This is not an end around. This is about extracting tolls - slivers - from economic activity. They will all comply with the status quo, they will say what needs to be said, they will bow as they need to bow, they merely want to get their little cut on a billi…

>That's the point of confusion. This is not an end around.

Whether that's the intention or not doesn't matter, it has the potential to be and that is simply not acceptable.

When a developing world country like India needs to use monetary policy to stimulate their economy but those transmission mechanisms aren't working because a significant part of the economy is using Libra, that's a major threat to their sovereignty. It's digital colonialism.

https://www.washingtonpost.com/news/wonk/wp/2014/07/31/argen...

Re: Facebook, Libra, and the Long Game

#124

Post by bongobongo »

jshowa3 wrote: post #114

Here is the important thing to understand about the Libra Association: while its members — who again, are the validators — do control the Libra protocol, Facebook does not control the validators. Which, by extension, means that Facebook will not control Libra. But Facebook does control Libra just by virtue of providing infrastructure. They're also part of the consortium. So again, why is the author trying to make it…

It's a kind of mind-trick that only occurs in articles and white papers about cryptocurrencies and blockchain technologies. I've noticed that they often end up proposing a distributed private shared database controlled by a corporate cartel and call it "freedom."

Re: Facebook, Libra, and the Long Game

#125

Post by wan23 »

sonnyblarney wrote: post #76
gooseus wrote: post #45

> The largest leap will come last: Libra as a genuine currency, not simply a medium for transaction. This will be function of volume in the previous two use cases, and is understandably concerning to governments all over the world. Well that's certainly an understatement. This is literally the only mention of government through-out the entire article. The only mention of banks is in the previous paragraph stating the…

Actually, the US used to have any number of currencies in the 19th centuries and it was a mess. Having a centralized currency is a reasonable thing, though the Fed is a private entity, it operates ultimately like other central banks. The banks don't have any special power - if you want to open one, you can do that right now. If they did have some special sauce, VC would be pouring it, and mostly, it's not. Banks don'…

> Banks don't make their money or derive their power through the 'creation of money'.

A bank just opened and has $0 in the vault You give the bank $1000 The bank lends me $800

Your current bank balance = $1000 My current bank balance = $800 Total money in the bank = $1800

You might say that the money wasn't created because they can't afford to pay out $1800, but if for some reason at this point they need to pay back the $1000 they can ask another bank for a loan, and point to the $800 they're owed as collateral. On top of that, both the $1000 and the $800 would be insured against the failure of the bank by the federal government. This is a simplified example of course, but when the banking system is working normally it's hard to say that they don't make their profits on the creation of money.

Re: Facebook, Libra, and the Long Game

#126

Post by thatfrenchguy »

boh wrote: post #120

Adding the words blockchain and cryptocurrency to this new Facebook initiative gives it an air of "innovation", the sort that reacts to criticism with "this is too new and innovative for you to understand", and "stogy governments don't like to innovate like we do, so they want to stop us with old timey regulation (and consumer protections)". Libra is essentially an ETF. It's a vehicle that will take deposits from cus…

> Libra is essentially an ETF

But what they invest in will be interesting: what happens when the next financial crisis comes ? When the dollar plunges ?

Re: Facebook, Libra, and the Long Game

#127

Post by geezerjay »

jpkiser wrote: post #108
simias wrote: post #74

Earlier quoted context omitted.

>I really don't know why this isn't a larger part of this conversation. That's been the elephant in the room ever since Satoshi published its paper more than a decade ago. When I discuss with cryptocurrency enthusiasts I often get the impression that they think that banks are this kind of useless parasite body that somehow appears like mosquitoes around a pond in summer. That they only serve to basically operate ATMs…

Yes, there are many Bitcoiners who believe that everyone will become their own bank but I believe a more common sentiment is the idea off full backed reserved. But a great I feel that a more common belief held by Bitcoiners is that the "inherent" issues with capitalism come from fractional reserve banking. Now for the first time in history there is a form of money that you can prove in a matter of seconds that your m…

> Now for the first time in history there is a form of money that you can prove in a matter of seconds that your money didn't move when you gave custody to the bank.

Why do you believe this has any relevance at all? People want to buy stuff, not exchange bill with serial number #abcxyz with stuff.

And from my example you can easily understand why your assertion is quite wrong to begin with.

Re: Facebook, Libra, and the Long Game

#128

Post by jonathankoren »

svd4anything wrote: post #83
chasing wrote: post #75

Earlier quoted context omitted.

Government control over currency is a good thing.

Is that really truly settled by economists? Objectively. I mean there have sure been a lot of currency crisis and hyperinflation events in modern world history.

I think you need to read up on the era before central banking, and bank notes. It was chaos.

https://www.npr.org/sections/money/2012/12/07/166747693/epis...

Re: Facebook, Libra, and the Long Game

#129

Post by 2a96eb7d685a49c »

thatfrenchguy wrote: post #126
boh wrote: post #120

Adding the words blockchain and cryptocurrency to this new Facebook initiative gives it an air of "innovation", the sort that reacts to criticism with "this is too new and innovative for you to understand", and "stogy governments don't like to innovate like we do, so they want to stop us with old timey regulation (and consumer protections)". Libra is essentially an ETF. It's a vehicle that will take deposits from cus…

> Libra is essentially an ETF But what they invest in will be interesting: what happens when the next financial crisis comes ? When the dollar plunges ?

Part of the solution is that it is a basket of currencies rather than just the dollar.

Re: Facebook, Libra, and the Long Game

#130

Post by sigmar »

ghayes wrote: post #87

My primary concern is that with a set of 20 or 100 validators, you can’t call it a decentralized platform (it’s a blockchain run exclusively by a centralized consortium). The article discusses the fact they intend to to decentralize it in 5 years, but that would be the equivalent of a dictator stepping down and promoting democracy which... doesn’t always come to pass.

I've been wondering about this too. I don't see how the incentives are setup that the Association would want to move towards an entirely permissionless network. Especially if Libra gets heavily adopted at 100 nodes (as they don't need to improve trust at that point and letting more companies into the association will decrease transaction throughput).
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