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Facebook, Libra, and the Long Game

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Re: Facebook, Libra, and the Long Game

#141

Post by AlphaWeaver »

This article captures one of the biggest problems I've seen in the discussion about Libra, which is that everyone has been writing it off as a currency that Facebook can control. In reality, Facebook's control is limited to being equal to the other members of the Association. Facebook controls the Calibra wallet, _not_ the currency as a whole.

The thing that really drove this point home for me was when I browsed to both websites. Browsing to the Calibra wallet website, the entire site broke because I have blackholed all Facebook and tracking domains through NextDNS. When I browsed to the Libra website to view the whitepaper, everything worked just fine. This is a great demonstration of who is in control of what.

That being said, I think this article also outlines the clear incentives as to why Facebook would like to promote Libra in the first place, which is the data they have the potential to gather through the Calibra wallet.

Re: Facebook, Libra, and the Long Game

#142

Post by kitten_smuggler »

sprafa wrote: post #101
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…

This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deust…

> This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks.

I don't think you understand bitcoin as well as you think you do. 51% attacks do not work like this.

Re: Facebook, Libra, and the Long Game

#143

Post by panarky »

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

China allows WeChat Pay and Alipay to be predominant methods of payment, so it's not obvious to me that new payment methods threaten governments.

What, precisely, is the threat?

And what, exactly, can governments do to stop companies from offering their own scrip?

Would they outlaw Venmo? Gift cards? Airline miles?

Re: Facebook, Libra, and the Long Game

#144

Post by tiluha »

sprafa wrote: post #101
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…

This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deust…

I think you are misinformed about how bitcoin works.

Bitcoin doesn't care how much of it you have, as it uses Proof-of-Work not Proof-of-Stake. The only thing that matters is you computational power. Now it is true that large banks could just buy lots of ASICs and try to beat the network, but that would mean a continued investment: As soon as they stop mining, the network would return to normal.

They can hurt bitcoin (not that cheap anymore) by making it unusable for a period of time, but unless they are willing to keep mining until everybody else stops, they won't be able to kill it.

As far as usability goes i don't think bitcoin is that hard: Download an app, scan a QR-code, send money. Not that complicated. The transaction rate is a problem, though.

I agree that some people are too enthusiastic about crypto, but I think it still has its place. It doesn't have to kill banks.

Re: Facebook, Libra, and the Long Game

#145

Post by miohtama »

panarky wrote: post #143
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 China allows WeChat Pay and Alipay to be predominant methods of payment, so it's not obvious to me that new payment methods threaten governments. What, precisely, is the threat? And what, exactly, can governments do to stop companies from offering their own scrip? Would they outlaw Venmo? Gift cards? Airline miles?

"Bottom 150" governments ability to borrow and issue money weakens, as Libra could often be more stable. When you citizens do not need or want your money the governments ability to control, e.g. tax, quickly diminishes.

See usage of USD in developing nations.

Re: Facebook, Libra, and the Long Game

#146

Post by miohtama »

mgraczyk wrote: post #133
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…

When was the last time you used an ETF to pay for Uber Eats? Libra is not an ETF. Clearly it has different functionality and will be used differently by both Facebook and users. It would be more accurate to say that the risk profile should look to account holders like an ETF rather than a bank.

The 1000 Libras question is if a currency basket backed asset is a security, commodity and such - is such a bearer note allowed? Then you might be in the domain of securities transfer agents, not money transmitters. You would need to pay capital gains tax on every transaction.

Re: Facebook, Libra, and the Long Game

#147

Post by pfortuny »

wan23 wrote: post #125
sonnyblarney wrote: post #76

Earlier quoted context omitted.

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…

This is why double accounting (?) was created. Too keep track of All the directions money flows. Your example is right, but only half-right (there are at the same time two debts to account for).

Re: Facebook, Libra, and the Long Game

#148

Post by sprafa »

kitten_smuggler wrote: post #142
sprafa wrote: post #101

Earlier quoted context omitted.

This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deust…

> This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I don't think you understand bitcoin as well as you think you do. 51% attacks do not work like this.

I would welcome a correction! My impression is if anyone has 51% of all bitcoin they can write whatever they’d like on the blockchain and validate it at will. Is this wrong?

Re: Facebook, Libra, and the Long Game

#149

Post by sprafa »

panarky wrote: post #136
sprafa wrote: post #101

Earlier quoted context omitted.

This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. I always considered two datapoints to be fulcral A) ease of use, which Bitcoin has never had and B) potential to be overtaken by an actual bank and twisted into whatever purposes it wanted due to the 51% error. That is, how hard would be it for JPMorgan or Deust…

> This is one of the reasons I dropped out of crypto for years, most of its supporters were completely delusional and tragically uninformed about actual banks. The reason I stayed in is because Bitcoin solved a seemingly intractable problem, it works in the real world, and it's survived and even thrived in the face of fierce attacks for a decade. Yes, there are many shills who are delusional and ignorant. Yes, specul…

Yes true, this is why I “dropped out of it” then eventually came back to it. The fact that I have Venezuelan friends who started hoarding it to avoid capital controls in their country convinced me of its usefulness and long-term viability.

Re: Facebook, Libra, and the Long Game

#150

Post by gooseus »

buboard wrote: post #60
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…

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.

> state controlled money is something recent too, it used to be that multiple sources minted coins

I don't think you're considering a long enough time scale, the minting of coins with the likeness of rulers and symbols of the power of the state is as old as the concept of currency and rulers.

There have been instances where companies printed their own script and new non-authoritarian nations might struggle for a bit early on with competing banks, but it's always resolved and power is vested in the central authority.

The role of currency from the point of view of the central authority is more than just economic - it's symbolic, it's propaganda, it's confidence in that government expressed by every citizen through the very act of accepting their currency as valuable.

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