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Facebook, Libra, and the Long Game

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Re: Facebook, Libra, and the Long Game

#171

Post by baq »

svd4anything wrote: post #98
xxpor wrote: post #90

Earlier quoted context omitted.

I don't think pure economics are the only thing to worry about here. Anti-money laundering/sanctions/stopping terrorist financing efforts are generally a good thing that not ideal from an economic perspective.

> Anti-money laundering/sanctions/stopping terrorist financing efforts That looks like a pretty questionable line of logic, because, say for sake of argument, that it can be demonstrated from an economics objective that competitive private currencies produce higher levels of growth. Now the terrorists also have us hostage economically as we need to use monopoly government money as the only way to stop them! Come on,…

the goverment's role isn't to be a monopoly, it's to provide and enforce rules. otherwise the strongest player will coerce everyone to their own rules via force. it's naive to think that without governments everything will suddenly be better and cheaper - on the contrary, there will be a period of anarchy where no fair trade is possible because fraud won't have any consequences and after that the strongest players will form a kingdom or whatever with support of many tired ordinary people who just want to live.

Re: Facebook, Libra, and the Long Game

#172

Post by ascendantlogic »

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.

Bitcoin hasn't been extinguished because it's not a replacement for fiat. Transaction scaling still isn't there and no one in their right mind spends their bitcoin on coffee when it could 10x in a year and then drop 90% from there just to 10x again. It's become an investment class and governments are fine with that because people are investing their fiat into it and then pulling it back out to fiat later. There's no threat to their sovereign monetary policy yet.

Re: Facebook, Libra, and the Long Game

#173

Post by codyb »

JoeSamoa wrote: post #154
geezerjay wrote: post #127

Earlier quoted context omitted.

> 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.

I care about my exact bills and your exact bills. I care. Maybe you don't, but I do and so does the person you replied to. That makes at least two of us.

You care about your exact bills? You actually take the time to look at the serial numbers of all the bills you use in a given day/week/month/year? For what purpose?

I check for cool serial numbers fairly frequently but I couldn’t say I care about the exact bills. A five’s a five. That’s why currency is great.

Re: Facebook, Libra, and the Long Game

#174

Post by abecedarius »

camgunz wrote: post #30
padobson wrote: post #9

I can't help but think that Facebook doomed this "distributed ledger" possibility by trying to be first to market with a tarnished brand. 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 can't imagine the possibility for prosperity when 3 billion consumers enter…

> 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…

Re: "we know what's best for you". We're talking about private companies offering people a free choice of an alternative to state monopoly money. Yes, Facebook has reach, but they're not the ones jailing people, etc. Even though I can't stand Facebook I think you have this backwards. (To the extent they succeed through dirty tricks, I'd be wrong about this.)

> there's also no doubt that being able to execute monetary policy is a huge advantage for any country.

I'm not confident about pretty much anything macroeconomic, but I do doubt the confidence of most talk about it. The U.S. was on the gold standard through the Industrial Revolution, for example.

Re: Facebook, Libra, and the Long Game

#175

Post by codyb »

buboard wrote: post #157
gooseus wrote: post #150

Earlier quoted context omitted.

> 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…

Yeap what has changed is the scale. Never before have states exerted so strict monetary control in such vast areas. For medieval kings it was just impossible to prevent the use of other people's coins.

I’m not sure why anyone would really want to go back to a fractured system (inherently unstable, and very dominant in the early years in America) unless they live in an already unstable system.

Universality of your currency is kind of the best selling point isn’t it?

Re: Facebook, Libra, and the Long Game

#176

Post by Rychard »

chaoticmass wrote: post #156
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…

I can't pay my taxes in Crypto, so in that sense I don't think will ever completely replace fiat currency and the banks.

You can do this in at least one US state: Ohio[1]. I'm not sure of how many other states (if any) that have something similar.

[1]: https://ohiocrypto.com/

Re: Facebook, Libra, and the Long Game

#177

Post by bhupy »

carleverett wrote: post #112
bhupy wrote: post #67

Earlier quoted context omitted.

But given the system laid out in the white paper, what specifically gives Facebook the ability to exert this kind of control, even in the long run? I think we all agree that Facebook is incentivized to behave in certain ways, but if self-limitation is baked into the system, how does that matter? This is a genuine question for which I would love an answer.

The white paper explicitly gives the Libra Association (i.e. Facebook and its partner validators) governance control over the cryptocurrency. Here's an easy scenario to imagine that shows how incentives would get misaligned: Facebook and the other validating nodes of Libra are financially compensated by interest from the collateral for Libra tokens. If Libra is successful in its mission, it will become a global curre…

Seems to be an excellent breakdown of how the Libra Association (of which Facebook is an equal among many) would control Libra, but not Facebook alone.

I think the strongest argument towards the latter is the long-run aggregation theory one re: Calibra owning the most Libra users, and not having to own the underlying Libra system itself.

Re: Facebook, Libra, and the Long Game

#178

Post by woah »

nybble41 wrote: post #163
sigmar wrote: post #130

Earlier quoted context omitted.

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).

There are also some technical barriers on the path to a permissionless network. The consensus algorithm Libra is using currently requires full connectivity between validators and is only robust so long as 2/3 of the validators can be trusted. Much has been made of the risk of a "51% attack" against Bitcoin, but one need only control 1/3 of the validator nodes to disrupt Libra, which is a far lower threshold than 51%…

The 1/3rd / 2/3rd pattern in a lot of blockchain BFT protocols is really elegant. If 1/3 of the voting power of a chain wants it to stop, then it probably shouldn't be running. It takes 2/3rds of the voting power for the validators to actually steal anyone's money or alter history.

Your botnet example is a non-sequiter. Since power in BFT protocols does not stem from the wasting of electricity, botnets have nothing to do with any possible attacks on a BFT system.

Re: Facebook, Libra, and the Long Game

#179

Post by aserafini »

RobertoG wrote: post #95
aserafini wrote: post #79

Earlier quoted context omitted.

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…

>>"Why? Well assuming all things being equal (convenience as medium of exchange etc.), an individual is always going to prefer holding currency that isn’t subject to inflation." And why should they spend a so wonderful asset? And what is the point of a currency that is always appreciating and nobody want to spend? >>"The problem for governments is: the genie is out of the bottle regarding fixed supply." Central banks…

> what is the point of a currency that is always appreciating and nobody want to spend

Fixed supply doesn't mean it will always appreciate.

It just seems like it today because the first fixed supply currency that can be transferred over the internet was only invented 10 years ago. It (or an equivalent, or a mix of equivalents) has to rise from 0 USD to X USD over time where X is "the value of global, fixed supply currency". When X is reached, it reverts to being the worst investment you can possibly make, useful only for buying higher yield assets or exchanging for food, shelter and stuff.

> The only thing a government have to do, in order to create demand for its currency, is accept only its currency as payment for taxes.

Just because I pay taxes in USD/EUR doesn't mean I can't store my cash in a fixed supply currency, and anyone who does this avoids inflation. And if everyone does this, government no longer controls the money supply.

Re: Facebook, Libra, and the Long Game

#180

Post by warp_factor »

scarface74 wrote: post #49
warp_factor wrote: post #11

I'm crossing my fingers that this pseudo crypto money never takes off. Having Facebook control this would be so terrible and the proof that we didn't learn anything over the last couple months. Don't fool yourself even though they released a white paper and some pseudo decentralized schemes this is no different than a casino chip. Unfortunately I feel like it might pick up and become a thing.

The article specifically says that FB does not have a controlling interest or the ability to decide who joins the consortium.

That's the way they marketed it. They know they had to do this little concession in order to get Libra to pick up so that people would repeat tirelessly that it's not controller by Facebook and therefore it's good.

But it's controlled by Facebook and friends and the influence they would get over any decision is absolutely huge

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