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Facebook, Libra, and the Long Game

stratechery.com

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Re: Facebook, Libra, and the Long Game

#281

Post by rohit2412 »

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…

Also, it is a joke that crypto will not have inflation.

The government will always require taxes and utilities to be paid in their currency. So, every one will need to sell cryptos to fulfill those electricity bills and taxes. This sell pressure will carry on a inflation into cryptos.

Re: Facebook, Libra, and the Long Game

#282

Post by Conjoiner »

z3c0 wrote: post #159
sprafa wrote: post #148

Earlier quoted context omitted.

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?

Sort of, yeah. It would be 51% of verification nodes. If you bought 51% of all Bitcoin, but it was verified by everybody else in the network, you don't actually have any power to decide if your transactions were valid or not. If you controlled 51% of the nodes, you would have majority control over which transactions are valid.

it's not 51% of the nodes, it's 51% of the hashing power together with following the agreed upon rules of the network

Re: Facebook, Libra, and the Long Game

#283

Post by codetrotter »

carleverett wrote: post #196
jpkiser wrote: post #138

Earlier quoted context omitted.

> 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 c…

I don't think Libra's collateralization is a hedge against fractional reserve monetary policy, I think it's just Facebook's way of ensuring consumer confidence that a Libra is actually worth something, and the most proven way to peg a stablecoin to a value. I don't think this is necessary in a mature crypto economy where digital currencies are being used more than fiat currencies. I agree though that crypto monetary…

> I think it's just Facebook's way of ensuring consumer confidence that a Libra is actually worth something, and the most proven way to peg a stablecoin to a value.

Or even just to have people use it.

I can’t afford to hold crypto right now because I don’t have any savings, only debt.

But if there was a crypto that had a stable price and which was accepted by merchants, and I perceived it as trustworthy I’d use it for my purchases instead of using a credit card or debit card.

Libra is not going to be it for me because I don’t trust Facebook and I don’t want them to have any involvement over my money. But I will admit that it has potential for a lot of the Facebook userbase to start using it.

Re: Facebook, Libra, and the Long Game

#284

Post by creeble »

snarf21 wrote: post #251
creeble wrote: post #250

Forgive my stupidity, but I don't understand this statement by Ben (Stratechery): "In practice, it is much more complicated: while a limited set of “validators” — aka miners — share a history of transactions in (individual) blocks that are chained together (i.e. a blockchain), what Libra actually exposes is the current state of the ledger. In practice this means that adding new transactions can be much quicker and mo…

Libra intends to use Proof of Stake. This means that the initial members will "stake" some amount of Libra and now all transactions can only be validated by them. You as an individual can't validate any new transaction. The assumption is that because the PoS validator has a huge stake in this currency, they will behave rationally or otherwise they would devalue their own stake. The trust here is completely centralize…

Probably too late to keep this discussion going, but...

I understand Proof of Stake vs. Proof of Work. But what Ben says about only "publishing the current state of the ledger" doesn't seem to relate to whether PoS is used. It's certainly not inherent to PoS that the entire blockchain isn't published.

Maybe he's just confused about how PoS works (but I somehow doubt that). I understand how PoS makes things more efficient by entrusting a single validator (or any small subset of validators) rather than having essentially a contest, and I understand why this is also inherently less trustworthy than PoW.

But Ben never mentions Proof of Stake anywhere in his explanation, just that the blockchain's "current state" is the only thing "exposed".

I'm juse trying to understand what he's getting at there.

Re: Facebook, Libra, and the Long Game

#285

Post by vinay_ys »

A brand new highly technical protocol with a brand new language has been announced along with open-source codebase and I am yet to come across a meaningful critique or review of the tech side of Libra. Politics aside, just the tech is quite interesting.

I think it is silly that they think this will become big among the unbanked (in countries like India) when they can do only 1000 transactions per second. Nuts! Don't you think so?

Re: Facebook, Libra, and the Long Game

#286

Post by aserafini »

rohit2412 wrote: post #281
RobertoG wrote: post #95

Earlier quoted context omitted.

>>"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…

Also, it is a joke that crypto will not have inflation. The government will always require taxes and utilities to be paid in their currency. So, every one will need to sell cryptos to fulfill those electricity bills and taxes. This sell pressure will carry on a inflation into cryptos.

It won't have inflation caused by the underling supply being increased which is the largest component of inflation. But you’re correct to point out that inflation has other causes (eg. natural fluctuations in demand for goods and services) that will still exist in FixedSupplyCoin world.

Re: Facebook, Libra, and the Long Game

#287

Post by vmurthy »

I am someone you might consider early adopter. I enjoying tinkering with the latest gadget, getting that fancy domain name with an extension like .ooo ( yeah! not kidding :-D ) but .. when it comes to FB, I don't mind being a luddite. Add to that, the country I live in currently (India) has a ban on cryptocurrencies and we have tons of alternatives like Paytm[0] and UPI (Inter-bank transfers in an instant)[1]. So, Mr Zuckerberg et al, thank you but no thank you.

To me , the most interesting part is towards the end of the article (emphasis mine) > This applies even more to the Calibra wallet: Facebook promises not to mix transaction data with profile data, but that entails, well, trust ...

We all know how the promises turn out [2][3]

[0]https://paytm.com/

[1] https://en.wikipedia.org/wiki/Unified_Payments_Interface

[2]https://www.theinquirer.net/inquirer/news/3032946/whatsapp-a...

[3]https://www.forbes.com/sites/lensherman/2018/05/23/zuckerber...

Re: Facebook, Libra, and the Long Game

#289

Post by aserafini »

camgunz wrote: post #261
aserafini wrote: post #219

Earlier quoted context omitted.

> Unless I can convince someone to give me 3 USD for my BTC. This is exactly what would happen, no convincing required. Overnight 50% hyperinflation of the dollar would mean 2 USD worth of BTC/EUR/GBP/milk/anything bought yesterday could be sold for 3 USD today. > Why do you think this is a good thing? I’m not claiming it’s a good or bad idea. I’m claiming it’s an inevitable consequence of usable fixed supply currenc…

> Overnight 50% hyperinflation of the dollar would mean 2 USD worth of BTC/EUR/GBP/milk/anything bought yesterday could be sold for 3 USD today. Ahh, but BTC doesn't belong in that list at all. The Euro and Sterling are backed by large, stable economies, used by each to value their exports. Milk is a commodity, which has intrinsic value (not to mention cost to produce, market, transport, regulate, and sell). BTC is a…

Your position is that 50% USD inflation overnight would cause 2 USD worth of EUR/GBP/milk/gold/anything bought yesterday to be worth 3 USD today but for some reason 2 USD worth of BTC bought yesterday would continue to be worth only 2 USD?

This is wrong, assuming values of BTC hadn’t also changed overnight. It could only be true if BTC simultaneously dropped in value 33%, but that would be unrelated to USD inflation.

Re: Facebook, Libra, and the Long Game

#290

Post by coralreef »

"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."

Within the designed protocols, yes, Facebook gets one vote equal to the the single vote of any other node.

Outside the system lens, Facebook brings this product to potentially 2.38 billion users. That dwarfs the value that any other validator can bring.

If Facebook becomes unhappy with what the consortium is doing, it can simply say "Hey, we're gonna stop using Libra, and start a new fork." So while they may not control other validator members, they can certainly strong arm them into falling in line.

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