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Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

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Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#41
post #20
post #3

Earlier quoted context omitted.

If we knew which government, I mean person, created bitcoin would the same apply? Or would the Feds be all over Satoshi Nakamoto? FB has been the subject of several congressional and parliamentary hearings around the globe recently. Why would they not question Libra?

Thats the beauty of decentralization. You can't really blame one person for bitcoin's value today, you have to blame everyone who participates in it (Really, who would the congress question, and what could that person do? take down bitcoin?). While Libra is centralized so single point of failure

There are no decentralized cryptocurrencies.

Like all other so-called "decentralized" coins, Bitcoin rewards economies of scale. That means that it tends towards centralization.

Though of course Bitcoin has its own unique problems, like being deflationary (which is evil).

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#42
post #13

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be invested)

Investment is circulation though. They are no longer holding the $10 you spent to buy 10 Libra but $10 worth of Apple stock say that definitely isn't always worth $10 and Apple or whoever sold that stock now has $10.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#43
post #31
post #27

Earlier quoted context omitted.

I feel like this is E-gold 2.0 maybe 3.0 with BTC being 2.0 https://en.wikipedia.org/wiki/E-gold

E-gold was a scam IIRC, while libra's assets : > the assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets. And BTC is not backed by anything, it has intrinsic value now so it's wrong to call it a scam.

What is the intrinsic value of btc?

I can't eat it, use it to heat my house. It has value, most of it isn't intrinsic though.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#44
post #36

Earlier quoted context omitted.

It's like any other startup: building a product that's useful enough to get widespread adoption requires nailing a lot of different details. You leave one critical feature off and you don't get adoption. You get all of them right and the product takes off on a hypergrowth curve. It's like how Reddit took off once they added comments, or AirBnB took off once they started taking professional-quality photos. It's not th…

Do you view privacy as an important quality? Nano seems like a pretty good attempt at making a cryptocurrency that's useful as a currency, but transactions are not private and I'm not sure how big of a problem that is

I don't personally, but there are cryptocurrencies that have made some really big strides there: Monero and ZCash. I've heard that a lot of dark-web business is actually switching over from Bitcoin to Monero, so it's getting some real adoption.

One of the interesting things about the cryptocurrency space is that it's challenging one of our fundamental assumptions about economics, namely that currency is a winner-take-all market and everything works better if there's a single currency used for everything. Instead we're seeing that currencies can actually have different properties, and that this can actually affect which currency you'd chose to use in which circumstance. Want to do things that you don't want the government to know about? Use a privacy coin like ZCash or Monero. Want to let your computer programs transact economically? Use a platform coin like Ethereum, EOS, or Tron, and select which based on whether you want to write your smart contracts in Solidity, WebAssembly, or Java, respectively. Want to define a marketplace and create a utility coin to mediate transactions in it? That's what coins like BAT (Brave), Kin (Kik) and now Libra (Facebook) do.

The primary functions of a currency (store of value, medium of exchange, and unit of account) are also now getting unbundled: Bitcoin is used as a store of value, but not as a medium of exchange, while something like Monero or BAT is much more a medium of exchange than a store of value, and stablecoins like Tether or USDC are filling the unit-of-account role. That trend has been going on for decades - stocks and bonds are stores of value, but not mediums of exchanges or units of account, while in-game currencies are units of accounts but not a good store of value or unit of exchange - but the crypto space has made it explicitly clear.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#45

My main concern about libra is that, by being strongly tied to real currencies, libra issuers (not just facebook, all of them) have effectively assumed the role of unsanctioned mints, with the ability to damage the stability of each currency because libra is not tied to the international exchange system: if you pay facebook, or anyone else, $10 and they convert that into libra, now they have $10 that they will absolu…

The original 10$ aren't "gone", they're held in reserve in the form of bank deposits and government bonds. If you hold Libra, you supposedly have a claim against those. This is unlike a fractional-reserve bank, which can turn those most of those $10 into loans of any sort and still pretend it's cash that's available at any time.

You know a bond is a loan?

Why is a Libra loan to the government different to a fractional reserve loan of any sort?

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#46
post #42
post #13

Earlier quoted context omitted.

But i thought each libra must be backed by real money? i.e. when they sell 10 libra the 10 dollars go to the libra fund, and cant really circulate (but can be invested)

Investment is circulation though. They are no longer holding the $10 you spent to buy 10 Libra but $10 worth of Apple stock say that definitely isn't always worth $10 and Apple or whoever sold that stock now has $10.

They could instead deposit it into their own bank, i.e. full reserve, and let the bank do the investing/recirculation itself which it is accredited to do.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#47

Earlier quoted context omitted.

Fractional reserve banking usually requires some non-zero percentage of deposits to be withheld.

In virtually all developed nations, the requirement is either zero or single-digit percent.

No there are strict tier 1 and tier 2 capital ratios that banks are required to uphold.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#48
post #43
post #31

Earlier quoted context omitted.

E-gold was a scam IIRC, while libra's assets : > the assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets. And BTC is not backed by anything, it has intrinsic value now so it's wrong to call it a scam.

What is the intrinsic value of btc? I can't eat it, use it to heat my house. It has value, most of it isn't intrinsic though.

u can convert it to USD, so it must have some value or else people wouldn't buy it

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#49
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post #38

Earlier quoted context omitted.

zero? What happens when someone wants to make a withdrawal?

The operative word there is requirement. Banks in 0% reserve countries don't have to keep cash around but do to serve as their actual functions as banks.

What countries are we talking about here? As far as I'm aware most developed nations have capital requirements for the banks. Whilst maybe not stating a minimum % reserve, in practice they do need to keep reserves for those capital requirements.

Re: Fed Chair Jerome Powell Has ‘Serious Concerns’ with Facebook Libra Proposal

#50
post #43
post #31

Earlier quoted context omitted.

E-gold was a scam IIRC, while libra's assets : > the assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets. And BTC is not backed by anything, it has intrinsic value now so it's wrong to call it a scam.

What is the intrinsic value of btc? I can't eat it, use it to heat my house. It has value, most of it isn't intrinsic though.

You can move it illegaly more easily than cash.
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