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Facebook Libra Is Architecturally Unsound

stephendiehl.com

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Re: Facebook Libra Is Architecturally Unsound

#31

Post by HashThis »

This ignores the big problems in Facebook's Libra:

1) It charges ECONOMIC RENTS. The ethical asset backed and currency backed stable coin needs to pass profits from revenue generating assets to the currency holder. The member companies should only take a tiny slice of the profits. This is the MASSIVE problem.

2) Libra is designed that ECONOMIC RENTS will be sharecropped and sent to the member companies. This will be the economic incentives for them to force it on their customer base and create incredibly fast adoption. This is a good thing, except it turns evil by the economic rents from #1.

Re: Facebook Libra Is Architecturally Unsound

#32

Post by rusk »

ckastner wrote: post #29
westoque wrote: post #21

> Libra has no capacity for consumer protection mechanisms. You can replace Libra quote above with your favorite cryptocurrency and that pretty much sums up what I feel on the crypto space.

Ironically enough, the inability to regulate decentralized currencies is often touted as a strength, especially from the point of view of a consumer.

until you get caught in a pump-and-dump scam that is ...

Re: Facebook Libra Is Architecturally Unsound

#33

Post by rusk »

marcoseliziario wrote: post #27
wongarsu wrote: post #23

Earlier quoted context omitted.

In general the answer for consumer protection is to use any escrow service. Multi-signature schemes can even prevent you from a bad escrow, as long as no two parties are colluding. In general the need for consumer protection mechanisms is of course already a failing of the justice system. Virtually every case where consumer protection is useful is covered by existing laws and shouldn't require anything from the payme…

But if you are going to introduce a third-party anyway, why use crypto?

because even with a third party, it's still much cheaper, secure, and private.

Re: Facebook Libra Is Architecturally Unsound

#34

Post by sedeki »

marcoseliziario wrote: post #27
wongarsu wrote: post #23

Earlier quoted context omitted.

In general the answer for consumer protection is to use any escrow service. Multi-signature schemes can even prevent you from a bad escrow, as long as no two parties are colluding. In general the need for consumer protection mechanisms is of course already a failing of the justice system. Virtually every case where consumer protection is useful is covered by existing laws and shouldn't require anything from the payme…

But if you are going to introduce a third-party anyway, why use crypto?

Because of crypto’s ”monetary policy”. And the point is you are not obligated to use a third party.

Re: Facebook Libra Is Architecturally Unsound

#35

Post by chrisweekly »

basicplus2 wrote: post #2

> " It is a pivot from a company whose advertising business is so embroiled in scandal and corruption that it has no choice but to try to diversify into payments and credit scoring to survive. The clear long term goal is to act as a data broker and mediate consumers access to credit based on their private social media data. This is such an utterly terrifying and dystopian story that should cause more alarm than it does."

^ This. The rest is moot.

Re: Facebook Libra Is Architecturally Unsound

#36

Post by dharma1 »

Aside from perhaps lack of developers / competency, I wonder why central banks don't issue digital currencies themselves?

Mark Carney (current Bank of England governor) has been warming up to the idea - https://www.theguardian.com/business/2019/jun/20/mark-carney...

Not sure if that because he is setting himself up for a new job at Libra after his BoE gig finishes in 2 months, or is there merit to the idea and appetite from central bankers?

Re: Facebook Libra Is Architecturally Unsound

#37

Post by pron »

The answer to the question implied in the article -- why does Libra make such unjustified design decisions -- is simple. Some people have become enamored with blockchain despite it having almost no good use cases, and this certainly isn't one. It seems like a classic example of focusing on the technology rather than on the problem.

--

Regardless of the other, far more important sections of this article, I find the section about the programming language misleading. Programming language theory does not study the quality of programming languages or their suitability to certain tasks. It is simply outside the purview of the discipline. PLT does not have any tools whatsoever to determine which language is more or less suitable and it is not interested in that question. The theory studies the properties of formal systems and the internal implications of their design. Much like mathematics can deduce from the Peano axioms that 10 > 5, but it says absolutely nothing about whether 10 is "better" than 5 because the answer to that depends on context (are we talking cookies or tumors?) that is simply outside the purview of mathematics. Similarly, PLT can say whether a certain formal system is sound or not, but it says nothing whatsoever about whether soundness is "good", "bad" or neutral, and certainly not how good or bad it is. Of course, programming language theorists have opinions on the matter, but those opinions are not supported by the theory.

Also, given the other glaring flaws, there is nothing to suggest that a formal definition of the programming language would improve matters in any perceptible way. After all, we do entrust the world's monetary system, and sometimes even our lives, to software written in programming languages that don't have a formal definition. As someone who studies the issue of software correctness, a formal definition of a programming language is certainly of interest to theorists, but it has not been shown to be a particularly worthwhile means of increasing correctness.

Re: Facebook Libra Is Architecturally Unsound

#38

Post by K0SM0S »

no1youknowz wrote: post #17
snarf21 wrote: post #6

There have been a lot of posts and responses about Libra. The core of it is that FB wants to be an unregulated bank. That is all this whole thing is about. Given the current (and post 2020 political realities?), it is no wonder all the established payment companies tapped out. This effort will be delayed until their is a government structure willing to look the other way. It will also be really interesting to see how…

As time goes on, it's increasingly looking likely that it won't be rolled out in Europe[0]. > "Libra is not welcome on European soil," French Economy Minister Bruno Le Maire told reporters the sidelines of the annual meetings of the World Bank and International Monetary Fund > "Do we want to put monetary policy in the hands of a private company like Facebook? My answer is clearly no," he said [0]: https://www.busines…

Worth noting however that Facebook could register some entity as a bank and operate the Libra service from there (even sharing offices with Fb, that's not illegal afaik).

They would fall under all possible kinds and manners of banking regulation, but it's viable; many companies originally outside of the fin sector are offering financial services now (notably Orange, the French leading and historical ISP, formerly a state-owned public company).

This would likely result in some tiny fee when crossing in/out of the traditional banking sector (from/to Libra and some regular account or merchant paying system), and maybe when entering/leaving Europe, but would remain largely free for Libra transactions within the EU.

Which, as I see it, is the purpose of said regulation: to protect EU citizens (account insurance up to €100K, rights to certain features like free inter-bank transfers within the EU, etc). Libra unregulated would basically fall to Facebook's unilateral rules for protection and features, and that just isn't acceptable to the EU.

Re: Facebook Libra Is Architecturally Unsound

#39

Post by robjan »

dharma1 wrote: post #36

Aside from perhaps lack of developers / competency, I wonder why central banks don't issue digital currencies themselves? Mark Carney (current Bank of England governor) has been warming up to the idea - https://www.theguardian.com/business/2019/jun/20/mark-carney... Not sure if that because he is setting himself up for a new job at Libra after his BoE gig finishes in 2 months, or is there merit to the idea and appeti…

Aren't all currencies digital these days? When I receive my salary it's just an entry in a digital ledger and when I buy something it's just another entry.

Re: Facebook Libra Is Architecturally Unsound

#40

Post by jyu »

HashThis wrote: post #31

This ignores the big problems in Facebook's Libra: 1) It charges ECONOMIC RENTS. The ethical asset backed and currency backed stable coin needs to pass profits from revenue generating assets to the currency holder. The member companies should only take a tiny slice of the profits. This is the MASSIVE problem. 2) Libra is designed that ECONOMIC RENTS will be sharecropped and sent to the member companies. This will be…

Economic rents is an issue, but how else would you incentivize member companies to join into Libra in the first place?

The proven business models are "evil" to some population: 1. Charge fees (like paypal, stripe, bank ach / wires), 2. Collect interest via economic rents, or 3. Capture and monetize user data ala Facebook.

Can you think of a better way to jumpstart a new monetary network?

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