Facebook Libra Is Architecturally Unsound • Hacker News Board

Re: Facebook Libra Is Architecturally Unsound

#81

Post by K0SM0S » Tue, Nov 05, 2019, 2:45 PM UTC

davidgerard wrote: post #57

K0SM0S wrote: post #38

Earlier quoted context omitted.

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 s…

So far as I can tell, (a) Calibra will be a "custodial wallet", i.e. it'll hold the Libra tokens and present to the user a bit like PayPal; (b) they're talking up a Libra-per-currency, rather than the synthetic basket; (c) they're actively at work developing Calibra, in some sense. To me, it's increasingly looking like they're heading for Calibra as PayPal-but-it's-Facebook. This is a more sane and comprehensible bus…

Indeed, and thanks for the info. Makes sense, definitely.

Basically just a layer of abstraction like in-game currency in virtual worlds, only this one has some 2.2b 'players' so the in-world PayPal is one hell of an easy way to transfer money?

That's much less sexy from a technological and social standpoint, but it might just be the simplest way to both reach a solution and seduce just enough blockchain lovers for the 'buzz' (best fueled by Controvery®).

When you think about it, people use items as secondary currency to exchange real-world money since forever and a day. E.g casino chips (physical), in-game assets ("virtual" but really we just mean software i.e. codified text, like we'd write score cards in tabletop RPG, or... computer punched cards). Colibra, fundamentally, would be just that...

So much ado about nothing if it turns out to be such a custodial abstraction. Now I expect Colibra lootboxes and gift shops in WhatsApp and Instagram! — once you've seen people spend hundreds on pixels in games, cosmetic shaders to embellish their avatar, you know there's no limit to human commerce. Probably Facebook's endgame with Libra if you ask me.

Re: Facebook Libra Is Architecturally Unsound

#82

Post by dathinab » Tue, Nov 05, 2019, 2:47 PM UTC

I think the start problem of Libra was to go with the ideas that: 1. One globally _uniform_ payment system is needed/wanted/makes sense. (It doesn't make sense due to regulation, is not needed, as long as a non uniform system still can make cross area transactions reasonable fast. It is not wanted (by some) as it put consumers at additional risk wrt. data protection and international conflicts). 2. Blockchain makes sense and "fixes everything", somehow, magically

Sure the current payment systems have a lot of problems. But many come from complicated regulations which makes building such systems harder not incompetent bank IT. I fear a single company can't do to much here. Especially because banking software has to be reliable from the get-to-go.

Re: Facebook Libra Is Architecturally Unsound

#83

Post by gridlockd » Tue, Nov 05, 2019, 2:50 PM UTC

hocuspocus wrote: post #75

jyu wrote: post #40

Earlier quoted context omitted.

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?

Laws and regulations in Europe have managed to make wire transfers and card payments cheap and efficient for both consumers and businesses.

It's not that cheap:

https://en.wikipedia.org/wiki/Electronic_cash#Costs

You may think 0.3% isn't much, but with razor-thin profit margins (e.g. groceries) it does make a difference.

Re: Facebook Libra Is Architecturally Unsound

#84

Post by semiotagonal » Tue, Nov 05, 2019, 2:50 PM UTC

__MatrixMan__ wrote: post #62

Retric wrote: post #47

Earlier quoted context omitted.

Yea, having third parties capable of reversing transactions has an associated cost. But, it’s Billions relative to fraud, so Billions ends up being cheap.

Yeah, for now it's all we have, so I guess the juice is worth the squeeze. But in a world where our cryptocurrencies are a bit more mature I think we can stop being reactive by reversing transactions and start being preventative by using their structure to build chains and webs of trust that make fraud harder to commit up front, rather than just making it harder to get away with.

The amounts to giving the advantage to fraudsters until something that doesn't exist is invented.

Blockchains are irrevocable and unalterable, which removes two useful tools (reversing and changing transactions), and replaces them with nothing workable.

Re: Facebook Libra Is Architecturally Unsound

#85

Post by z3t4 » Tue, Nov 05, 2019, 2:50 PM UTC

When you make a oversea money transaction the banks take up to 20%. For every electronic transaction a bunch of middle-men takes a percentage. Maybe there need to be a payout for those that keep the system running? Like in Bitcoin mining ... But the thing is, transactions can be highly automated, with almost zero marginal cost (the cost of making yet a transaction when you already process millions per second). So the transaction fees for the middle-men is almost pure profit after a certain level. So there will be efforts to make sure any joint solution fails.

Re: Facebook Libra Is Architecturally Unsound

#86

Post by pron » Tue, Nov 05, 2019, 2:52 PM UTC

AlphaWeaver wrote: post #76

pron wrote: post #73

Earlier quoted context omitted.

> but your final paragraph seems to imply the formalism isn't key to end quality? That's not what I said. I said that merely creating a verified formal specification of a language is not in itself a good path to increasing correctness, and I wouldn't focus on that as a significant cause for concern given all others. But even when you use formal methods in the development of your software -- and I'm certainly a propon…

> Security is defined with respect to certain threats, and blockchain is rarely the most secure with respect to the threats in a monetary system. Wow, this is a great way to frame this! What do you see as the largest threats to the effective operation of a monetary system?

I think this question is best answered by economists, and I'm certainly not one. But blockchain does seem to interfere with some of the best regulatory defenses against economic disasters.

Re: Facebook Libra Is Architecturally Unsound

#87

Post by leg100 » Tue, Nov 05, 2019, 2:52 PM UTC

arcticbull wrote: post #71

clarkmoody wrote: post #58

Earlier quoted context omitted.

The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale: 1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners. 2. The American system of banking regulations introduces systemic risk into the financial sector. Sure, if you can prove that your transaction was fra…

I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out. Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as yo…

I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.

Re: Facebook Libra Is Architecturally Unsound

#88

Post by reportgunner » Tue, Nov 05, 2019, 2:53 PM UTC

sbmassey wrote: post #45

seibelj wrote: post #16

Typical blockchain and Libra hatchet job, except this time under the veneer of someone with software skills. I will make some counterpoints. > Byzantine fault tolerance is a fairly niche area of distributed systems research that concerns the ability of a networked system to endure arbitrary failures of its components while taking corrective actions critical to the system’s operation. Networks that are byzantine toler…

What are some good websites for discussing technical aspects of blockchain?

Check out Andreas Antonopoulos

https://aantonop.com/books/

Re: Facebook Libra Is Architecturally Unsound

#89

Post by glofish » Tue, Nov 05, 2019, 2:54 PM UTC

arcticbull wrote: post #71

clarkmoody wrote: post #58

Earlier quoted context omitted.

The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale: 1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners. 2. The American system of banking regulations introduces systemic risk into the financial sector. Sure, if you can prove that your transaction was fra…

I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out. Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as yo…

Excellent point -

Low inflation is a good thing - it is a sign of a properly functioning economy. A dollar today should be worth more than a dollar tomorrow.

Too much inflation is not a good thing is usually sign of systemic failures of trust in a system.

The two stages are usually conflated in many discussions.

Re: Facebook Libra Is Architecturally Unsound

#90

Post by glofish » Tue, Nov 05, 2019, 2:55 PM UTC

leg100 wrote: post #87

arcticbull wrote: post #71

Earlier quoted context omitted.

I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out. Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as yo…

I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.

The answer is simple - trivial even.

As I mentioned before a dollar today should be worth more than a dollar next year since, if you are smart, you can make that dollar work for you for a whole year.

Hence the inflation.