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Facebook Libra Is Architecturally Unsound

stephendiehl.com

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Re: Facebook Libra Is Architecturally Unsound

#101

Post by Nursie »

rusk wrote: post #74
Nursie wrote: post #67

Earlier quoted context omitted.

> but I think, with traditional money exchange the reliance is on regulatory and legal enforcement, rather than making the technology itself watertight, A lot of money and research has gone into this, and the tech is being tightened up all the time. > which increases the risk profile, and thus cost. Except the cost isn't actually higher. > You can do this in traditional approaches because you just pass on these costs…

> A lot of money and research has gone into this, and the tech is being tightened up all the time. Yeah, but it's not being deployed at consumer level, nor are the savings being passed on. > A much more expensive and more risky way to do basically anything Risky, yeah. Like any new technology. But transaction cost is cheaper. Sorry, I didn't mean to get involved in some holy war. I can see there's people with a lot v…

> Yeah, but it's not being deployed at consumer level, nor are the savings being passed on.

It absolutely is, not sure where you're getting your ideas from here.

> Risky, yeah. Like any new technology. But transaction cost is cheaper.

It's not risky because it's new technology, it's risky because you've passed all the risk to the end user and their opsec. The cost per transaction of something like the VISA network is utterly tiny compared to most cryptocurrency transactions, particularly if you factor in the externalities (mining) and it's a pretty small cost to the merchant as well in places where regulation has been put in place (i.e. not the US). To the consumer it's free. See also bank transfers in most advanced economies.

> Just pointing out the obvious.

You're not pointing out anything that's actually true though.

Re: Facebook Libra Is Architecturally Unsound

#102

Post by ma2rten »

m12k wrote: post #96

I've been thinking and it actually makes a lot of sense for new ways to be created to transfer money and pay for things (though I'm highly skeptical of having it operated by Facebook and of the ad-hoc pump-and-dump-prone and whitewashing-and-tax-avoidance-friendly properties of cryptocurrencies). But when you think about it, it's insane that transferring money is something credit cards and payment processors can regu…

Like a debit card?

Re: Facebook Libra Is Architecturally Unsound

#103

Post by Jeff_Brown »

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…

> Let's assume Facebook solves scaling ... > Move has not been battle-tested yet so I would at > least let it get finished and deployed before claiming ... > > Libra’s cryptography engineering is unsound. ... > Facebook, like many other companies, can pay for audits > and formal verification of crypto libraries. As Libra > will not be production-ready for years (it isn't live > today!), I think we can give Facebook the benefit of > the doubt on this.

That's a lot of benefit of the doubt! There are situations in which such generosity is warranted, but this is not one of them. "Move fast and break the financial system" is a philosophy we've seen play out before. It's bad.

(I find particularly strange the idea that we should give them the benefit of the doubt because they're a huge rich company.)

> > Libra has no transaction privacy. ... > This means the same level of anonymity as > provided by Bitcoin.

Diehls' point regarding privacy is not that pseudonimity is inherently bad. It seemed to be that pseudonymous networks (like Libra or Blockchain) do not satisfy US or EU legal requirements.

> I want to conclude by saying that blockchain and > cryptocurrency are knee-jerk hated by Hacker News,

Ad-hominem arguments are unhelpful.

Re: Facebook Libra Is Architecturally Unsound

#104

Post by kragen »

matthewdgreen wrote: post #56

I don't disagree with the article per se, but I think many technologists are missing the forest for the trees when it comes to the motivations here. Or perhaps they're being charitable and are evaluating Libra on purely on its stated motivations rather than the ulterior motive that Libra can't name out loud. For example, take this quote: "The possibility that a Libra node run by Mastercard or Andressen Horrowitz woul…

> The possibility that a Libra node run by Mastercard or Andressen Horowitz would suddenly start running malicious code is such a bizarre scenario

It doesn't seem like a bizarre scenario at all. Consider:

- Real-time control system nodes in Iran's nuclear energy project suddenly started running malicious code, destroying a large number of their centrifuges.

- Crypto AG cipher machines sold to embassies around the world were always running malicious code (or perhaps malicious circuits), giving the US a major advantage in 20th-century diplomacy.

- Google's and Facebook's data centers suddenly started running malicious code as part of the PRISM attack carried out by the NSA.

- Municipalities regularly pay ransomware ransoms because their computers have suddenly started running malicious code.

- Numerous nonprofits organizing conferences have discovered to their dismay that the code running on Paypal's servers is malicious to them, opportunistically freezing their accounts because they have recently received a lot of payments.

- We saw an article last week about how WeChat runs malicious code in their chat application to censor politically controversial images.

- What was the name of that popular NPM package for building pipelines that suddenly started running malicious code on everybody's servers looking for Bitcoin wallets? Was that this year or last year?

I don't think it's at all far-fetched to suggest that if Mastercard or Andreessen Horowitz is in a position to decide how much of other people's money they're entitled to, they might decide that the answer is "all of it". Paypal and Google do this on a regular basis. Here in Argentina, the banking system decided that the answer was "75% of it" in 2001, with respect to dollars; in the US, the Federal Government did precisely the same thing in 1933 with gold.

"Regulators" and "courts" and "legislatures" are indeed among the parties that might decide to confiscate the holdings of participants in some kind of financial system, using various rationalizations. (And that's why "simply enforcing protocol integrity…through legal means" is a less effective solution, as you say.) But they are far from the only ones.

Still, it seems like if that's Fecebutt's motivation, it would just back Bitcoin.

Re: Facebook Libra Is Architecturally Unsound

#105

Post by kadoban »

harikb wrote: post #98
__MatrixMan__ wrote: post #62

Earlier quoted context omitted.

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.

There are generally 3 kinds of fraud 1. A scammer cheating someone out of their life savings through social engineering 2. A central bank "unjustly" inflating currency and giving the newly printed money to specific industry/people etc 3. A person paying for merchandise with a stolen credit card or refusing payment after services/good is delivered. Fiat solves 1 and 3 (recovery) does not think 2 is a problem. Crypto s…

Who says it is meant for solving case 1? I have literally never heard that as a selling point, and I hung around the crypto crowd for quite a while.

Re: Facebook Libra Is Architecturally Unsound

#106

Post by tromp »

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…

> savings account as many offer 1.8% interest these days

I don't know where you live but I doubt it's western Europe. In the Netherlands for example, the highest interest rate available [1] is a lousy 0.2%.

[1] https://www.spaarrente.nl/

Re: Facebook Libra Is Architecturally Unsound

#107

Post by ukj »

K0SM0S wrote: post #65
pron wrote: post #37

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 se…

If you may spare a minute, I'd like to know your opinion on mission-critical software in dangerous-prone contexts (such as avionics, life support, even just economically for permanently-written "ROM" software, etc). Formal methods seem required in such projects, but your final paragraph seems to imply the formalism isn't key to end quality? (my agenda, for transparency: I want to send SOC's in space on tiny RISC-V sa…

Beware of bugs in the above code; I have only proved it correct, not tried it. --Donald Knuth

On the one hand we have the management mantra: if you can't measure it you can't improve it. On the other hand we have Goodhart's law.

And so 'correctness', 'safety', 'quality' (or absence thereof) are fluid concepts that can never be formalised precisely.

Language/logic sucks, but it's all we've got.

Re: Facebook Libra Is Architecturally Unsound

#108

Post by buboard »

robbya wrote: post #97
matthewdgreen wrote: post #56

I don't disagree with the article per se, but I think many technologists are missing the forest for the trees when it comes to the motivations here. Or perhaps they're being charitable and are evaluating Libra on purely on its stated motivations rather than the ulterior motive that Libra can't name out loud. For example, take this quote: "The possibility that a Libra node run by Mastercard or Andressen Horrowitz woul…

> The plan is to build a ledger that no single party (or coalition of parties in a single legal jurisdiction) has the capacity to edit or alter, and to make such alterations so technically challenging that it's beyond the capacity of any single court or legislature to do so. I'm not seeing why they need a new cryptocurrency for this. If you grow Bitcoin (or any other existing cryptocurrency) to be "too big to fail",…

I think the idea is to have a US-controlled currency before some chinese-controlled currency catches on , particularly in Africa

Re: Facebook Libra Is Architecturally Unsound

#109

Post by syllable_studio »

pron wrote: post #37

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 se…

Regarding your claim that blockchain has almost no good use cases, I see news every week which disagrees.

Here is the first article I could find from just today which shows a great use case.

Coca Cola is expanding their blockchain trial project to a $21 billion-a-year supply chain because they found very significant savings.

https://www.coindesk.com/coca-cola-supply-chain-firm-to-expa...

Re: Facebook Libra Is Architecturally Unsound

#110

Post by wongarsu »

scott_s wrote: post #44
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…

I'm confused by your last paragraph. How does the existence of laws that protect consumers actually protect consumers if the payment systems we use don't allow reversals?

If an ebay seller delivers me a faulty product I can sue them for not delivering what I payed for and when I win the court orders them to pay the money back (plus my expenses). If they don't pay I can go after their assets.

It's basically the same how a business would recover money from a bad supplier. With small claims court it's even somewhat efficient for small sums, but of course still orders of magnitude more work than a credit card dispute.

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