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Facebook Libra Is Architecturally Unsound

stephendiehl.com

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Re: Facebook Libra Is Architecturally Unsound

#281

Post by kragen »

the_gastropod wrote: post #279
kragen wrote: post #261

Earlier quoted context omitted.

Anyone who invests in a stock is taking a significant risk of losing 100% of their investment, a risk on the order of 5% per year. Anyone who invests in gold is used to seeing it fluctuate by a factor of 2 or 3 most years. Yet not only are these popular investments — they're better investments than dollars are over all but the shortest time periods. Anyone who invested a large amount of money in stocks or gold in 197…

You're moving the goalposts. Are we comparing BTC to currency or investments ? People invest in things, generally understanding the risk. Risk is not all equal. BTC is far riskier (more volatile) than virtually all publicly traded stocks or commodities. See again the very recent 85% drop in 1 year. And let's be clear: BTC is not comparable to a stock. Company stock is valuable because it gives you ownership (and ther…

> Gold is worth less today than it was in 1979.

In 1979 the price range of gold was $226 to $512 per troy ounce, a slightly higher level of volatility than the Bitcoin level you describe with a bit of exaggeration as "far riskier than virtually all…commodities." The gold price today is $1485 per troy ounce.

I'd like to caution the people who have downvoted your other comment that there is a plausible reading that is sufficiently charitable to make your new comment not actually false. Namely, although if you measure it in dollars, it's "worth" 3 to 6 times more, even over the timespan you cherry-picked, the dollar has lost more than a factor of 6 since 1979, so gold really is worth less today than it was then. The attraction of gold — just as with Bitcoin — is precisely that it doesn't have a secular decline in value built in, so it's a good vehicle for preserving wealth through periods of instability, even though it doesn't generate a return in the way that stocks and bonds do.

Re: Facebook Libra Is Architecturally Unsound

#282

Post by littlestymaar »

j_shi wrote: post #247
littlestymaar wrote: post #231

Earlier quoted context omitted.

I've always been puzzled when I heard about shops accepting bitcoin: how to they deal with double spending?

Wait for enough confirmations where the payment becomes unlikely to reverse, which of course takes time and that's the more practical blocker for regular shops to accept Bitcoin.

They aren't doing that, in places I've seen, they just take your payment and let you go away with that. (I've never paid myself, but I've seen other customers do so)

If it's raw bitcoin, they couldn't even be sure that the transaction is a valid one (that the wallet has the funds in the first place, not even talking about double spending). I suspect they use some kind of third party like Coinbase, and that there aren't really using bitcoin at all (and just use Coinbase as a bank) but I'm not sure.

Re: Facebook Libra Is Architecturally Unsound

#283

Post by miguelmota »

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.

That's by design. Cryptocurrencies are meant to be used like cash. Cash doesn't have consumer protection mechanisms.

Re: Facebook Libra Is Architecturally Unsound

#284

Post by dmoy »

kragen wrote: post #254
dmoy wrote: post #248

Earlier quoted context omitted.

Certain things outpace inflation, yes. Certain things are drastically cheaper. That's why we use an inflation measure that's sort of an aggregate, not pinned to one or two commodities. You don't spend 100% of your money on oil and gold. Oil now is 3x more expensive even after a more average inflation of ~4% compared to the bottom of 1973 (though in the mid 90s it wasn't so bad). Energy as a whole though, is not 3x mo…

There isn't an objectively correct basket of goods that is obviously the correct deflator to use, which seems to be a significant underlying assumption of your line of reasoning. The debate about which ones are the important ones to include in statistics like the US BLS CPI is a politically charged debate resolved in part by political means, not purely by the disinterested pursuit of truth. The CPI in particular emin…

> If you're right about the cost of electricity "staying the same" — by which I assume you mean that, in the US, it increases in line with the BLS CPI?

Yes I meant real price, not nominal.

US electricity is somewhere around a third from coal.

I would be interested in a study showing a 15-30x increase in similar-quality construction materials.

The fixation on gold makes no sense to me. It's just a commodity, not a super useful one either. Gold's price floats wildly based on people's fears. It's not like everything became 4x more expensive between 2000 and 2015.

Re: Facebook Libra Is Architecturally Unsound

#285

Post by FridgeSeal »

kragen wrote: post #246
the_gastropod wrote: post #241

Earlier quoted context omitted.

> the US dollar has lost 96% of its value since the end of the gold standard in 1973 And Bitcoin lost over 90% of its value in just under 2 years. Where are you going with this, council?

> And Bitcoin lost over 90% of its value in just under 2 years. When do you mean? Right now Bitcoin is US$9400, which is almost exactly half of its all-time high value of US$19891 (in 2017). There are several times it has lost more than half of its value, but I don't remember a time when it has lost 90% of its value. The reason the dollar inflates and never deflates is that it's designed to inflate. On purpose. The u…

> we are all, for better or worse, participating in a radical large-scale experiment to test this hypothesis.

Well if you have a suitably sound and accurate economic model that you’ve been secreting away, let us know and save us the time. Additionally, it’s not like it’s been exclusively Keynesian economics since the 70’s: there’s been a huge amount of neoliberal economics going around-do you not remember the popularity of austerity measures during the 2008 GFC?

To me, bitcoin and co’s dogged insistence on the evils of inflation feels more like someone along the way had some personal issue with inflation alone and designed something to counteract it, plausibly at the expense of numerous other economic factors.

Re: Facebook Libra Is Architecturally Unsound

#286

Post by lazzlazzlazz »

The article is so confused about the underlying reasons for choosing a decentralized (among Libra members) ledger that it boggles the mind.

It's a legal move. Not a technical one.

Regarding privacy — it seemed obvious to me that privacy solutions for Libra would be build on top of Libra (the so-called "Layer 2") and not within the core protocol.

Stephen's critique here is bizarre and lacks context.

Re: Facebook Libra Is Architecturally Unsound

#287

Post by PeterisP »

nybble41 wrote: post #255
pyrale wrote: post #200

Earlier quoted context omitted.

Basically, scams. The ability to block a planned payment or ask your bank to chargeback is one of the keys to trust in online economy. If our banking system had used something like bitcoin to implement online transactions, odds are that e-business would have had much less successs and much higher barrier to entry.

Given a system with irreversible transactions you can always add structure on top to support escrow, chargebacks, or whatever other protection mechanisms you deem prudent. It doesn't work so well the other way around.

Protection from scams requires that a malicious actor with full technical control of some account is still unable to make irreversible transactions by opting out of whatever structure supports escrow, chargebacks, etc; so either those mechanisms (conditional reversibility, with technical controls defining a reasonable regime of when reversals will be possible and when not) are built in the core system and aren't optional, or the system doesn't have a sufficiently usable reversibility because all the really large scams will simply avoid that "structure on top".

The other alternative, of course, is someone taking on full legal liability for transactions that can't be secured technically. If Facebook would offer Libra to consumers in e.g. UK, then all that "transactions are technically irreversible" means is that Facebook would be required to "reverse" the transaction to customer while being unable to recover the funds from the beneficiary - and if they can afford to do that, that's their choice to make.

Re: Facebook Libra Is Architecturally Unsound

#288

Post by PeterisP »

Jeff_Brown wrote: post #69
dadarepublic wrote: post #54

Earlier quoted context omitted.

Anyone saying blanket "we don't need consumer protection mechanisms" because it's a "failing" of something or the other must be taking the piss. As a parent of children, consumer protections are overall a "good thing" to help prevent bad actors from doing harm. It goes for any space that can do harm to you or your family in any way. It's why you have exchanges like Gemini in place that seek to be the "most regulated"…

I think it's weird how family gets invoked to change the moral gravity of an issue. It suggests orphaned children, for instance, should care less about humanity.

It's not about the moral gravity but about an illustrative example of a particular category of people who have access to devices where buying stuff is possible - children. Our marketplace has at least some customers that clearly are unable to protect themselves and need protection, e.g. these children. This places some contraints on the properties that this marketplace must have - e.g. reversals must be possible without undue burden. And this places some limitations on what technologies can/can't provide these properties and thus would/wouldn't be suitable.

Re: Facebook Libra Is Architecturally Unsound

#289

Post by arcticbull »

stale2002 wrote: post #277
arcticbull wrote: post #264

Earlier quoted context omitted.

That’s not a reason. Give me a justification for why you think money should be worth more later. Because it would be sweet for you isn’t really compelling. I gave you a reason for inflation and your counter was “because I would be rich” - see if you can make a better case and if not, maybe reconsider your position.

> Give me a justification for why you think money should be worth more later My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions". I believe it is people's right to choose which money system that they want, and you should not have the right to prevent other people's voluntary choice to use a different money system. I am jus…

> My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions".

You're intentionally not answering my question which is: explain to me what benefit to society could potentially arise from money being worth more over time?

I'm not saying you can't do it I'm asking you why. It seems you and everyone else can't point to anything other than making yourselves wealthy.

Re: Facebook Libra Is Architecturally Unsound

#290

Post by linuxftw »

arcticbull wrote: post #259
linuxftw wrote: post #220

Earlier quoted context omitted.

> It’s theft like taxation is theft: it’s not. Taxation is also theft. > If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of larg…

> Taxation is also theft. Aw you’re one of those! It’s all starting to make sense. https://www.newyorker.com/humor/daily-shouts/l-p-d-libertari... I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up. If you don’t want to pay taxes there…

> I sure hope you don’t need the army, police, schools, fire, water, roads, air and so on. Most adults came to realize at some point that some things need to be provided as a group, and they’re not free. For those everyone has to pony up.

I'd be willing to pay for some of those. Lots of people have an inability to separate 'goods and services required for society' and 'government.'

Society can have all of those things, there need not be a government and there need not be taxes.

> paying taxes is social contact

This is just an empty phrase used as propaganda. There's no such thing as a 'social contract.' Taxes are taken under threat of physical harm and death, always have been.

> To keep it stable I’d make more dollars

This has the presumption that you, or someone should be in charge of what money is worth. That should not be a function of the government.

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