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Facebook Libra Is Architecturally Unsound

stephendiehl.com

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Re: Facebook Libra Is Architecturally Unsound

#301

Post by Acrobatic_Road »

Retric wrote: post #238
Acrobatic_Road wrote: post #197

Earlier quoted context omitted.

If you use a smart contract wallet you can actually protect yourself from losing all your money even if someone gets your private key. You can set a withdrawal limit of say, $50 and you can set a few recovery addresses (of friends, family or other personal wallets). So if I have $10,000 in my ethereum wallet and I post my private key in every forum and every chatroom on the internet then the most I lose is $50. Befor…

The cost of doing that is making the wallet largely useless for purchasing anything over 50$. The independent ability to send all your money to a recovery address is a new security risk. Further, you need to notice the issue which means you could be our far more than 50$ unless you happen to be checking how much is in the wallet constantly. So, this is strictly worse than using a credit card.

>The cost of doing that is making the wallet largely useless for purchasing anything over 50$.

I don't think I ever spend that much in a single day though. The limit will differ from person to person.

>The independent ability to send all your money to a recovery address is a new security risk.

It's not new and it's not a risk. You could always send all your money to another address. And the recovery addresses are meant to be trusted. I could send my money to a secondary wallet sitting in a safe or to a trusted family member. That isn't a risk.

>Further, you need to notice the issue which means you could be our far more than 50$ unless you happen to be checking how much is in the wallet constantly.

Your balance is printed in big letters whenever you open the wallet. It's hard to not notice really. There's also these things called automatic notifications, not difficult to set up.

>So, this is strictly worse than using a credit card.

But this is supposed to replace cash not credit cards. It is objectively better than cash in terms of consumer protections.

Re: Facebook Libra Is Architecturally Unsound

#302

Post by nybble41 »

PeterisP wrote: post #300
nybble41 wrote: post #296

Earlier quoted context omitted.

You're asking way too much. It's not as if the current system actively prevents you from opting out of all the safety measures and, say, irreversibly handing cash (or something else of value) directly to a scammer; nor should it. Reversible transactions come with costs, especially when the other side of the transaction is not reversible. Chargeback fraud, for example, is a big problem for merchants, and can only occu…

There's a bunch of "should" in this argument. I won't debate whether it should have liability, but I'll point out that no matter how it ought to be, according the law of the land at least in EU any payment service provider inavoidably has liability in certain cases e.g. when your account has been hacked; if they are unable to reverse a transaction that wasn't authorised by me but by someone else, well, that's their p…

This thread was originally about the social and technical issues of scams in the context of irreversible ledgers, not legal liability. As far as that goes I am in full agreement with you: Facebook and other Libra consortium members are likely to face quite a bit of legal heat from various jurisdictions desiring them to block or reverse transactions and willing to hold them accountable for others' actions on the network. In my opinion the only sane way to introduce something like Libra would have been to give up control entirely, along with the ties to fiat currencies, and make it a permissionless, decentralized system like Bitcoin. Exchanges in a decentralized system have various regulations applied to them but in the end they aren't inherently in the position of transmitting money on behalf of their users; nor are they strictly necessary for the network to function. Libra, on the other hand, will be seen as a payment system controlled by Facebook and the other consortium members, and Facebook itself as a money transmitter, not a mere buyer and seller of coins.

Personally I find it much more interesting and productive to debate what the law ought to be rather than what it is, but as a practical matter Facebook will obviously need to take the various injustices of the jurisdictions in which they intend to operate into account—and the centralized design of Libra doesn't seem very well suited to deal with that reality.

Re: Facebook Libra Is Architecturally Unsound

#303

Post by syllable_studio »

syllable_studio wrote: post #109
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...

Wow, I'm surprised by the downvotes.

There are more details in this BI article mentioned in the coindesk one. I would have linked to it directly, but they have a paywall. https://www.businessinsider.com/coca-cola-bottlers-sap-scali...

As the article explains, they're expanding their test because it's demonstrated that they could reduce order-reconciliation duration from 50 days to just a few days. That's a big deal for a $21 billion-a-year supply chain.

So, for those of you who are so sure that blockchain is pointless end-of-story, it seems like you're not taking into account how messy and expensive it is to manage data and legal contracts with many small business entities throughout supply chains. But I'll read more into the links you sent with your arguments, thanks for that.

Re: Facebook Libra Is Architecturally Unsound

#305

Post by arcticbull »

stale2002 wrote: post #297
arcticbull wrote: post #289

Earlier quoted context omitted.

> 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 othe…

The benefit is that people are allowed to use money of their own choosing. Freedom is something that many people care about and value. The benefit is also that different people want different things in their own money system, and a diversity of things and monetary systems is good, merely because of the money systems being different. There is value in having differing money systems with different properties (merely be…

Different isn’t always better.

Re: Facebook Libra Is Architecturally Unsound

#306

Post by kragen »

dmoy wrote: post #284
kragen wrote: post #254

Earlier quoted context omitted.

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 sup…

> Yes I meant real price, not nominal.

We were debating precisely which data series is best for computing the "real price" from the nominal prices. But it seems you take me for a fool and beg the question.

Re: Facebook Libra Is Architecturally Unsound

#307

Post by not_kurt_godel »

kragen wrote: post #224
rossdavidh wrote: post #218

Earlier quoted context omitted.

I see your point, but I think there are plenty of examples of people losing their Bitcoins through analogous nefarious activities (e.g. MtGox). For an expert in cybersecurity perhaps Bitcoin is safer, but for the average non-technical person (in the U.S.) it is probably _more_ likely to get your money taken by a thief than if you had it in fiat currency in a bank, though of course either one is possible. Again, this…

I think it's true that "for the average non-technical person (in the U.S.) it is probably more likely to get your money taken by a thief than if you had it in fiat currency in a bank." But I think you're locating the problem in the wrong part of the conjunction: the reason fiat currency in a US bank is more secure is because US banks are fairly secure, not because the fiat currency is secure. It seems like some sort…

> But I think you're locating the problem in the wrong part of the conjunction: the reason fiat currency in a US bank is more secure is because US banks are fairly secure, not because the fiat currency is secure.

Fiat currency is secure in US banks because there is vast institutional protection for banks such as FDIC insurance and extremely strict laws against bank theft, the Federal Reserve, and so on. There are no such institutional protections for Bitcoin and there never really can be, by design.

> If you lent your car to a random French PHP programmer in Japan and he came back without the car, you wouldn't blame that on cars in general being an "unsafe" investment.

Sure I would - if lending a car to strangers was an effective necessity to use one in the same way using an exchange is an effective necessity to use Bitcoin, and there were "alternative cars" (aka fiat currency) that required no such lending to strangers.

Re: Facebook Libra Is Architecturally Unsound

#308

Post by arcticbull »

linuxftw wrote: post #290
arcticbull wrote: post #259

Earlier quoted context omitted.

> 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 thing…

> 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.

Tell that to the judge haha

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

Yeah no, not really.

> 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.

You’ve again completely ignored my point which is that your share of the value of the economy if the dollars in the system remain constant goes up by inaction. Maintaining a constant Value of the dollar as you yourself suggested requires active management. Once you agree on that we’re just chatting degrees.

Re: Facebook Libra Is Architecturally Unsound

#309

Post by Nursie »

tomp wrote: post #49
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…

I'm no fan of FB or Libra, but I don't get it, how is that any worse than existing system? Banks charge huge interest rents and pass only a tiny (or zero) on to customers, credit cards charge even bigger interest rates in addition to fees that make all our products more expensive, ...

> in addition to fees that make all our products more expensive

There's a decent argument to be had that they make products cheaper.

What, you didn't think it was free to handle cash, did you? It takes time and effort to do that. So much time and effort that a lot of smaller places are going card-only here in the UK so they don't have to deal with cash.

Re: Facebook Libra Is Architecturally Unsound

#310

Post by linuxftw »

arcticbull wrote: post #308
linuxftw wrote: post #290

Earlier quoted context omitted.

> 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 thing…

> 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. Tell that to the judge haha > Society can have all of those things, there need not be a government and there need not be taxes. Yeah no, not really. > This has the presumption that you, or someone should be in charge of what money is worth. That sh…

> Maintaining a constant Value of the dollar as you yourself suggested requires active management

I don't think that it requires any management. If the value of a currency increases, then the ratio of currency to goods decreases. If a currency became so valuable that people can't trade with it, they'd trade with something else.

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