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Facebook Libra Is Architecturally Unsound

stephendiehl.com

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Re: Facebook Libra Is Architecturally Unsound

#311

Post by Retric »

Acrobatic_Road wrote: post #301
Retric wrote: post #238

Earlier quoted context omitted.

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 mea…

It’s the “independent ability” that’s new. Without that you just need to keep your key safe. With it your key could be safe and you still end up with a problem.

> objectively better than cash

Many people don’t use cash just credit cards. They might keep 50$ or less in their wallets, but that’s about it.

Further, Billions of people can hack my PC, only those I come into contact with can take my cash.

Re: Facebook Libra Is Architecturally Unsound

#312

Post by nighthawk24 »

littlestymaar wrote: post #282
j_shi wrote: post #247

Earlier quoted context omitted.

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…

https://www.reddit.com/r/btc/comments/dry028/hows_an_bch_0_c...

Re: Facebook Libra Is Architecturally Unsound

#313

Post by arcticbull »

linuxftw wrote: post #310
arcticbull wrote: post #308

Earlier quoted context omitted.

> 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.

You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify.

> 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.

That's (a) very much your opinion stated as self-evident and (b) not currently the job of the government, it's the job of an independent private central bank specifically designed to separate monetary policy from fiscal policy and the whims of the elected officials.

The Federal Reserve is federal in the same way that Federal Express is: it's not. Doesn't this line up with the libertarian ethos?

Re: Facebook Libra Is Architecturally Unsound

#314

Post by spir »

pron wrote: post #154
spir wrote: post #134

Earlier quoted context omitted.

Because while the core innovation of blockchain is a trusted database a context without trust, the core benefit of blockchain is reduced transaction costs. A blockchain is a singleton global computer of program code and data. It turns out this is sufficient to represent capital (money) on that computer. In practice this results in dramatically reduced transaction costs. For example you can transfer money with an API…

> the core benefit of blockchain is reduced transaction costs. No, this is not true. It might incidentally currently be the case with, say, Bitcoin vs. $US, but there's nothing technical that inherently makes it so. In fact, as this article and countless others reiterate, from a technical perspective blockchain is almost always more costly.

Blockchain (ie. Ethereum) is, overall, a reducer of monetary and non-monetary transaction costs.

Example of reduced monetary transaction costs:

The current Ethereum gas price for a token transfer is $0.04 (https://ethgasstation.info/). Operations on Ethereum are relatively inexpensive and will become much cheaper with Ethereum v2 in a couple of years. The cost of Ethereum operations is orthogonal to the value of the money being manipulated. You can transfer $100M for $0.04.

Example of reduced non-monetary transaction costs:

Say you wanted to launch an eBay-type app with a single market for a dozen countries. Some customers may bring Euros, others Swiss Francs, some USD. Each market auction selects a currency from a whitelist. All bids for that auction must be in its selected currency. On Ethereum you can bid Swiss Francs which will be dynamically exchanged for USD. Unlike using your VISA for forex, this currency exchange is at the same price that whales and banks get; you pay no spread fee for being an end consumer. The non-monetary transaction cost part is that this Ethereum-based currency exchange API can be permissionlessly integrated in an afternoon.

2nd example of reduced non-monetary transaction costs:

https://www.pooltogether.us/ is a no-loss, audited, provably fair lottery built on Ethereum. The way the lottery works is -- you always get your money back, but your money bears interest during the lottery period, and all the interest goes to a single lottery winner. So the cost of the lottery is the time value of your money. PoolTogether is built on other Ethereum projects, that's why the lottery proceeds earn interest. The non-monetary transaction cost part is that PoolTogether is able to access interest-bearing deposits as easily as you can use jQuery. Also anyone in the world can participate - reduced cost of being in another country.

Re: Facebook Libra Is Architecturally Unsound

#316

Post by spir »

frenchyatwork wrote: post #183
pron wrote: post #154

Earlier quoted context omitted.

> the core benefit of blockchain is reduced transaction costs. No, this is not true. It might incidentally currently be the case with, say, Bitcoin vs. $US, but there's nothing technical that inherently makes it so. In fact, as this article and countless others reiterate, from a technical perspective blockchain is almost always more costly.

Indeed. The main reason why a given bitcoin transaction might be cheaper is because nobody's checking to make sure it's actually legal. It's the same reason why AirBnB is often cheaper: hosts don't pay business fees and don't follow other regulatory requirements like safety inspections.

Yes, I'd agree that, today, typically nobody is checking to make sure that an Ethereum transaction is legal.

But, it's important to understand that Ethereum is not a replacement for or opponent of KYC, AML, or checking if transactions are legal. Ethereum is a starting point, a base layer. It is necessary to rebuild all kinds of monetary controls into Ethereum's app layer. I support this development. Within 5-10 years all of the traditional controls will become available on various parts of Ethereum -- KYC, ability for government to freeze accounts, etc.

Re: Facebook Libra Is Architecturally Unsound

#317

Post by spir »

yzmtf2008 wrote: post #222
spir wrote: post #134

Earlier quoted context omitted.

Because while the core innovation of blockchain is a trusted database a context without trust, the core benefit of blockchain is reduced transaction costs. A blockchain is a singleton global computer of program code and data. It turns out this is sufficient to represent capital (money) on that computer. In practice this results in dramatically reduced transaction costs. For example you can transfer money with an API…

Isn’t the Coca-Cola trial was about supply chain management not transferring money? How is transaction cost relevant in this scenario?

Here's how monetary and non-monetary transaction costs are relevant to a Coca-Cola supply chain --

Blockchain (ie. Ethereum) excels when a heterogenous network of 3rd and 4th parties come together in a commons and interact permissionlessly based on a set of rules enforced by the system.

Ethereum is basically the World Wide Web with hyperlinks except with programs in general and money can live inside those programs.

An Ethereum-based supply chain system could do a lot of things. Not sure if these are valuable because I'm not a supply chain expert. But I can speculate.

Coca-Cola's Ethereum-based supply chain system could...

1. associate an eBay-style reputation with each supply chain participant. These reputations could then be used by more parties (eg. Pepsi) than if they were locked in a centralized system. Coca-Cola might retain the option to override any reputation.

2. provide a global audit trail of supply tracking. Similar to FedEx's "track my shipment", except you could transfer payment for supplies in the same blockchain transaction that updated their status. And those updates could automatically feed into the reputation system.

3. pay for supplies with a security. For example, Coca-Cola could tokenize a portion of its common stock and pay suppliers tokens of common stock in the same transaction that pays them currency. Or Coca-Cola could automatically distribute a pro rata stock grant to the entire supply chain each quarter. This could better align a global, heterogenous supply chain with the long term interests of Coca-Cola.

4. integrate with other Ethereum-based systems. For example supply payments held in escrow could automatically earn interest in https://compound.finance/. Payments crossing international borders could automatically exchange currencies at a very competitive, no-fee rate (eg. https://dex.ag/).

Should Coca-Cola embrace an Ethereum-based supply chain? I have no idea. But after spending hundreds of hours studying Ethereum I feel very confident that there is something very special going on here.

Re: Facebook Libra Is Architecturally Unsound

#318

Post by linuxftw »

arcticbull wrote: post #313
linuxftw wrote: post #310

Earlier quoted context omitted.

> 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.

You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify. > This has the presumption that you, or someone should be in charge of what money is worth. That shou…

> The Federal Reserve is federal in the same way that Federal Express is: it's not

It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.

Here's what I actually said:

> 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 large banks is theft.

It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.

> (b) not currently the job of the government

Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.

Re: Facebook Libra Is Architecturally Unsound

#319

Post by arcticbull »

linuxftw wrote: post #318
arcticbull wrote: post #313

Earlier quoted context omitted.

You argued for a constant value of a single dollar and then told me what would happen if the value of the currency increases, which is the opposite of what you were telling me before. If it does increase then it leads to massively disproportionate accumulation of wealth for existing holders, which you cannot justify. > This has the presumption that you, or someone should be in charge of what money is worth. That shou…

> The Federal Reserve is federal in the same way that Federal Express is: it's not It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity. Here's what I actually said: > 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 pr…

> It's analogous to hiring a contractor. The government wants a program, it simply outsourced the operation to another entity.

No, it isn't, explicitly so. The reason the Fed operates at arms-length is explicitly to avoid having the government set monetary policy. This degree of stability allows businesses to plan and reduces their currency risk. Otherwise you face D vs. R every 4-8 years totally reversing monetary policy.

> It should remain relatively constant. That's the entire point of a unit of exchange. There might be periods where the relative demand for the currency outstrips the supply, and if it becomes such a dramatic situation as your presented in your contrived example, then it would cease to be useful as a currency, and something else would/should become the currency.

Yes, and my whole point is to avoid a large dramatic change you apply small amounts of pressure over time. This is called managing the money supply. And once you agree that this kind of adjustment achieves your objective of "relatively" stable currency (it does), then we can talk degrees, but we're now having a very different conversation.

> Congress has the power to coin and regulate value, per the US constitution. I'm not sure how we ended up talking about the US specifically here, I'm referring to governments generally.

Government handles the fiscal policy, federal reserve handles monetary policy. They're explicitly separated. This is true in many developed countries in the world operating under a central banking model, including Canada (Bank of Canada), and all of Europe (ECB) and England (Bank of England -- privately owned from 1694 to 1946).

Re: Facebook Libra Is Architecturally Unsound

#320

Post by Bartweiss »

whatshisface wrote: post #114
syllable_studio wrote: post #109

Earlier quoted context omitted.

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...

Why would Coca-Cola need to use a block chain? They can run their own code on their own servers.

Blockchains are genuinely pretty promising for supply chain tracking. Distributed ledgers are most famously useful when you distrust the motives of a central authority like Bitcoin, but they're also a reasonable option if you distrust the accuracy of a a central administrator.

So for the purposes of supply tracking, different Coca-Cola facilities and shipments are 'individuals' which might report mistaken or dishonest results to the central server. And once somebody screws up, that trusted authority becomes a problem for others facilities to work around. For sufficiently large and restrictive systems (like US military supplies), correcting an error can become functionally impossible. At that point, you start resorting to awful two-wrongs-make-a-right solutions like entering fictional shipments which "move" a misdirected item from the listed location to the real one, or even redoing needless part replacements to match reality to documentation.

Obviously you can track supplies without a blockchain, and I'm sure a lot of Coke's actual gains came from tearing out a bad system and replacing it, but a blockchain does at least encourage good tracking design (one authoritative record per item, transactions are assessed by peers rather than immediately accepted by an authority). And if the goods in question have individual identifiers, "proof of work" is actually a great addition. It doesn't have to be computationally hard if you trust all the users, but you still get a system where "I am holding this and hitting it with an RFID scanner" is allowed to overrule any number of past errors regarding that object.

(Did Coke get all those gains? No idea. They probably just scrapped some legacy nonsense for a not-too-stupidly designed system.)

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