Facebook Libra Is Architecturally Unsound • Hacker News Board

Re: Facebook Libra Is Architecturally Unsound

#221

Post by kragen » Tue, Nov 05, 2019, 5:43 PM UTC

swensel wrote: post #193

kragen wrote: post #104

Earlier quoted context omitted.

> 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 wor…

> 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…

> The consensus model of blockchain would at least require Mastercard, Andreessen Horowitz and other validator nodes to be in agreement about stealing / being entitled to the money, which seems less likely.

Right, I think you, I, and Libra's developers are in agreement about this being a significant risk and one that using a blockchain effectively mitigates, in precisely the way you say, but Diehl and Green aren't.

Re: Facebook Libra Is Architecturally Unsound

#222

Post by yzmtf2008 » Tue, Nov 05, 2019, 5:54 PM UTC

spir wrote: post #134

whatshisface wrote: post #114

Earlier quoted context omitted.

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

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?

Re: Facebook Libra Is Architecturally Unsound

#223

Post by rusk » Tue, Nov 05, 2019, 5:56 PM UTC

Nursie wrote: post #101

rusk wrote: post #74

Earlier quoted context omitted.

> 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…

> it's risky because you've passed all the risk to the end user and their opsec.

This was exactly my point. With pervasive crypto end users can assume this to a greater degree, whether you believe that appropriate or not.

Visa e.g. requires specialist terminal equipment, complicated issuer and acquirer and banking relationships and is heavily dependent on legal enforcement wherever you use it. Try using mastercard or visa in a third world country.

For “actual” money transfer, compare with western union where toure talking about ~10% fee.

> ... nothing that’s actually true

Oh you’re a rude one. But I’m sure to somebody you’re very special. Good boy.

Re: Facebook Libra Is Architecturally Unsound

#224

Post by kragen » Tue, Nov 05, 2019, 5:59 PM UTC

rossdavidh wrote: post #218

kragen wrote: post #166

Earlier quoted context omitted.

Right, here in Argentina our currency has lost more than half its value this year, and the US dollar has lost 96% of its value since the end of the gold standard in 1973. I carry a Zimbabwe 100 trillion dollar bill in my wallet to remind people what real hyperinflation is. I don't think that's the main threat Bitcoin is designed to defend against, though; I think there's a whole spectrum of confiscation threats, rang…

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 of confusion to blame the Mt. Gox heist on Bitcoin. Mt. Gox's depositors gave their Bitcoins to Mt. Gox; Mt. Gox didn't give them back and claims that an unknown party absconded with them. 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.

If the Mt. Gox depositors had kept their Bitcoins in a paper wallet in a Bank of America safe deposit box rather than in Mt. Gox, they'd still have their money. (In fact they'd have enormously more money, but that's sort of random; it demonstrates the fickleness of markets rather than any kind of fundamental security of Bitcoin.) Conversely, the investors and banks who invested or lent dollars and yen to Mt. Gox lost as much or more as the Bitcoin depositors.

Probably a BofA Bitcoin account would be better, but that's a matter of convincing BofA to offer Bitcoin or similarly secure currencies, instead of or in addition to dollar-denominated accounts. And that's where Libra comes from.

Re: Facebook Libra Is Architecturally Unsound

#225

Post by dmoy » Tue, Nov 05, 2019, 6:04 PM UTC

kragen wrote: post #166

rossdavidh wrote: post #116

Earlier quoted context omitted.

Blockchain gives the impression that the primary threat it is designed to defend against, is a government deciding (like Germany between world wars) to inflate their currency for whatever reason. So, not surprisingly, in order to defend a currency against being decreased in value by a central authority, it is vulnerable to all of the threats that a central monetary authority might help you with. Which of these threat…

Right, here in Argentina our currency has lost more than half its value this year, and the US dollar has lost 96% of its value since the end of the gold standard in 1973. I carry a Zimbabwe 100 trillion dollar bill in my wallet to remind people what real hyperinflation is. I don't think that's the main threat Bitcoin is designed to defend against, though; I think there's a whole spectrum of confiscation threats, rang…

> the US dollar has lost 96% of its value since the end of the gold standard in 1973

It is more like 80-85%, not 96%. $1 in 1972 is $6-$6.5 in 2019. A 96% loss of value would mean $1 in 1972 is more like $25 in 2019, which is not the case.

Also to phrase it in context you should probably say "the US dollar has had an average annual inflation rate of 4% per year over the last 5 decades". Also for additional context you should point out that bonds slightly exceeded, and that $1 of stock in 1972 in the US market became ~$104 in 2019.

Context matters a lot here.

Re: Facebook Libra Is Architecturally Unsound

#226

Post by EGreg » Tue, Nov 05, 2019, 6:05 PM UTC

Tomte wrote: post #150

EGreg wrote: post #100

Earlier quoted context omitted.

I disagree that blockchain has almost no good use cases. All a blockchain is, is a Merkle tree with a third party that ensures there is only one “main line”. That’s the use case. All the other stuff — such as having all computers in the network watch every transaction — that’s the wasteful part. There are other ways to have a set of third party validators, that is a subset of the network watching a given merkle tree,…

> All a blockchain is, is a Merkle tree with a third party that ensures there is only one “main line”. No. The "wasteful part" is also part of the definition of the blockchain. Just because the word "blockchain" seems to describe only the data structure, doesn't mean that's the case. The innovation was to couple a Merkle tree with a proof-of-work system. Both existed before in standalone forms. The Merkle tree in man…

There is no requirement that blockchains must be secured by proof of work. Many blockchains use proof of stake. A blockchain is one or more Merkle Trees plus an external ledger saying what the last state of each tree is. The innovative piece is Consensus about this last thing. How it is achieved can vary. Ultimately consensus is achieved by the end users checking the results.

Re: Facebook Libra Is Architecturally Unsound

#227

Post by stale2002 » Tue, Nov 05, 2019, 6:06 PM UTC

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",…

Bitcoin has some pretty significant drawbacks. The main one being that it is severely limited in the number of on chain transactions that it can do.

And that the proposed "solutions", such as the Lightning Network, to this are nowhere near completed (and have indeed suffered from doomsday "someone can steal all my money" type bugs as of recently)

Re: Facebook Libra Is Architecturally Unsound

#228

Post by stale2002 » Tue, Nov 05, 2019, 6:14 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…

> why they think money should be worth more later

Because it is my choice? If you want to use an inflationary currency, go ahead. But other people should have the option of opting out, and using a different currency, with different properties

Re: Facebook Libra Is Architecturally Unsound

#229

Post by randomidiot123 » Tue, Nov 05, 2019, 6:15 PM UTC

arcticbull wrote: post #135

linuxftw wrote: post #125

Earlier quoted context omitted.

Your understanding of inflation is misguided. Inflation as we have it under central banking today is theft. A GSE creates money from nothing. Large banks are allowed to have this money at near-zero cost, and lend it to others and a higher cost. It's a free profit for large banks. It's 100% organized theft. This is the scenario that create the 'too big to fail banks' that we had to give even more money to keep the sys…

Ok round 2. > “inflation is theft” I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach. It’s theft like taxation is theft: it’s not. > a GSE creates money from nothing Yes that’s the point. The economy gets bigger and more people are born and the m…

Simply being born is no justification for stealing by fiat. People should be rewarded for saving capital. Forcing people to gamble their money only to maintain the wealth they already earned is not ethical. It is sufficient for people to be incentivized to spend money on things that are useful or interesting and to invest for higher return where the investment is sound.

EDIT: the money stolen by fiat is not evenly redistributed, and definitely not in favour of the poorest.

Re: Facebook Libra Is Architecturally Unsound

#230

Post by notahacker » Tue, Nov 05, 2019, 6:16 PM UTC

anteatersa wrote: post #219

semiotagonal wrote: post #84

Earlier quoted context omitted.

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.

The faults that people are attributing to blockchain are also applicable to cash, if you go the market and buy some magic beans from dodgy Dave with cash you won't be getting your money back. If you buy something from a reputable supplier with cash/blockchain then you would probably get a refund if you had some form of receipt.

Sure, cash has some of the same shortcomings of BTC, but that's why cash isn't touted as the future of payments and in modern economies is mostly used for transactions which are either small or illegal, and isn't considered to be a smart way of storing or carrying large amounts of money.