
Facebook urged to pause Libra crypto-currency project - headalgorithm
https://www.bbc.co.uk/news/technology-48688359
======
r3bl
Conspiracy theory time: Facebook knows they can't do this legally across the
world. They're announcing it beforehand in an attempt to get permissions in
like 10 jurisdictions tops, with a soft deadline that's going to be used as an
excuse to get those permissions as soon as they can (or, at least, faster than
they would otherwise).

For the other 200ish jurisdictions, they won't bother. Why act proactively
when they can launch a currency, hope that it catches on, and then act re-
actively once other jurisdictions with less power catch on to what's
happening. Western governments will get what they want before the projects
kicks off, and everyone else... well, who gives a shit about everyone else?
Certainly not Facebook's shareholders.

~~~
chii
but to play the devil's advocate, why should a service which proportedly offer
a benefit to the user of that service be disallowed to be offered? If a
country's citizens chose to use libra, it must be because they found it
useful, and the country should not have permission to prevent it.

If it was exploitative, then presumably the users would not choose to use
libra.

~~~
inflatableDodo
>If it was exploitative, then presumably the users would not choose to use
libra.

Unless one actually believes in the existence of homo-economicus and also has
never previously encountered a history book, I have no idea how someone would
draw such a conclusion.

~~~
Andhurati
What's exploitative about a cryptocurrency?

~~~
Ericson2314
It's not a crypto currency in the p2p sense. It's federated, and the servers
are run by the initial investors. It's world-Venmo.

1\. All the interest from the reserve (which isn't all hard cash but also low
risk securities) goes to the investors. No ability to create your own bank
offer interest and compete.

2\. Undercuts sovereignty. The HN crash may laugh but ask Yanis Varoufakis
what it's like when you can't do your own monitary policy. Would you rather
deal with the IMF or Facebook?

~~~
inflatableDodo
>Would you rather deal with the IMF or Facebook?

Now that is a genuine dilemma. I'd say the IMF, purely because there is enough
historic data to use Bayesian inference to guide you in doing the opposite of
what they advise.

edit - Better the devil you know, in other words.

------
ralphstodomingo
Look, it does not matter to me whether this uses blockchain or not. Such
discussion won't even be productive.

Facebook has not been the best steward for its main feature the News Feed,
leading to fake news, mass misinformation, not to mention their heavy use of
psychology to keep people hooked.

I refuse to trust them something similar won't happen with Libra.

~~~
chris_wot
This. Currencies only work if people have confidence in them. They also need
to have confidence in the institution backing them. In no way should anyone
have any confidence in Facebook.

On top of this, in most economies, deposit taking institutions are backed by
Reserve Banks. Facebook could die in 20 years. Do we want to trust it will
still exist? If it collapses can you recover your money?

There are so many issues, they haven’t even come close to addressing even a
small portion of them.

Caveat emptor!

------
adwww
It is amusing watching big US tech giants trying to launch payment platforms
to solve problems the rest of the world has forgotten about.

> “In time, we hope to offer additional services for people and businesses,
> such as paying bills with the push of a button, buying a cup of coffee with
> the scan of a code or riding your local public transit without needing to
> carry cash or a metro pass,”

You can instantly and securely send up to £100,000 for free between any UK
banks, and contactless payments are EVERYWHERE here - I've even seen a begger
with a chip and pin machine - let alone paying for coffee or a bus fare
without cash.

~~~
cthaeh
Have you been to any of countries in the world with dysfunctional banking
systems?

India immediately comes to mind, many African nations likely would find this
incredibly useful. Just because it isn't useful to YOU doesn't mean its
useless.

~~~
linuskendall
For consumers India's banking system has seen a large number of fast online
payment systems. Yes, they have problems especially in rural areas but for the
people that would be target group of Libra they are well served in India. In
fact, India and (as far as I know) many African countries have far more
advanced digital payments systems for consumers than many European countries.

International transfers are still an issue (at least from India to abroad) but
this is largely a regulatory issue on foreign remittance than a technological
one.

------
docdeek
Honest question: how is this different to a website having a means for users
to buy tokens, and then either give those tokens to another person on the site
or trade them with another user?

I can buy reddit gold and then gift that gold to someone who amuses me with a
comment or a post, and the only difference I’m seeing is that reddit keeps my
money and only gifts virtual gold to the funny guy. Is the only difference
with Facebook’s Libra that when I give the Libra to someone else they can cash
it our for ‘real’ money?

Apologies for the question if I am missing something obvious.

~~~
jrochkind1
> Is the only difference with Facebook’s Libra that when I give the Libra to
> someone else they can cash it our for ‘real’ money?

That's a pretty big difference! It's the one that makes Libra a currency.

~~~
chii
> It's the one that makes Libra a currency.

it doesn't. Currency needs to have one other property - the legal requirement
that a party accepts it as payment. For example, i cannot force a shop to
accept my gold coins as payment (they could choose to accept it - but it's not
a legal requirement). However, if i offered cash, they are legally required to
accept it as payment.

Facebook can make this a pseudo requirement by virtue of network effect, but
it isn't the same as currency with legal tender status.

~~~
mokus
US federal reserve notes don’t meet your definition - they can be legally
refused for purchases, it’s only debts where you can’t refuse them. In a
purchase scenario, where there is no pre-existing debt, a dollar is no more
legally privileged as a payment method than pocket lint.

------
gjulianm
I get the impression from the article that no lawmakers had knowledge of the
protocol. I hope Facebook does not plan to introduce this "sneakily" without
taking into account laws and the financial issues this can introduce.

Honestly, I really hope this project is stopped as soon as possible. Facebook
already has way too much influence in our lives. It controls news, messaging
and relationships with others, and it has not been managing them in a
responsible way. Why would anyone let this company control money too? What
happens if Facebook causes a financial crisis? Who will be controlling them?
Who will they be accountable to? What happens if Facebook goes bankrupt? Libra
is a project with way too much risk for the benefits it offers.

~~~
gtirloni
You don't have to use Libra, or Bitcoin, or Ether, or...

~~~
gjulianm
This is not another app. This is Facebook saying that they want to create a
widespread currency, not just a payment system. And I don't need to use it to
become affected by the monetary policy of the behemoth that Libra could
become.

~~~
buboard
Ah, not in my backyard

~~~
gjulianm
Do you care to expand?

~~~
buboard
People having terrible economic backyards may want to move near you. Yet you
say they should be stopped because they ll ruin your view.

[it doesnt have to be facebook's currency, any cryptocurrency could have major
monetary policy implications]

~~~
gjulianm
>People having terrible economic backyards may want to move near you

Nothing to do with that. Facebook is saying that they have a new lawnmower
that could improve some lawns, and I'm saying to stop it because Facebook has
shown that it does not care about anybody's lawns but their own, and their
lawnmowers could very well accidentally release asbestos to screw users and
non-users alike.

>any cryptocurrency could have major monetary policy implications

Yes. However, up until now no cryptocurrency has had the full backing of a
behemoth such as Facebook. Facebook could very well use their power to act as
a bank and as a financial actor bypassing regulations put in place to avoid
problems.

------
tjpnz
>If Libra wants to be a big player in the UK's payments system it will have to
be regulated by the Financial Conduct Authority and show that it knows who its
customers are and that it has strong anti-money-laundering controls. Existing
money-transfer firms say complying with all the rules can be an onerous and
expensive business.

Similar deal in Japan. They'll need to ensure nobody using it is in a gang, is
a terrorist or might be politically exposed. In a lot of cases they'll be
required to collect identity documents. They'll also need to cease offering
service to any flagged individual across their entire platform.

~~~
dexen
_> In a lot of cases they'll be required to collect identity documents._

This may very well be the major reason for Facebook to introduce & maintain
the cryptocurrency.

The "real name" policies were tried across the social media, with the
expectations of both higher civility, and also faster, more complete build-up
of personal data gathering/social graph build-out for advertising etc. The
policies failed for obvious reasons.

However if Facebook was legally mandated to obtain & keep personal
identification data due to handling of the cryptocurrency, and also at the
same time able to track transaction of the users, it would have an
unprecedented look into even more connections between people.

Tracking money shows business connections, family connections (think allowance
for kids, gifts, etc.), and also social connections (think hanging out with
friends, splitting bills with Venmo, etc.).

~~~
YawningAngel
That's never going to fly in the EU, the regular will simply insist that they
keep all such data entirely separate, even if that's very impractical for them
to do.

~~~
dexen
...after 5 years of hand-wringing and investigations. By which time Facebook
would have had made out like mad bandits.

Plus they really can white-wash the data; as per the announcements, not only
Facebook but also other major entities would hold the ledger. You can easily
imagine Facebook buying (or getting for a nominal $1) processed data from the
other entities. No user data would change hands, "merely" well trained AI
models.

------
buboard
This is not the first cryptocoin, or stablecoin or anything that has not been
released before. It's hard to take these reactions as anything other than
politicians grandstanding for popularity points.

~~~
tzs
Do any of those released before, even in their wildest dreams, have a chance
of being as widely used and having as big an impact on ordinary people as
Libra?

Facebook is not attracting political and regulatory attention not because what
they are doing is new, but rather because they have a realistic chance of
doing it on a much larger scale than we've seen so far.

~~~
buboard
Bitcoin was supposed to have dominated the world by now. Apple pay could
potentially be in 1.4 billion devices. Google pay could potentially be in 2.5
billion devices. I dont remember much political theater when these were rolled
out, that's why i believe this is just posturing.

------
digitalengineer
Are they afraid? What happens the next time the pound takes a massive tumble
down (again) during a Brexit like event? People might decide to convert their
money from pounds to Libra's. The Libra is based on a basket of currency's,
much like the SDR governments use. It's potentially MORE stable than the
pound.
[https://en.wikipedia.org/wiki/Special_drawing_rights](https://en.wikipedia.org/wiki/Special_drawing_rights)

~~~
CaptainZapp
Why would they convert into a currency owned and controlled by a private
company? A private company proven not to really care about morals?

While it could absolutely be that the £ tumbles there are a number of stable
currencies in which £ could be exchanged if people are worried that it loses
value (that's value in relation to other currencies). ¨ The concept is called
FOREX[1] and is not exactly new or revolutionary.

[1]
[https://en.wikipedia.org/wiki/Foreign_exchange_market](https://en.wikipedia.org/wiki/Foreign_exchange_market)

edit : wrong word

~~~
digitalengineer
> Why would they convert into a currency owned and controlled by a private
> company

Because if a bank runs the risk of failing (like BOTH of mine did in Holland)
people freak out. Their bank accounts are suddenly a liability. If there is a
fast and easy way to transfer money out of the banks, that would be a big
plus. Even if you were to purchase dollars, they would still sit on your bank
account.

~~~
gjulianm
> Because if a bank runs the risk of failing (like BOTH of mine did in
> Holland) people freak out

Most EU countries have had deposit guarantees for a while (even before the
crisis). It's an EU-wide rule since 2014 [0]. Would FB have that? Doubtful, as
the deposit guarentees are provided by the governments that are in control of
the currency.

> If there is a fast and easy way to transfer money out of the banks

What bank do you use that does not allow you to withdraw money?

0: [https://ec.europa.eu/info/business-economy-euro/banking-
and-...](https://ec.europa.eu/info/business-economy-euro/banking-and-
finance/financial-supervision-and-risk-management/managing-risks-banks-and-
financial-institutions/deposit-guarantee-schemes_en)

~~~
icebraining
> Would FB have that?

According to them, yes: [https://libra.org/en-US/about-currency-
reserve/#the_reserve](https://libra.org/en-US/about-currency-
reserve/#the_reserve)

~~~
gjulianm
It's not the same. A deposit guarantee is given by a third party, so that if
Libra goes under or mismanages things I still cannot lose my money (up to a
certain limit).

------
seibelj
A week ago every blockchain and cryptocurrency article on HN was full of
comments declaring the whole technology a huge ponzi scam that only con-
artists and idiots used ("look at this NIST blockchain workflow [smug
face]"[0]).

Now blockchain is the most powerful monetary technology ever created and
governments and regulators must put a stop to it immediately!

It's incredible what can change in a week.

[0] [https://i.redd.it/uu0qg8t28tq11.png](https://i.redd.it/uu0qg8t28tq11.png)

~~~
supermatt
This isn't a "blockchain" discussion, this is a discussion about an
application of blockchain. It's clear that this isn't just a cryptocurrency,
but a bank using the cryptocurrency label to avoid regulation - thats why it
needs to be stopped.

You should read the comments in this and the announcement article (still on
front page since yesterday) as it seems you are confused.

~~~
seibelj
A week ago the pitchfork commenters would say anyone that uses blockchain is
clearly an idiot because a centralized database is superior in every way.

Suddenly everyone is agreeing that blockchain technology has value! I’m just
so shocked

~~~
snarf21
No, the issue as GP says is that they are using crypto as a label to avoid
regulation. They are using a _" but it is a decentralized blockchain"_
argument to try to avoid all the regulations they can't/don't want to meet.
This whole association is really just a new banking conglomerate. That
wouldn't pass muster without full compliance. This is just the normal "try to
skirt the laws" startup mentality so you can create exploitable margin over
your competitors that actually follow the rules.

------
morsmodr
Until tech firms start taking responsibility of ensuring that their platforms
are robust and cannot be misused, I am not convinced of Libra. Putting the
blame on people using the technology is incredibly naive on their part,
frankly because it is human nature to exploit something. They need to start
operating from a position of 'how can this be misused' not from a position of
'let's make this cool thing and expect some ideal world out there to embrace
it and then think about problems as they arise'.

And this is just 1 part of it, the other part is assurances that this data
will not be used to further interests of all the validators. I am curious on
what is the value proposition pitched by FB to attract validators, besides
what is given on the public facing websites. The fact that you have government
institutions is to have a body that is removed from profit making goals, and
thinks about the society in the long term. Sure, there are corrupt
politicians, but not all of them are. Europe seems to have the right mind with
regards to tech firms. What is it that fb and other investors look to get out
of this thing?

------
drc37
If Maxine Waters is against it then it is probably a good thing. And why is
one Facebook even batting an eye at one lawmaker?

~~~
PretzelFisch
It's both Republican and Democrat calling for this holt and testimony.
[https://www.nationalmortgagenews.com/news/maxine-waters-
call...](https://www.nationalmortgagenews.com/news/maxine-waters-calls-for-
halt-to-facebooks-cryptocurrency-plans?utm_campaign=alert-c-
Jun%2019%202019&utm_medium=email&utm_source=newsletter&eid=12a6d4d069cd56cfddaa391c24eb7042)

------
swarnie_
Considering Facebook is either dead or dying in the tech savey under 40 market
who is this aimed at? How many 55 year old boomers are going to exchange their
known fiat currency for magic Facebook bucks?

Also any note yet or the scope of this? Will it be pushed to Instagram and
what ever other garbage Facebook peddle?

~~~
malvosenior
You're aware that Facebook owns Instagram and Whatsapp right? It's by far the
number one social networking company for people under 40.

~~~
swarnie_
> Will it be pushed to Instagram and what ever other garbage Facebook peddle?

I literally reference them owning Instagram in my post, Whatsapp i forgot
about admittedly/

------
Mengkudulangsat
Why would the US be against this?

The current US dollar holds power globally largely thanks to the oil trade. As
the world moves away from oil, surely you'll need a replacement reason for us
to keep wanting the US dollar?

Libra would be a geopolitical coup.

~~~
jkoudys
I agree with all of that, but still have fear about how unhinged the us could
become in that scenario. No matter how unhealthy, uneducated, disrespectful of
the judiciary & rule of law, and xenophobic the population grows, the
government has always valued stability. A big part of that is the USD's place
as the defacto world-currency, stabilised by its place in the global energy
sector. Even when I haven't liked where they were headed, I've always felt
like America had a steady hand on the wheel. For the first time in my life I
feel like that may change.

------
koonsolo
Let's face it: the traditional world is shitting their pants.

The disruption of 'money' was already on the table with all the
cryptocurrencies. And now powerhouses such as Facebook, Visa and MasterCard,
Uber and Lyft, eBay, and Spotify stand behind this new Libra.

I would shit my pants too.

------
trpc
Even though I hate Facebook, but most politicians do such things only to get
featured in the news. They neither understand nor even care about what they
are talking about.

------
stakhanov
...that point where the policymakers realize "Oops this cryptocurrency stuff
is not going away on its own". Next step: Pass some laws to shut it all down.
(EDIT: To be clear, I don't agree with this, but this is what's going to
happen).

~~~
supermatt
It being crypotocurrency isnt the issue here.

The problem is that this isn't the same as a proof of work system - it is
proof of stake - with the "burden" of proof put on facebook and its partners.
This means that they can simply "create" currency with no oversight or proof
of reserve.

In short, it works EXACTLY like a central bank, but it's not regulated. This
is extremely dangerous for consumers.

~~~
stakhanov
My point is: The trend in financial services and payment systems regulation is
going in the complete opposite direction of the kind of features that would
make crypto interesting. Decentralization, Anonymization, etc are all things
that the policymaker has been actively working to combat.

~~~
supermatt
This isn't decentralized (its overseen by facebook and partners). It's not
anonymous either (in order to participate in the network you need
identification).

This is a bank, albeit using the cryptocurrency label to pretend it doesn't
need regulation.

~~~
vageli
This is _exactly_ the point stakhanov is making.

~~~
supermatt
I dont read it as that.

> "Oops this cryptocurrency stuff is not going away on its own". Next step:
> Pass some laws to shut it all down.

> Decentralization, Anonymization, etc are all things that the policymaker has
> been actively working to combat.

The reason policymakers should want to regulate this is because it is a bank -
not because its decentralized or anonymized (because its not)

~~~
stakhanov
Well: Either it _is_ crypto, in which case policymakers are going to dislike
it because of how crypto is linked to these aspects that policymakers dislike.
Or, if they called it crypto when it's not really crypto then that play
clearly backfired because instead of lessening the regulatory scrutiny it's
actually increasing it.

Either way, I think my point is valid: Cryptocurrency is in this state of
limbo where it's something that policymakers dislike but they haven't yet
gotten around to making the laws that say so. I can't see into the future, but
I am hereby going on the record by saying that this is something I am
expecting will happen. And facebook entering the scene serves as a catalyst to
accelerate the lawmaking. Them kind of saying "hold on a sec..." is what I see
as this process kicking off right now. Will be interesting to see whether it
holds true or not.

~~~
mercutio2
> ... haven’t gotten around to making the laws that says so.

Huh?

The SEC is very clear that most crypto currency is a security. The laws are on
the books. That deranged Reddit people imagine the laws don’t apply to them in
no way changes that.

Similarly, Facebook appears to be proposing that they become a bank, then
putting some lipstick on to suggest they’re not a bank. The laws are on the
books about how banks are regulated.

The argument here is “does claiming you’re not the thing you obviously are
work as a tactic to avoid regulation”. Clearly AirBNB and Uber got away with
it, so Facebook is hoping they can, too.

~~~
stakhanov
The question of whether or not a bitcoin or whatever is a security is only the
tip of the iceberg of regulatory questions that someone might ask about
cryptocurrency. How does anti-money-laundering regulation apply to it? Does a
cryptowallet need to come under FDIC insurance? How does the Volcker Rule
apply to someone who takes deposits and also engages in trading around a
cryptocurrency? etc etc etc Large parts of the law are written on the basis of
the assumption that currency is actually a dollar bill printed on paper, or a
number in a bank computer with a very narrow sense of what is and what isn't a
bank. Those definitions are being blasted wide open, and asking the law a
bunch of questions about cryptocurrency often resolves to "it does not
compute..."

