
Highlights from Facebook’s Libra Senate hearing - lil-scamp
https://techcrunch.com/2019/07/16/libra-in-messenger-whatsapp/
======
neura
This all comes down to Facebook and friends holding on to your money, making
interest on it, while everybody passes their tokens around. Many other
companies have been doing this for a very long time, just not in such a
widespread way and opening their currencies up to whoever wants to use it.

Take xbox live's original currency (still in use) where you pay $X for Y coin.
They had your money in the bank, while you had some coins in your account,
just sitting there, doing nothing for you. They had a bit more control and you
could only buy amounts of coin that were not equal to the amount of coin you
had to spend to buy anything, so you always had some left in your account.

In Facebook's case, just the time it takes to convert money to Libra and then
back into actual money will net them some interest on it. On such a large
scale, that's a constant income.

They're trying to be a non-profit because they don't actually charge for the
service, but the investors still make money by way of holding on to your cash
while it's in Libra form.

~~~
dllthomas
> They're trying to be a non-profit because they don't actually charge for the
> service, but the investors still make money by way of holding on to your
> cash while it's in Libra form.

A not-for-profit _can_ charge for service, and _cannot_ return a profit to
investors. Maybe they've ways to wiggle around the latter, but not charging
for the service is simply irrelevant.

~~~
solotronics
The non-profit could sell your financial transaction data to a for profit
corp. for basically nothing. The for-profit then makes all the money selling
the data to other corporate partners. Just one of the many ways I can see this
being abused.

~~~
cthaeh
Thats illegal. Highly highly doubt Facebook or any company in the media
spotlight will ever do anything clearly, and obviously illegal.

~~~
dllthomas
I have no idea whether this is serious or parody.

~~~
zaksoup
Sufficiently advanced satire is indistinguishable from genuinely felt
beliefs...

~~~
dllthomas
[https://en.wikipedia.org/wiki/Poe%27s_law](https://en.wikipedia.org/wiki/Poe%27s_law)

------
motohagiography
Any new system will necessarily have better oversight than the one that has
co-evolved in a murky organic soup with cash and foreign exchange. Even
bitcoin has more transparency than the majority of transactions today.

Watching some of those Senate hearings is like a trial organized by
superstitious villagers. Libra is just a company scrip, like poker chips,
which happens to be facilitated by a distributed ledger. I don't use Facebook
because it is an abomination, but given the trend toward de-dollarization, the
return of currency baskets and reserves made of special drawing rights, and
effective negative interest rate policies, Libra may be the last best hope of
the US to maintain its current level of influence in the international
currency market. Only thing I recommend is that the company should just change
it's name to Statebook.

~~~
hash872
> Libra may be the last best hope of the US to maintain its current level of
> influence in the international currency market

Sorry- what's the connection here? Libra will apparently be a basket of
different major currencies, how does this benefit the US specifically? I say
this as someone who would like to preserve dollar hegemony, I just don't see
the connection

~~~
solotronics
If the US doesn't take a lead in the fintech race China will take over the
world. Imagine everyone in Africa, S.E. Asia, etc using Alipay. This takes
away power from the US in control and de-dollarization.

~~~
jasonjei
You raised an interesting point about Alipay. But I’ve had equally fast
transactions with Apple Pay/Android Pay. Why not double down on NFC payment
options coupled with desktop devices instead of building an Alipay
alternative?

If you’re using a credit card as source payment, you get a bank to protect
your purchase and presumably some points or rebate?

I understand cryptocurrency as potential replacement to wire transfers and
cash payments. But as a consumer friendly choice, why would somebody choose to
pay with crypto over NFC pay (with banks promising purchase protection when
coupled with credit card)?

~~~
carlosdp
You can't use Apple Pay on top of a bank account that doesn't exist. 1.7b of
the people in emerging markets don't have access to banking services. 500m+ of
them have internet/cells and many have Facebook/WhatsApp. Hence Facebook's
interest.

------
olyjohn
> It is “not the intention at all” for Calibra to sell or directly monetize
> user data directly, though if it offered additional financial services in
> partnership with other financial organizations it would ask consent to use
> their data specifically for those purposes.

And of course, they'll get consent with a small EULA update to their existing
users, knowing they won't read it.

------
groovybits
What is the difference between 'Calibra' and 'Libra'?

This article uses them interchangably, and does not seem to distinct between
the two.

Edit: Looking more closely --

"That means that even though Facebook might not know how much money is in
someone’s Calibra wallet or their other transactions [...]"

It seems that Calibra is the name of the 'wallet', and Libra is the name of
the 'coin' itself.

~~~
SolaceQuantum
There's also this site: [https://calibra.com/](https://calibra.com/)

~~~
snek
LGTM [https://gc.gy/31025051.png](https://gc.gy/31025051.png)

~~~
aarongolliver
I think Firefox's Facebook container causes this

------
epiphanitus
Isn't this currency play just a way for Facebook to get more data? Data about
social interactions and how they influence purchase decisions would be very
marketable, especially to e-commerce businesses that want to take on Amazon.

It's also a potential moat for FB to protect its ad business against
encroachment by Amazon's own ad business.

~~~
carlosdp
No, it's about increasing revenue per user for their fastest growing market
(emerging market) by giving access to the 500m+ unbanked people that have
internet/cells/FB/WhatsApp in these markets a way to access the digital
economy, so they can actually buy things people advertise on Facebook, driving
up the price for those ads.

They can make a killing on this without needing to touch anyone's data.

~~~
epiphanitus
Why not both?

Besides, the lions share of FB's current revenue still comes from US Ad
spending. Amazon's dominance of e-commerce threatens this because people who
want to buy something increasingly just go to Amazon.com. Amazon's ads offer
the opportunity to influence consumers at the end of the conversion funnel.

But this means that Amazon will get a bigger slice of both the ad spend and
the purchase data which FB doesn't yet have. Their ad business already makes
almost $3B a quarter - that's almost 1/5th of FB's revenue. This is money that
likely would otherwise have gone to FB/Google, but isn't anymore.

This is big threat to FB's core business in what is their most lucrative
market right now. Would they leverage this data to try to keep their ad
business competitive? I certainly think so. Just imagine how much stuff an AI
that knows your purchases and your social life can get you to buy.

~~~
carlosdp
> Besides, the lions share of FB's current revenue still comes from US Ad
> spending

But the largest opportunity for growth is in the emerging world.

------
carlosdp
I think a lot of the confusion around Facebook's motivations with Libra lie
around the fact that Americans think they're the main target customer. It
becomes more clear when you realize (by literally reading the copy on the
front page of the Libra website, mind you) that the emerging markets (FB's
fastest growing sector) are the real target.

We'd just be a nice to have.

~~~
wmf
But it looks like Facebook doesn't know much about emerging markets either.
Internet.org didn't go over well in some places. Letting Americans set
moderation policy for Myanmar. Now they're talking about supporting unbanked
people in the developing world... with KYC. Many unbanked people do not have
"proper" ID and Facebook probably doesn't know how to parse such IDs anyway.

------
ajxs
There are some very interesting posts being flagged and killed in this thread
that I feel raise some very valid points. My chief contention with allowing
Facebook and ilk the ability to expand their influence and authority is that
the motivations of such entities are, at best, amoral. There seems to be a
troublingly significant movement of people who seem to think that Facebook,
Google et al are doing god's work when it comes to their political
involvement. But these companies ultimately will only serve their own
interests. Democracy has its obvious pitfalls. You may often feel like you as
an individual are not well served by the democratic process, as I often do
not, but the democratic process _is_ there. It provides a mechanism that is
fundamentally egalitarian for society to steer the direction of its governing
bodies by voting. FAANG is not bound to such a restrictive system, their
motivations concede no moral imperative. There is no incentive for them to
suffer the inconveniences of egalitarian principles any further than it serves
their agenda.

~~~
dang
What posts are being flagged and killed in this thread? I don't see any.

If you a [dead] post that shouldn't be dead, you should vouch for it by
clicking on its timestamp, then clicking 'vouch' at the top of its page. This
is precisely why we added that feature.

~~~
ajxs
There was one in particular post I was referring to, it looks like someone has
vouched for it since my noting it. Thanks for pointing that out, I was
unaware. I'm not sure I have the rep necessary however.

~~~
dang
If by rep you mean karma, the threshold is 30, so you're fine.

------
Lucadg
in other words: "let us create Libra otherwise Bitcoin wins. We have the
technical capabilities, you write the laws. Let's fight it together."

Put like this it will start making sense to the institutions. Just give them
some time to digest it.

------
willvarfar
Moving social networks into banking seems to be an excellent business
opportunity for social networks!

Suddenly they can make money from their users directly, rather than from
selling their users to advertising customers.

I think Apple should investigate doing the same; make it so you can have an
iBankAccount, and use phones to transfer money and pay etc using Apple as a
bank. Apple could beat Facebook at this. And with Tim Cook at the helm, we
might actually trust them more than Facebook and the current crop of actual
banks.

The thing I don't get is the 'crypto' part of the currency; why that? Why not
just become FaceBank and do it the old fashioned way?

~~~
lasagnaphil
I want to note that KakaoTalk [0], which is the de-facto messenger service of
Korea, is exactly going this route. Although having a straightforward monopoly
on messenger services in the country, it has failed to find a sustainable
business model in the past. However, five years ago they launched a service
called KakaoPay [1], which lets you send money across KakaoTalk friends right
in the app. And quite recently it launched its own bank called KakaoBank [2],
and is nowadays even issuing debit cards. I expect many social network
companies to move in similar directions; once you have a monopoly on
communications, network effects are too strong to ignore.

[0]
[https://en.wikipedia.org/wiki/KakaoTalk](https://en.wikipedia.org/wiki/KakaoTalk)

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

[2]
[https://en.wikipedia.org/wiki/KakaoBank](https://en.wikipedia.org/wiki/KakaoBank)

------
qqn
I can't believe no one's mentioned that Mr. Robot scene yet:
[http://youtube.com/watch?v=1ee-cHbCI0s](http://youtube.com/watch?v=1ee-
cHbCI0s)

------
jmalkin
Is it unusual or unheard of for a senate hearing to be held into an unreleased
product?

------
whatshisface
> _Facebook’s core revenue model around Libra is that more online commerce
> will lead businesses to spend more on Facebook ads_

That's not believable, but I think it was meant as a believable motivation
that could be told to people to make them feel like they understood Facebook's
motivation.

~~~
tmh79
Agreed, its not believable at all.

It feels like when FB told everyone that they would never data mine whatsapp,
and then started mining like 18 months after acquisition.

~~~
SolaceQuantum
Funnily enough it was claimed that whatsapp is encrypted and thus not mineable
in the senate hearing when a senator explicitly brought this up!

~~~
envy2
Message _content_ is encrypted and thus not mineable; metadata is a separate
issue.

------
golemiprague
How do we ensure that they don't politically discriminate against people? What
happen if they block you on facebook? At least if the government is doing
something I don't like I can vote for a different one, how can I influence
facebook decisions? I'd rather have someone who must uphold the first
amendment managing my money than someone who don't or even worst, will take
the interest and demands of countries like China into consideration.

~~~
raxxorrax
Mastercard and Paypal have already done this, so getting any different payment
provider would be a success already.

------
thinkloop
The most important quote might be from Mnuchin yesterday:

"Treasury takes very seriously the role of the US Dollar as the world's
reserve currency, and will continue our efforts to protect our country". [1]

Are you supposed to say that out loud?

[1] [https://youtu.be/zAICzg8ir50?t=370](https://youtu.be/zAICzg8ir50?t=370)

~~~
ForHackernews
Huh? Why not?

The US gains strategic advantage from the power of the USD, and signalling
their intention to protect that advantage will only help reinforce it.

~~~
thinkloop
Well there's this whole thing about fighting terrorism and money laundering,
and individual rights and small government, etc. In this context it's odd for
the government to be picking winners. We are also the leaders in crypto. Many
US citizens are involved in crypto. It's _almost_ as if the government had a
stake in GM and so started making rules against Ford under the guise of public
safety. Doesn't it seem like this should have zero effect on policy decision?
If not, shouldn't the rest of the world then also be looking out for their own
interests and make sure that the dollar reserve status is undermined? The
latter isn't beneficial to the US, so framing it that way seems like a bit of
a slip.

~~~
adventured
> If not, shouldn't the rest of the world then also be looking out for their
> own interests and make sure that the dollar reserve status is undermined?

I'm confused by most of what you wrote. The rest of the world is looking after
their own interests, that's why nearly every country has its own currency.
It's why the Euro exists. It's why the Federal Reserve isn't literally the
global central bank controlling a single currency that everyone on earth must
use. The Eurozone - for one example - is and always has been interested in
promoting the Euro as a dollar-competing global currency.

Russia and China, as the primary military competitors to the US (and China as
the sole economic superpower competitor to the US), are persistently
attempting to either compete with or undermine the US dollar hegemony. Russia
hasn't been subtle about wanting to see the dollar's prominence reduced for
most of Putin's time in office.

~~~
goatinaboat
_every country has its own currency. It 's why the Euro exists_

These two statements are contradictory. Ask the ordinary Greeks or Italians if
they feel the Euro supports their national interests. The Italians are even
talking about rebooting the Lira now.

------
rufusroflpunch
I genuinely hope this takes off. The idea of breaking the government money
monopoly is very appealing to me.

~~~
colechristensen
You prefer government by Facebook shareholders instead of democracy?

~~~
nishmastime
Having more than one option is worth infinitely more to me than just one
option I can vote on. It's not like the US dollar is going away. You present a
simple example of false dichotomy rhetoric which hurts discussion and is
uncharitable to the reasons someone could see the upsides of having Libra
around.

~~~
colechristensen
Libra becoming a significant amount of trade takes soverenty away from
governments. Giving it to Facebook is not giving it to the people, it's
transferring it to a corporation.

There's no dichotomy there, but straightforward transfer of soverenty to a
corporation.

~~~
rock_hard
You could also argue that some competition in the currency space could lead to
start governments to innovate again in that space

~~~
nfoz
If we want governments to innovate in the currency space then let's pay more
in taxes to let them do that.

