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The reason for Bitcoin’s design is precisely because a centralized/pegged alternative was tried and failed: https://en.m.wikipedia.org/wiki/Ecash

Facebook’s currency is not a successor of Bitcoin, it’s an inferior reincarnation of a failed predecessor.




The surrounding context around an idea is always changing. Facebook itself was tried many times with various degrees of success (MySpace; Friendster; LiveJournal; Classmates.com; Xanga; EZBoards; AOL; Usenet; fingerd; BBSes; etc.), but it took a new and relatively trusting generation getting online and being packed onto dense college campuses to make it take off.

I personally think that Facebook's cryptocurrency will fail because today's climate is anything but trusting, but just because an idea failed in 1983 doesn't mean it'd fail today. There's also a strong possibility of it succeeding in the developing world and failing in the developed world.


Facebook's original success was because the platform was somewhat pure (no arbitrary CSS decorating profiles) and exclusive. They reached the critical mass they needed at that phase then opened it to the public


Indeed.. fast, Microsoft-like, pure css, complete profiles.

Then it copied/pivoted to twitter’s timeline. And finally took off with a proper mobile app, and social apis for gaming. All while copying/buying - stories from Snapchat/Instagram, Whatsapp/messenger, live/ig to/twitch


> strong possibility of it succeeding in the developing world and failing in the developed world

It could work pretty well in the developed world, too, if transactions are instant and cheaper than credit cards or PayPal.

But whether it succeeds or fails as a payment system has nothing to do with any blockchain tech, or whether they call it a cryptocurrency.

This is not a competitor to Bitcoin, because it cannot be what Bitcoin is -- open, borderless, neutral, censorship-resistant, and public.

Maybe it will be better at buying coffee than Bitcoin. I couldn't care less, because buying coffee isn't the purpose of Bitcoin.


It can still be "open, borderless" though.

I can't use Venmo. Even if I would like to, I simply can't.

I can have a Libra wallet though and even if Visa, Mastercard, Paypal and Stripe decide that my market isn't big enough to sell me some Libra directly, I can still have that wallet and find others means to fill it.

That fit both the open and borderless nature of it.

I'm not saying it will be cheap, and surely filling it would require an intermediary (like in every single others cases), but at least that intermediary can be anyone that have a Libra wallet. That person could simply be someone that does wire transfer to someone that can purchase Libra, don't care, but it's now possible.

Sure having them behind make it not possible to be "neutral, censorship-resistant, and public", but at the end of the day, does it matters to me that just want to pay? Nope. Would it matter to me if I want to give money to Wikileak, sure most probably, but that's not why I want it. Like you said, that's not its purpose.


I'm always surprised people don't mention Orkut more often in such arguments.


Not to mention that pegs always fail in the land of financial markets anyhow [1]. Interest rate pegs, currency pegs, pegs to commodities e.g. gold tend to collapse in the long run because they create a "perfect trade". When the value of two separate things eventually diverge due to external market forces, you can take advantage of the peg by trading the less valuable item for the more valuable item at the historical peg.

In the context of Facebook being pegged to a basket of international currencies, the peg to each will need to be reevaluated frequently as the currencies fluctuate and arbitrage opportunities increasingly cost the peg-guarantor money to uphold the peg. These fluctuation can be cancelled by derivative contracts e.g. currency swaps, but those cost premiums to maintain and periods of volatility can get very expensive.

[1] https://www.google.com/search?q=site%3Aarmstrongeconomics.co...


> Not to mention that pegs always fail in the land of financial markets anyhow... In the context of Facebook being pegged to a basket of international currencies, the peg to each will need to be reevaluated frequently as the currencies fluctuate and arbitrage opportunities increasingly cost the peg-guarantor money to uphold the peg.

Assuming that Facebook is the sole issuer and redeemer of the coin, this is a nonissue. By backing the issued coin 1:1 with reserves according to the composition of the basket, Facebook can redeem any coins at face value. Hong Kong, for example, maintains a currency pegged to USD backed entirely with USD holdings.

As an aside, your source, armstrongeconomics.com, may not have the best credibility:

"In 1999, Japanese fraud investigators accused Armstrong of collecting money from Japanese investors, improperly commingling these funds with funds from other investors, and using the fresh money to cover losses he had incurred while trading. United States prosecutors called it a three-billion-dollar Ponzi scheme... Armstrong admitted to deceiving corporate investors and improperly commingling client funds—actions that according to prosecutors resulted in commodities losses of more than seven hundred million dollars—and was sentenced to five years in prison."

[0] https://en.wikipedia.org/wiki/Martin_A._Armstrong


I am aware of his past and still believe that he is the best in the world at what he does. His historical and financial insight is unmatched.


I spent a few years in Belize, and their currency is pegged 2:1 to the USD. Given the size, capability, and general competency of the Belizean government I always felt it was a major catastrophe just waiting to happen. Worse, nobody there seems to be remotely aware that this is a very risky way to manage your currency. If it were to collapse it would be a terrible blow to an already struggling country. Like diaspora terrible.


All they have to do is make it expensive and/or inconvenient to arbitrage against them. Some minimal transaction fees would probably kill the ability to make money exploiting small tracking errors.


The Libra whitepaper is supposed to debut this month, so I guess we'll see to what extent it's a true cryptocurrency.

I wish Libra was building on an Ethereum scaling technology, like Plasma, but most likely it's a new standalone proof-of-authority blockchain where the validators are the hundred companies investing $10M each.

In terms of the sliding scale between centralized and decentralized, Ethereum v1 and Bitcoin are considered to be "pretty much impossible to change history"; Ethereum v2 is expected to be "extremely impossible to change history"; but Libra would require only that the hundred companies agree to a process by which history can be changed: Libra will be very centralized in practice and while it might and I hope help take crypto mainstream, Libra is not a substitute for Ethereum's secure base layer.


It's not only about changing history, it's about getting transactions mined in the first place: censorship-resistance.

In Bitcoin, as long as you pay the fee, some miner will probably mine your transaction, based on purely economic incentive. Miners that refuse to serve certain customers based on "tainted" coins or illegal activity simply forego that revenue to miners who don't.

I'm going to go out on a limb here and conjecture that Facebook at the 100 entrenched industry players who are part of this new system will probably not consider censorship-resistance as a high-priority goal for the system. They will probably have a law-enforcement login portal that calls up Facebook's data profile of participants in a suspect transaction. There will probably be blacklists and fund freezes. There will probably be State Department liaisons to help comply with sanctions.



In practice the Bitcoin and Ethereum hashrate is controlled by far fewer than 100 mining pools.


Do you think there's a way to prevent this gradual centralisation of mining that we see in so many PoW chains?


There's p2pool and various proposals to let miners (not pools) produce blocks so that pools would just handle payouts. But once you fix pools you might discover that there are still less than 100 data centers doing the mining which is probably due to geographical electricity costs and economy of scale, neither of which can really be fixed.

Farther afield you have stuff like Chia's proof of empty disk space or of course PoS.


Algos with asic resistance is a recurring theme even outside of cryptocurrency. All modern password hashing optimises for it.

Monero is currently pushing back with randomx which performs well on cpu's and not much else: https://github.com/tevador/RandomX


How is it inferior to Ecash? FB's coin is not meant to provide anonymity features like Ecash did, but that's just a design choice. Other than that, Ecash is often suspected to have died due to the lack of reach and partnerships, which is not something FB lacks.

So far, FB's coin looks very interesting.

>Facebook’s currency is not a successor of Bitcoin

Yeah the title is just low-quality clickbait; it's got nothing to do with Bitcoin.


What makes this a cryptocurrency? It should be called facebook giftcard.


cryptocurrency is more SEO/Marketing friendly than giftcard. /s

Seriously, though... the whitepaper isn't out yet so we don't really know how this is supposed to work. It'm sure it will use some type of permissioned blockchain for convenience/ensure trust between all the partners and dissolve responsibility for all decisions the consortium takes.


It isn't a cryptocurrency. It's just a digital currency.


+1


I don't think its clickbait, a lot of projects in the crypto space claim to be like bitcoin but better, bitcoin is the foundation upon which a lot of projects showcase themselves to potential users, usually in the first few paragraphs of the white paper.

This coin might look interesting, but for all of the wrong reasons.


I doubt it will fail. Facebook is too big to not gain traction from users... Also, they are big enough to push ads every where..


David Marcus is a Sith Lord. https://github.com/libra/libra/issues/41




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