The thing that separates this from a bank database is a small thing, but important, and that's that even the bank cannot reduce your balance in secret without your authorization, since transactions are signed and the ledger is public. That's because of the cryptographic primitives used.
I think in the end we have to accept that taxonomies are going to have rough edges because the map is not the territory. With Bitcoin as the canonical cryptocurrency there have been a number of experiments that have removed or added guarantees. A distributed, verifiable, immutable chain of history is basically git with a couple of extra features, so the lines are necessarily blurry.
Rather than arguing semantics, the main questions are to what degree it is censorship-proof, permissionless, and scarce. The third one is the one that is least clear from the description and whitepaper. It sounds like they're trying to get the first two as well, but the designation of initial stakeholders might make that tricky until they can transition to proof-of-stake.
>the bank cannot reduce your balance in secret without your authorization, since transactions are signed and the ledger is public
This capability is pretty pointless when the bank can indefinitely suspend your ability to make transactions. The ability to block transactions is an essential part of compliance with anti-money-laundering and other banking regulations.
> This capability is pretty pointless when the bank can indefinitely suspend your ability to make transactions.
You beat me to it: Having cryptographically signed transactions simply does not matter when you have to submit the transaction to what Zuck calls a "validator". The validator will just refuse to validate if your address is on a blacklist.
The net effect is that the coins are frozen. And since this is a backed currency, the backing will then be reduced by the amount corresponding to the frozen coins. This has the exact effect of lessening a user's balance.
Naming it "Byzantine Consensus" in their white paper turns out to be surprisingly apropos.
Maybe we need to question whether the government should have the power to unilaterally block a transaction. Just because they’ve been able to in the past doesn’t mean we have to artificially limit technology to let them keep that power.
In the same way they used to be able to tap your phone, but now we can encrypt our calls and make that much more difficult. That doesn’t mean encryption should be illegal.
> Maybe we need to question whether the government should have the power to unilaterally block a transaction. Just because they’ve been able to in the past doesn’t mean we have to artificially limit technology to let them keep that power.
> In the same way they used to be able to tap your phone, but now we can encrypt our calls and make that much more difficult. That doesn’t mean encryption should be illegal.
The government has the power to unilaterally block any transaction in any domain, so long as they deem the transaction to have occurred in or whose parties are under their jurisdiction. I think that, generally speaking, it is rare for the government to cede jurisdiction over a domain once acquired.
> The government has the power to unilaterally block any transaction in any domain, so long as they deem the transaction to have occurred in or whose parties are under their jurisdiction.
The government cannot block cash or barter transactions. Instead, they can declare certain kinds of transaction illegal and then use the courts to punish anyone who engaged in an illegal transaction.
It’s a subtle but important distinction— to do anything against you, the government needs to present some sort of a case to judge and jury, and you have an opportunity to argue your side.
The government can freeze access to your assets unilaterally without your input if they deem it necessary. They can even take your cash and charge it with crimes! That's not even including things like the US government OFAC list which you could end up on without due process.
But to your point, thankfully we (mostly) have due process with our government (in US at least); the same cannot be said of dealing with corporations. I certainly see your point. One large fear I have around money being a number in a database is that your access to the monetary system is more easily revoked, whomever the controlling authority may be.
I think that AML[1] laws were just an example. The point is that the validators have the power to block transactions. This could be due a government request, or because you posted something that Facebook (or one of the other affiliated companies) doesn't like. The actual reason is immaterial; the important thing is that currency is worthless without the ability to spend it.
No, we really don’t need to question that. Financial laws exist for a good reason. Nor should some private company have more power than a sovereign nation just because.
The main reason we do need to ask the question is that Bitcoin is currently effective at preventing governments from blocking Bitcoin transactions. Even if financial laws exist for a good reason, they don't supercede the "natural laws" of cryptography that determine which actions are possible. So the question isn't whether Facebook should have the power to do X. The question is whether Facebook should be allowed to do X, given that Bitcoin is already permitted to do so.
Nope, I feel that my opinion reflects both the conventional wisdom and the expert consensus, which would be a waste of my time to reiterate. It’s the people arguing a multinational corporation ought to be able to circumvent the laws of sovereign democracies that have ‘splainin to do
Isn't AML just a bandage applied on top of a larger issue? What are the use cases for AML? How effective is AML in preventing and or solving for those use cases?
I just mean that your funds at the bank can be seized without your assent for numerous reasons - civil judgements, asset forfeiture, etc., and given to someone else.
The reasons you list are the bank complying with the law. Civil judgements and asset forfeiture are legal matters where the court has decided that your assets are declared forfeit in order to make reparation for some legal matter. Presenting this as proof of your money's insecurity in a traditional banking institution is incredibly disingenuous. The fact that your bank complies with the laws of your country is just more proof of why traditional financial institutions would be more trustworthy than a consortium of tech giants.
What can also happen with banks is that they forbid you from withdrawing more than a certain amount, or take x% from the top of every account because of economic issues.
I've never heard of the latter occurring, can you point me to an example of where this has happened and which countries it has happened in? I can imagine that anything could happen in Zimbabwe, but if this happened in the western world I'd expect widespread outrage.
The former isn't particularly common in modern times. In the US deposits are insured by the FDIC, which has pretty much brought bank runs to a halt. It's happened in Greece recently if I recall, but even then it's still pretty rare.
I don't consider either of these good reasons why an international consortium of tech giants is any more trustworthy than domestic financial institutions that, while greedy and wicked as they may be, are tied up in regulations.
Well Greece is the example I was going to name. It doesn't happen that often, but it's quite possible.
As for the FDIC, there's a similar deal in most countries up to a specific amount(FDIC is $150K, other countries sometimes have less), but I don't think the FDIC has enough money for a more massive bank run.
I agree with you that Facebook & co. aren't that much more trustworthy at all, my comment was aiming more towards pointing out some benefits of things like Bitcoin.
Ultimately you’re still beholden to private corps to transact at all, and transactions will be tied to your id, so I don’t see this having any benefit over bank-sourced transactions at all.
> any benefit over bank-sourced transactions at all
I see a few benefits, but nothing on the order of the full potential of crypto.
1. Your FacebookCoin value is a collection of the world's currency value and not tied to a single goverment currency. It's more likely that {Single Fiat Currency} experiences hyperinflation than {Collection of Fiat Currencies} thus some of your risk is mitigated. Most individuals hold the majority of their wealth in a single currency, or in assets that are sold for a single currency (NYSE transactions are completed in USD, same with US based real-estate.)
2. Transaction fees can potentially be lower than incumbents. This is probably going to be especially true with person-to-person international transfers and could big a huge win for third world startups dealing in digital services.
3. The barrier to entry will, in all likelihood, be significantly lower than traditional banks. I've known people with a credit score so low they couldn't open a bank account. I've meet people with anxiety of using a debt card because of over withdrawal fees.
If it's centralized the bank/consortium can do whatever they want. Your transaction might just disappear if the consortium decides that today is a good day to do so.
I think in the end we have to accept that taxonomies are going to have rough edges because the map is not the territory. With Bitcoin as the canonical cryptocurrency there have been a number of experiments that have removed or added guarantees. A distributed, verifiable, immutable chain of history is basically git with a couple of extra features, so the lines are necessarily blurry.
Rather than arguing semantics, the main questions are to what degree it is censorship-proof, permissionless, and scarce. The third one is the one that is least clear from the description and whitepaper. It sounds like they're trying to get the first two as well, but the designation of initial stakeholders might make that tricky until they can transition to proof-of-stake.