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.
Look at Uber, AirBnb, Lime etc. They were launched illegally in many countries.
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.
Specific cryptocurrencies on the other hand, well, where do I start? We could be here all day.
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?
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.
A single person might use Libra because it is useful for them, and one more user of Libra will not change much. However, it is difficult to assess the risks that could come with FB having control over millions of people's transactions, and then factor that in your individual decision. And that assumes that people know what can go wrong with monetary policy, which is far from reality.
To make an analogy... "If a country's citizens chose to use opioids for pain management, it must be because they found it useful, and the country should not have permission to prevent it."
So apparently no one does meth, or gets involved in pyramid schemes, or buys ridiculous ICOs.
You are right, there are no systems that are perfect when they involve humans. However, you used two countries that are, respectively, failures of socialism and communism as an argument against the "invisible hand of the market".
Also, I country might have laws about equal access to financial services, which libra might not offer.
> Better to ask for forgiveness than for permission
Mantra/MO that they have been following since inception.
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.
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.
> “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.
Money transfers between countries in particular poorer ones is absolutely not a solved problem. Neither is accepting money for products/services in countries where not everyone has a bank account or a credit card. And there is rampant corruption in many places as well.
Even a handful of these are enough to make the effort a success.
Check out M-Pesa or EcoCash. These are largely solved problems from a technical point of view.
International money transfers between entities not on the SWIFT network is still not a solved problem, or more specifically, the solutions that do exists are expensive and slow (and SWIFT transfers can be quite expensive)
Money transfers in some poorer countries are done successfully via sms messaging and have been for years. You are basically trying to sell people a payment service on their phone, when they already have a payment service on their phone that is backed by the phone company, which would seem less risky to the average user than having the same thing but backed by a marketing scheme.
> Money transfers between countries in particular poorer ones is absolutely not a solved problem.
It may come out wrong (that is, there are some people that legitimately and desperately need this in these countries) but I fear this will mostly enable more extortion and scam schemes. And of course, one more way for Facebook to gather data.
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.
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.
It is however true what you are saying. But I can easily believe that these companies would exploit those countries even more than "traditional" banking systems ever could.
To my knowledge you don't even need an internet connection for mobile money.
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.
That's a pretty big difference! It's the one that makes Libra a currency.
Non-redeemable purchasable tokens could meet the definition of a currency. Conversion can be facilitated by exchange between users, rather than by the issuer. In this case, the issuer's sale price only sets an upper bound on the exchange rate.
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.
There's also the issue of scale. Facebook is everywhere, if it controls our money it can become more powerful than governments.
We've probably crossed that bridge already, but this would certainly speed up that outcome.
Hmm I see why this might sound scary but I don't get why this is a bad thing, it might be the competition we need against governments to improve monetary systems across the planet.
Also, I disagree with the part about a corporation being "elected". If you don't like how your schools run, for example, you can vote for a different government, and at no point you will lose the schools for voting differently. If you don't like how Facebook is run (or any other company for that matter) the only way to "vote" is to be ready to stop using Facebook. In other words, the cost of having a say in how a company is running a service is possibly losing access to the service, and therefore the company has far more power over you than the one a "government" would have running the same service.
Individual governments actually feel threatened by a global currency that is available on platforms most of their citizens already use and is backed by a basket of geographically distributed low volatility assets.
If US is worried, then governments with smaller and more volatile currencies may be having a panic attack.
Rather than relying on Reddit, for instance, to determine who owns what, everyone can check the blockchain to see for themselves.
The public ledger means that Reddit doesn't (in theory) control the ledger. Reddit couldn't go in and delete coins or give coins without payment. Reddit could have a large stash of coins though and be willing to buy and sell coins though.
Libra though is kind of really weird. It is a "decentralized" system but really the decentralization is just putting it in the hands of a small group.
That isn't totally a bad thing, but it definitely isn't a great thing. Look at 51% attacks, that is why having a small group of large holders is a really bad idea. On the other side though, the large holders are well-known so at least everyone would know for sure who is pushing around the network.
Actually, there would be nothing stopping them giving coins without payment. The ledger cant record that payment was received in order to mint some coins, it would just record that coins were minted. Thats what scary about this whole situation. They could mint extra "funds", and as long as user deposits are greater than what they "spend", you would never know.
I was perplexed as anyone about the use of blockchain for Libra, but seeing this thread I can imagine a scenario where it makes a ton of sense. If they are simply using a markov chain to create a ledger that makes public all transactions in a provable way, then this actually seems like a good idea to me. If you give FB $10 and expect to get X Libra back, you need your bank's help to prove that you gave FB $10, but you don't need anything to prove that FB did or did not give you X Libra (assuming you agree to identify yourself as the recipient of the transaction).
In fact, I don't think we actually need proof that FB is receiving funds for its Libra, because FB has tonnes of cash (almost literally). You can think of the receipt of Libra as a bond rather than as cash. You can then trade that bond for things or other cash. Because of the aforementioned tonnes of cash, this bond quite rightly should be highly rated -- in fact, I suspect it would be rated higher than many government bonds.
This may worry governments. I'm not sure -- incredibly liquid bonds would essentially be cash and could undermine weak currencies. You can imagine that if you are in trouble with hyper inflation, anybody who can will grab Libra because it will be easy to get and very, very liquid. This could sink your currency pretty quickly.
On the plus side (and I can't believe I'm actually saying this), this is practically exactly what I wanted when BTC was first released. Of course it is crap that it will be run by a single entity... but if it's liquid enough and if they don't start charging ridiculous fees it would be awesome as a payment method for online purchases.
I predict that not only aren’t governments worried, but they will crack down hard on Facebook. In fact, if it ever happens I will personally write to the Australian Consumer Competition Council and ask them to make sure they don’t try third line forcing (forcing people to only pay with Libra-bucks or what they are called). EBay and PayPal tried that, and got smacked down very quickly.
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.
[it doesnt have to be facebook's currency, any cryptocurrency could have major monetary policy implications]
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.
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.
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.).
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.
And it should be easy to implement in a private consensus blockchain.
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.
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 and is not exactly new or revolutionary.
edit : wrong word
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.
Most EU countries have had deposit guarantees for a while (even before the crisis). It's an EU-wide rule since 2014 . 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?
According to them, yes: https://libra.org/en-US/about-currency-reserve/#the_reserve
At least a bank is regulated and holdings are insured up to a certain amount.
Considering some rather beleaguered tech company's fancy new crypto-whatever to be more stable than currencies that have decades of rather benign market histories does not strike me as rational.
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.
You should read the comments in this and the announcement article (still on front page since yesterday) as it seems you are confused.
yeah, that kind of shit must be stopped. you disagree?
Actually i don't disagree. And look, facebook coin has addressed all these issues from the get-go.
Sure we can "trust" (this is central to current proof of stake systems) that facebook et al won't do anything nefarious, but I'm not sure we should be trusting facebook at all, let alone with our money.
> There is nothing for the consumer here,
i disagree on that, i could use it to earn micropayments from facebook users tomorrow, this can be pretty impactful.
> by becoming a bank in everything but name (and regulation).
Cryptocurrencies are regulated, even though their status is still not well defined, and this will actually pressure the US SEC to set their standards more rigorously. KIK is already trying to push for that. I don't have a problem with facebook becoming a bank, it's not like banks have a stellar reputation either.
Suddenly everyone is agreeing that blockchain technology has value! I’m just so shocked
The crucial point here is that FB is creating a currency they control. It can still be true that FB are idiots for using a blockchain instead of a database.
The claims I've seen have been (1) that the whole ecosystem is overrun with scammers and (2) that the blockchain is being ill-used (hence the NIST workflow).
I'd say (2) still applies here - the "blockchain" here is just a distributed database, which already existed before Bitcoin came around. Bitcoin's innovation - combining Merkle Trees with POW - is irrelevant in a network of trusted partners.
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?
Also any note yet or the scope of this? Will it be pushed to Instagram and what ever other garbage Facebook peddle?
They have said this will be available in Messenger and WhatsApp.
I literally reference them owning Instagram in my post, Whatsapp i forgot about admittedly/
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.
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.
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.
This is a bank, albeit using the cryptocurrency label to pretend it doesn't need regulation.
> "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)
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.
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.