Libra isn't a cypherpunk wet dream, but it moves us in that direction and thats a good thing. This article is written from the perspective that crypto mass-adoption is right around the corner (i.e. just a few UX tweaks) and that Libra will displace the crypto-utopia that could-have-been. I couldn't disagree more.
The lack of adoption is a combo of a 1) network "dead-zone", 2) reversal risk, and 3) regulatory friction.
FB & Co are uniquely situated to fix these 3 in a way small companies just can't.
1) Any network is useless unless people you need to use the network are using it. Cryptos are still in the "dead-zone" where there's not enough people using it where it has value as a payment platform. By integrating into existing apps (Venmo, FB Messenger, Paypal) that could change
2) Every fiat transaction has some level of reversal risk. There is legislation in the US that requires, and companies that implement, reversal of payments if the payor claims fraud or account takeover. Any company that sits in between fiat systems and the crypto systems have a huge amount of this risk cause they can't reverse crypto payments. These companies are uniquely capable of handling this risk because they already spending resources to figuring out that you're a real human being and you are who you say you are.
3) Regulatory friction (AML/KYC) is something these companies are uniquely able to tackle because they have your identity. Furthermore, they have the legal resources to find out how far they can push the line and lobbying to keep them from harm when they get too close.
In cypherpunk terms, what’s dreamy about a crypto currency with no anonymity, that shifts power from international democratic governments to private US corporations?
It's not cypherpunk at all, but it's cyberpunk in spades! The world switching to corporate currency is like something out of a 80's/90's William Gibson novel.
1) Irreversibility. You have a payment system with that small companies can actually build gateways to true cryptos. Not to mention the “high risk” businesses locked out or priced out of fiat gateways
2) Cryptographic proofs of payment. With that you can do a lot of fun stuff, especially with smart contracts. Going back to #1 you can make the gateway trustless
I understand that there are important use cases where irreversibility is must. My issue is that in a typical consumer-focused market (like most if not all online shopping or physical shops) it is only to the advantage of the seller and has essentially no benefit for the buyer.
Because you thunk governements having power over currency is a good thing? At least with corporations you can choose to deal or not with them, that's the dream.
> At least with corporations you can choose to deal or not with them
That position beaks down when the corporations control the means of transaction.
It would be a different story if Libra was a bunch of companies making an arrangement to accept each other's individually-issued cryptocurrencies, but instead its a cabal issuing one scrip that they all control.
> Because you thunk governements having power over currency is a good thing?
I don’t have too strong an opinion, but certainly it’s a well-understood thing.
What specifically is bad about it? The ability for governments to seize money or interfere-with/surveil transactions looks like it will be preserved via Libra’s KYC/AML surveillance/protections.
I suppose for people with very large amounts of money, they might disagree with their government’s currency policy re: inflation/deflation. But for those people, a huge range of investment products exist to hedge.
But perhaps they wish companies became independent of the Federal Reserve, and more in control of the value of their own currency, both in terms of exchange rates and the ends to which they can be used or not.
They also happen to be a conglomerate who’s a EULA-change away from pushing at the very least millions if not more people into this. From a person’s point of view there’s no freedom to be gained here and those people generally tend to be about personal freedom.
The libertarians, perhaps, yes. But not the anarcho-capitalists, who will always defend the right to property and freedom of agency in the markets above all other things. Which includes minting your own coin, if you choose to do so.
To be honest, the 'reversal risk' issue is a red herring.
Consumers are not going to be thrilled about storing their money in a system where there's no official "if your account gets compromised or suffers a technical difficulty, you'll be made whole" policy. If it turns into a knock-on situation where they buy third-party insurance at their expense, it looks even worse.
For merchants, even if not technically required, legitimate players are going to have to find a way to bolt refunds onto such a system. The risk to reputation would be too great-- nobody wants to be known as "this is where people go to buy stuff with stolen crypto because they never refund." And this will be priced into things, just like now they have to price in losses due to bad cheques and stolen cards.
What's the best a perfect crypto dream can offer? An appeal to super-high-risk (and outright fraud) merchants who might benefit from not having surprise clawbacks and chargeback fees.
> The lack of adoption is a combo of a 1) network "dead-zone", 2) reversal risk, and 3) regulatory friction.
No, no, no. It’s the lack of a killer app, which the author bizarrely confuses as the lack of a phone app with a good UI. What does cryptocurrency (or a currency managed by a company) do that the fiat system doesn’t, /from the perspective of a consumer/? In other words, what am I currently using USD for that would be significantly easier or cheaper with crypto? Nothing. The majority of my money goes to taxes, loan payments on large assets, and food. Those are facilitated by... the government, banks, and a bunch of merchants who are not involved in this project. Good luck to Libra!
The “crypto system” is just an algorithm. It can be changed to anything. It is merely a convention that all participants follow the same algorithm. If this thing ever takes off you can safely assume that it will be regulated the way all other financial transactions are and the algorithm will include some nice reversal features & co.
All the big players in the Association can probably afford this gamble, but if they don't already have the government and the banks on their side, then this thing is DoA.
Government only really needs to do a few things to be essential, one of those things is securing and backing the legal tender, and yes this is also one of the ways they exert authority. It's also how they maintain legitimacy, this has been true for thousands of years.
What country is going to give up this power and hand it over to a consortium of multinational corporations (with 0 banks in it) led by a corporation that is controlled by a sole person?
If it can't be nationalized then they won't let it be adopted and I'm sure every country (including the US) has any number of laws that will allow them to prevent the undermining of their currency.
They let Bitcoin do its thing because it lacked all the things this has, which let them classify it as something closer to commodity/security, and not a currency. If this thing isn't that, then I don't see how this is going to be acceptable without the government demanding a massive hand in how it is run.
You know, strategically, when you’re about to get super regulated and the government is touting antitrust probes: maybe don’t start something that competes with the Dollar.
I thought the same, but then it makes sense if you look at it from the sort of fuck-you attitude that FB leadership tends to have: "So you want to undermine us, fine. But what if we undermine you first?"
My read is that it IS the USD.
'...it may actually cement the dollar as the world currency once and for all. As the Association mops up all the fiat in the world they’ll likely turn it into dollars on the back end anyway, so Euros and Yen become Dollars and cents.'
Yeah, being a western currency, Libra competes more with RMB than with Euros or Dollars. It's more what the CFP franc is to Euros than an anti-Dollar. If the power grows too big, it may get nationalized like how the BEIC got nationalized.
The USD and petrodollar are under great pressure as reserve curencies at this point in history, this could be an effort by the globalized elites to create a new world currency. I suspect this FB initiative will fail but set up a next generation with similar size and heft
This, I think, is the value proposition to the USG. Facebook is primarily aiming Libra at foreign markets. Americans don't really particularly need a better way to pay for things online.
In the current climate of accelerating a new cold war, and potentially a hot one with Iran, the gov needs to take back control of all it's propaganda channels. FB has proven itself here as very valuable asset for disseminating view-points and is "too valuable" not to be unregulated
It absolutely does not compete with the dollar. And that is very deliberate. Because it's not a cryptocurrency. Its a scam that Visa and PayPal designed so that they could block Bitcoin etc. and continue to get a cut of digital transactions.
So these things should prevent us from innovating? That’d be sad. It’s pretty cool that we can still work on projects like that and I would even say that thanks to the spotlight we already had, it puts even more pressure on us to do it right. Which is a win win imo.
Conspicuously missing from the entire libra story is how they are actually going to manage the peg. How will they handle the custodian counter-party risk?
What I mean by that is: for libra to actually be a stablecoin, for every libra unit in circulation, FB and their merry band of friends will need to stash a frozen combo of {dollar, euro, yen} somewhere.
That "somewhere" is actually not easy at all to design from a financial infrastructure point of view: any institution (other than central banks) who will actually store that stash will have to:
- be regularly audited by independent auditors
- be risk-free (and there is no such a thing) or the peg will drift.
Worse, these custodians of what is already essentially virtual money are going to be sitting on a huge pile of currency and to guarantee the peg, won't be allowed to do anything with it.
I give it 6 months before that money is re-invested somewhere through some smart financial engineering.
> Conspicuously missing from the entire libra story
All of this is answered in the Libra whitepaper.
> is how they are actually going to manage the peg. How will they handle the custodian counter-party risk?
"The assets in the Libra Reserve will be held by a geographically distributed network of custodians with investment-grade credit rating to provide both security and decentralization of the assets."
> be regularly audited by independent auditors
Pretty much any custodian with investment-grade credit ratings will be audited and heavily regulated.
> Worse, these custodians of what is already essentially virtual money are going to be sitting on a huge pile of currency and to guarantee the peg, won't be allowed to do anything with it.
The funds are not held in currency -- the funds are invested in "a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks."
> be risk-free (and there is no such a thing) or the peg will drift.
Also answered: "as the value of the underlying assets moves, the value of one Libra in any local currency may fluctuate. However, the reserve assets are being chosen to minimize volatility, so holders of Libra can trust the currency’s ability to preserve value over time."
> funds are invested in "a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks."
They're underestimating how difficult it will be to avoid losing money.
Bank deposits So what if Facebook and their partners don't park their reserves in mortgages and derivatives if their banking intermediaries do? Banks routinely go insolvent in recessions and financial crises.
Short-term government securities Which are currently paying negative interest rates in "stable" and "reputable" nations like Germany and Japan.
A "negative interest rate" means you buy a government obligation for $1000, and a year later you get back $997.
Can Libra reserves earn a high enough return to (a) fund their admin and security apparatus, (b) cover insolvent partners and institutions, and (c) cover fraud and abuse?
It's clear from the whitepaper that there is no upside to holding this currency, but it's not at all clear that it won't "break the buck" and actually lose money.
Sooner or later, FB partners will go to a fractional reserve model and effectively convert this "cryptocurrency" into a vehicle for inflating the money supply to a multiple of actual reserves by issuing debt.
My bet is this will happen sooner rather than later, because there's zero profit in sitting on giant pile of short-term cash.
I've only read the white paper, but finance is one of my biggest hobbies, so I'm going to take a stab at addressing the concerns you mention.
It's not entirely a currency peg - it's an asset peg. The assets will be Treasurys, bunds, etc. that are _representative_ of currencies, but are not direct currencies.
The peg is going to drift. The history of currency pegs is filled with struggles by institutions to maintain the peg at a fixed level, only to let go of the peg and convert to floating. I think the idea behind Libra is that, while the peg will drift, Libra will still be a drastically more stable store of value compared to almost every other crypto.
I would not be surprised to learn that the Libra Foundation's custodians are the people holding the assets and handling the counter-party risk. It explicitly says in the white paper that the interest earned on the reserves held by the custodians will be used to pay for expenses of maintaining the network. If I was Visa, I would be more than happy to hold a basket of bonds and take a cut in a play to try to expand my customer base, by moving more people into the transaction market space.
I understand why my answer wouldn't sit well - putting trust into thesee parties and buying into the ideas behind Libra require a huge leap of faith, one that I don't think I would even participate in. But I do think that the mechanics behind how Libra manages the peg are actually not as nefarious or difficult as you laid out.
> I think the idea behind Libra is that, while the peg will drift, Libra will still be a drastically more stable store of value compared to almost every other crypto.
There will be a temptation to speculate on it. And once started, speculation could easily get out of hand. If they want some semblance of stability they’re going to be prepared to actively engage in monetary operations, just like any other currency.
Something I haven't seen mentioned anywhere yet is the amount of power controlling the reserve will grant the libra association. They are free to move the reserve around between "low risk" investments. If the reserve grows to a large size that will mean they can prop up a (small) countries currency (and thus economy) by using the reserve to buy some of it, or it can crash a (small) countries currency that it is currently invested in by divesting.
Small countries might have to start thinking much more carefully about regulating the companies controlling this if it succeeds.
Capital flight is already a thing. But large scale speculation on the economies of random small foreign countries isn't a "low risk" investment and the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to.
Sure, but if this succeeds they will have order of magnitudes more capital to do it with than is already a thing.
> large scale speculation on the economies of random small foreign countries isn't a "low risk" investment
They are the ones who get to define the term "low risk", as part of a basket of many such economies it deserves the term as well.
> the Libra Association has literally no incentive to move the backing of assets away from bonds denominated in currencies its user base wish to convert to.
Of course it does, and not just in terms of exerting political pressure (which is an incentive which is literally the purpose of this conversation) but in terms of maintaining a safe basket of goods with as high interest rates as possible.
I don't think Libra is going to end up with orders of magnitude more capital than the rest of the world's investors, most of whom are much more risk tolerant, and they're obviously going to define the term "low risk" as "let's make an easy profit by backing our US Libra-holders' accounts with US Treasuries instead of cash" and not "let's corner the market for Rwandan government securities to try exert political pressure on them"
> why does everybody say it's a "Facebook currency", a Facebook project, if there are +/- 30 corporations in the association?
Because FB launched it, and currently appears to have the most control over the project. At the same time, people don't actually take the time to understand the governance model.
> Does Facebook have more decision power than Visa, MasterCard or any other participating corporation?
No. They get a seat in the governance organization, which they hope will be about 100 organizations at launch (so they get ~1% of the vote.)
> Or is Facebook simply the main vector Libra will be promoted with?
For now, looks like it.
> Would Libra still be a project if Facebook was (hypothetically) shut down?
Yes, it would. Again FB will have just 1% of the control at launch.
> Yes, it would. Again FB will have just 1% of the control at launch.
But wouldn't FB be running/in control of the most of the infrastructure behind Libra? The stability of the currency would be dependent on FB providing the core services behind Libra. Having "just 1% of the control" doesn't matter if FB can just shut it down and/or destabilize it's value at will. It's FB actually intends for it to be an open cryptocurrency then why make a new one when we already have several options available other than being able to exert control over it?
The origin of physical currency -- coins -- happened 2000 years after money was invented. Coins were invented as a way to provision armies.
It worked like this: soldiers were paid in coins. Taxes were required to be paid only with the new coins. The only way to get the coins, to pay your taxes with, was to sell supplies to soldiers who had coins. Armies supplied, check.
Facebook has an opportunity to force its coin into use by a similar stratagem: offer advertisers a discount (at first!) if paid in Libra. Advertisers can only get Libra from Facebook account holders. Advertisers have to sell at a discount, for Libra, to get enough Libra, but they get it back in the advertising discount. If buyers want these discounts, they need to get Libra from Facebook.
Soon, Facebook controls the economy of the world.
It was recently explained to me that Facebook only wishes they could be as evil as Google, but they were way behind. (Google passed Microsoft sometime back.) This could leapfrog Facebook far beyond Google's dreams.
Are we in for Dystopia? I can't see how not, unless they fuck up so it's both too hard to use and too easy to get ripped off.
The connections to Aadhar is far more interesting than is mentioned in the article. There is a revolving door between USAID's 'Catalyst' promoting cashless transactions, Aadhar and the people who benefited from demonetization. The Indian state has also been extremely antagonistic to Bitcoin and other such 'anarchist' platforms.
The state apparatus often grumbles about 'terrorism' and how internet has made things difficult for them. Infact, the minister incharge of IT was quoted as saying in 2011 that internet access needs to be moderated with IDs (guess which one). It's almost certain that such legislation will be authorized in the coming decade - perhaps sooner if the "i-patriot" act which is in the waiting (in the US) passes
earlier.
It may very well be that the retainers of the East India company (aka deep state) are planning on selling the nation for a few pieces of silver again - which would explain why policies remain uniformly the same with every dispensation. Would not be the first time, and should not be surprising. However, since history education follows the colonial model of cryptic self-justification, it should not surprise anyone that clear foreign geopolitical moves (India has close to half a trillion of IMF/WB loans) are now seen as 'nationalistic'.
It'll be very interesting to see how this proceeds in India - given its hostile stance on Bitcoin. I'm betting the state will welcome it with open arms and will probably proceed to tie it to UPI. In fact this could take a big share of the foreign remittance market, and could rope in Indian banks in to influence the state. I imagine people like Nandan Nilekani, who illegally pushed the 'Big Brother' project, will play crucial roles here.
Sure it'll be nice to make easy money off the interest on deposits. And it'll be nice to make money on the analytics that can be run on all the worlds' transactions. Great.
But the biggest pay off is that once consumers buy into Libra as a thing on its own, the policy can be changed to no longer link it to any basket of currencies, and it can then be issued without that annoying and expensive currency-buying-thing. Just pure profit.
You’re missing the part where Treasury agents swarm the Libra offices and arrest everyone for various flimsy charges. If there is one single thing that enrages the government more than anything else, it is denying it revenue.
It's a hackernoon opinion blog post, not the New York Times. And you don't need a citation for something that is clearly meant to be hyperbole.
[Citation needed] has gone from a notation about checking facts to a trendy response whenever someone doesn't like something they read in a blog post or comment.
If the author is going to make such extraordinary claims, I expect to see some research to back it up. There are plenty of metrics: google trends, headline count, tweet count etc. Since he hasn't done the legwork, and the claim rings false, I'm calling him out.
It's not hyperbole. People are completely under-reacting. If Libra succeeds, it could completely change things for the worse. It has a good chance of succeeding once governments understand that it impedes real cryptocurrencies.
Can someone explain what this provides to users over, say, a credit or debit card?
You don't have the rebellious notions of sticking it to traditional banks, not do you have (completely imagined) anonymity crypto fans have gravitated to. You don't have any of the intangibles crypto fans like.
It just seems like Facebook wants a central bank. Who's asking for that?
Direct peer-to-peer payments: Those are currently a nightmare when you regularly travel. US: Venmo, Europe: SEPA, China: Wechat, etc. If Facebook manages to sign up enough stakeholders from different countries (that provide gateways between Libra and traditional bank accounts in their respective countries) Libra would provide a viable global alternative to the currently very fragmented market.
PayPal is not available in a lot of countries (Turkey would be one example). Western Union might work, but the fees are high and there's much more friction. In case you're based in the United States: Would you use Western Union over Venmo / Square Cash. If you're based in Europe: Would you use Western Union over SEPA? Libra has the potential to provide a low friction environment (like Venmo) supported by local companies that's available globally.
And while Libra definitely isn't perfect I think the set of trade-offs they chose are pretty reasonable. Another advantage over Venmo, Western Union, etc. is that the Libra will be run by a multiple independent companies, instead of locking you into a single company which is the case with the currently existing solutions (with the exception of SEPA).
> If you're based in Europe: Would you use Western Union over SEPA ?
At least in France, people actually use apps like Venmo for person to person transfers (or cash, or cheques, but they're on their way out).
We mostly use SEPA for either automatic bill payment authorization, or big transfers.
No one will start a bank transfer and ask for their friends IBAN to pay back two beers.
You need a bank account with Paypal still. This is direct payment into your personal virtual wallet (supposedly not linked to your real identity) avoiding all banks.
Depending on your country you don’t. Paypal needs a bank or a card, and for instance in France cards can be prepaid (supermaket chains can make their own).
All of that will be tied to a real identity, but I am not sure Libra will also be completely free of these ties. There must be a point where to use your wallet you’ll have to justify your identity (i.e. above some amount or some kind of purchases you hit KYC requirements)
Visa, MasterCard, PayPal, and governments are asking for a way to combat real cryptocurrencies from taking over. Because Bitcoin and Ethereum are making major pushes to increase scalability. The payment processors can't profit from real cryptocurrency and governments can't control it.
They are mainly trying to catch up with WeChat Pay etc. But they figured it would be good to pretend it is a cryptocurrency because that makes it seem like an alternative to real cryptocurrency which it is not.
It is unlikely that you will need to sit in a bank and fill out forms to get a card. You will have no more hoops to go through than in-game tokens.
Which makes me wonder, why haven't there been in-game tokens made universal yet? I don't do Facebook but didn't they once have a large Zynga game thing on the go, very much tied into the platform?
A monopoly on a virtual currency should have happened by now, one that only buys stuff in games, unlocking features etc., transferable to mates.
If this had happened then it would not be that much of a leap to make the virtual token be handy for real world things. Crypto-nonsense would not be needed, it could just be like a classic in-game token.
If the tokens can be cashed out to hard currency great. But some people might never need to do that. They could buy music and apps with mummy and daddy doing the top ups.
That would be a big no no and would ring money laundering alarms
> If the tokens can be cashed out to hard currency great.
Again, regulators, that's why Libra has the association and needs to back up each transaction.
In reality the payment processors take so big a cut that a virtual coin would not be very profitable. Plus you have to manage everyone's complaints and chargebacks. Facebook had FB credits but they scrapped it, presumably because it was not good business. There are some smaller companies who manage virtual coins on behalf of games, like superrewards.com . They take a big cut, but also save developers a lot of trouble.
In-game tokens can be legally treated as just part of the game because they can't be transferable to mates and cashed out to hard currency.
As soon as (for example) Zynga claims that tokens can be cashed out for hard currency or used to buy arbitrary real-world things outside of that game, that would mean that all kinds of money-related regulations would start to apply for them. For example, many game mechanics that include these tokens and randomness would fall under gambling laws; and money laundering/KYC laws would start to be relevant. That's why pretty much every company offering such tokens will pinky-swear that they're not redeemable for cash and real world things, and take at least some visible action to combat any black market for such sales lest they'd be considered aiding money laundering.
In essence, you can't really have your cake and eat it too - there can be a cryptopunk-ideal digital currency but pretty much every legitimate business selling real world things would be prohibited from touching it (at least in nontrivial amounts, if they don't do their own deanonymization of customers like all the legitimate Bitcoin exchanges do); or you can have a digital currency that's usable on a scale (like Libra) but it can be that way only by implementing KYC (i.e. anti-anonymity) and AML (i.e. possibility for censoring payments).
but it is pegged to other central banks, what kind of central bank is that? The only positive that i see about Libra is that it will (hopefully) be exchangeable for some real uncensorable coin.
It's only pegged as much as they so choose. If you can change your own exchange rates day to day, the consortium can buy and sell fiat currency in such a way as to cause inflation or deflation. It's all the same power without a physical mint, is it not?
"Of course, those big company Association members, like Visa and Mastercard, all paid $10 million dollars for the privilege of functioning as validators on the network. Why would they do that? Because they’re going to make a lot of money." --- Long ago I was a management consultant for Amex advising on micropayments (this was decades ago). The consultants answer is always to make a bunch of small bets in a maybe emerging space to preserve optionality. It looks good on a presentation, makes the board reasonably content that they have a future looking strategy, leads to fun follow up work identifying bets which are financially irrelevant to the company if they go to zero, etc...
This isn't some grand strategy of Visa and Mastercard. $10MM to those companies is a write-off FOMO punt. If they had put in 20x that amount I would be paying more attention.
> By pegging it to a flurry of other currencies they’ve started the planet down the path of ditching the dollar as the default world currency.
That's probably false. FB's coin will be at the mercy of the Fed and ECB, and most likely will be an equal or worse choice than any of the fiat currencies in the basket , considering central banks move in concert these days. It doesn't seem FB will pose any real threat to central banking unless they unpeg their currency.
>FB's coin will be at the mercy of the Fed and ECB
Only if the currency flows out of traditional Fiat and into Libra don't substantially affect currency prices or the effect is more or less universal.
For instance, if the euro loses 10% value in a given period of time while 3 other equally weighted currencies are relatively stable, libra would lose ~2.5% value in that time. Given the low risk this seems like an obvious hedge if you are heavy in euro, and momentum could easily snowball.
it could also work the other way, e.g. that the basket loses more than the USD . I dont think overall there is any benefit , but maybe there is overall reduced volatility or risk. I don't know if the central limit causes a reduction or increase of risk here. It seems like the index fund of currencies.
FB exerts increasing control over, and insight into, financial transactions. Alongside excessive insight into most other aspects of personal lives. The result becomes the sort of MegaCorp that cyberpunk novels are built off of. Except, you know... I don't think William Gibson ever expected the future megacorp to have sprung up from an undergrad pivoting his Hot or Not rip-off.
Crypto in this case does mean cryptographic currency, and it is indeed part of an Cypherpunks wet dream, which is a movement since the 80s to 90s[0][1], and Bitcoin was largely enabled by people of this movement[2][3]. They basically strive to build society with cryptographic methods.
Cyberpunk on the other hand is just a science-fiction genre, which mostly play in futuristic orwellian dystopias and people like to draw comparisons to them.
Cyberpunk doesn't necessarily have to do with crypto, it can just be internet and VR and being a rebel while being jacked in to your nine-CRT set up in your neon-lit basement techno club.
Cypherpunk refers to the same basement techno club but the freedom and rebellion comes from the privacy and inviolable secrets enabled by cryptography.
edit: Better comment below me, cyberpunk is very much set in economic dystopias, and the rebels are tech hackers.
Facebook is simply making another private scrip. They're turning IMF SDRs into a private currency. Prior to this crop of entrepreneurs, when I read about scrip it seemed always to be in connection with alleged violation of law, I think legal tender laws. But, who knows, this may turn out swell.
Libra shows what crypto and in particular blockchain is really for: allowing global megacorporations to start their assault on the nation state. It's pretty critical we undo this, while the nation state still has its monopoly on the legitimate use of force.
For those asking why we need the nation state: because in most countries, this is part and parcel of having a democracy. Celebrate the death of the nation state, you celebrate the death of democracy in itself.
Against democracy? Start another thread explaining why you're so damn clever you'd wind back centuries of political progress.
Nation in nation state is pretty recent addition and already dying off (fortunately), but the state owing allegiance to its citizens (ever imperfect) is better than slide back to feudal-authoritarian corporation that is in no way on the hook for anything towards the common man.
Only because the nation states force this on the corporations. Do you really think the corporation would let you choose anything if they were let unchecked?
You'd have to pick your allegiance and then face the consequences. Or they'd pick you before you had a chance to choose yourself. Do you think the lords of old let the serfs have a say in whether they wanted to leave or stay? No. It would be the same for us. Going to digital lords and barons and no states to rein them in would be regressing.
It is not that simple. Policy can increase or decrease competition. Breaking up Ma Bell as an example.
Overall governments increase standards which can lead to few players but it can also help an industry grow quicker and allow for more complex/value products/services which creates an industry around it helping support it (shopify)
Where to begin. This article is full of big words and drama. I've been reading through the whitepapers and discussions and there seem to be an awful lot of people reading all sorts of things in this stuff. What worries me is that it mostly is people responding to interpretations rather than the raw facts. Big dramatic outcomes make for awesome blog articles. But that doesn't mean it's the only outcome; or even the likely outcome.
I try to look at this a bit more rationally. Given that blockchains have grown economically in the last few years for reasons that you may or may not agree with philosophically, morally, etc., it is not surprising that existing entities with economic wealth are looking to get in on the action. From this point of view, what Libra is doing is entirely unsurprising.
From a technical point of view, what Facebook is doing with Libra is cherry picking what seems to work in the market. Consensus models seem to work for the likes of Ripple, Stellar and a few others. There are a lot of people who object against this model for all sorts of reasons. But it undeniably works and scales quite well. A system this ambitious needs to scale. It's not optional.
I don't really see how Libra could have picked anything else given the current state of the art. Mining seems a dead end in terms of scalability and off by orders of magnitude from where it needs to be. There are lots of technical issues and even when it works, things like 50% attacks, insane energy consumption, etc. make this a non starter. Ethereum has been trying to switch to proof of stake for some time now and the are also trying to introduce sharding. Maybe this is fixable, but the reality is that they are nowhere close to shipping something that scales by the time Libra intends to open for business.
So, when Facebook decided to do this, building their own platform was a foregone conclusion because what's out there just isn't anywhere near good enough and basing it on consensus algorithms was the only logical choice technically.
The only relevant question is, why is it just Facebook doing this and how long is it going to take for the rest of the world to react? I'm talking about the likes of Google, Apple, banks, the oil industry, anyone with economic resources basically. They'll all want in on the action and not all of them are going to be inventing their own blockchain like platform (using the term loosely here). I doubt they are going to have Facebook have all the fun.
The follow up debate about the legalities and regulations is also going to be interesting. My guess is governments will react slowly and by the time they start making bigger decisions, it will be too late. Once you have a few "too big to fail" type companies doing stuff like this, they are not just going to pull the plug.
So, I expect things will heat up shortly. I think this is a good thing. We need competition of ideas and approaches. If what Libra is doing bothers you, stop whining and do something better. Now is a good time to get started with that.
The lack of adoption is a combo of a 1) network "dead-zone", 2) reversal risk, and 3) regulatory friction.
FB & Co are uniquely situated to fix these 3 in a way small companies just can't.
1) Any network is useless unless people you need to use the network are using it. Cryptos are still in the "dead-zone" where there's not enough people using it where it has value as a payment platform. By integrating into existing apps (Venmo, FB Messenger, Paypal) that could change
2) Every fiat transaction has some level of reversal risk. There is legislation in the US that requires, and companies that implement, reversal of payments if the payor claims fraud or account takeover. Any company that sits in between fiat systems and the crypto systems have a huge amount of this risk cause they can't reverse crypto payments. These companies are uniquely capable of handling this risk because they already spending resources to figuring out that you're a real human being and you are who you say you are.
3) Regulatory friction (AML/KYC) is something these companies are uniquely able to tackle because they have your identity. Furthermore, they have the legal resources to find out how far they can push the line and lobbying to keep them from harm when they get too close.