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Visa, Mastercard, Stripe, and eBay exit Facebook’s Libra project (theverge.com)
1083 points by gkolli 7 months ago | hide | past | web | favorite | 343 comments



David Marcus update [1] :

Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.

I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.

[1]https://twitter.com/davidmarcus/status/1182775728431087623


Since Libra isn't distributed, in the sense that anyone can start mining it, one of the key premises for its trust was that governance and operation will be handled by a group of powerful and trustworthy companies.

The more companies leave the initiative the more centralized it becomes and the less its trust model is valid. If only Facebook remains it isn't any different than a simple virtual currency (like the discontinued Facebook Credits).

And to preempt the argument that visa and mastercard aren't trustworthy - there is an inherent trust that most people give to big companies because their processes and checks and balances developed over years to be robust - usually from having to handle lawsuits and regulations which small companies rarely do.


I dont buy the idea that Paypal added critical legitimacy to the project. SV companies are a pretty homogeneous interest group, and FB is already one of the largest players. For me libra is trustworthy because it's backed by real money from many governments. It's highly unlikely that facebook would commit real fraud with it, since they both have the cash to pull it through and committing fraud would be devastating to their brand (HN may not like FB , but it is obviously one of the better trusted tech companies).

This also opens the way for other more obscure partners to enter the association. That will probably determine its future course


I've got to wonder if Visa, Mastercard, Paypal, Stripe and others got involved with this on the principle "Keep your friends close and your enemies closer"? Facebook is too big to just crush, so you need a smarter approach.

By initially supporting Libra, they got to find out FB's plans, get access to a bunch of market research and see what kind of hurdles they would face if they wanted to launch their own version of the same thing. Then by backing out at the 11th hour, they're able to undermine Libra's credibility before it gets started and make it look like a doomed project.


What people want is a stable currency that they can use where ever they want. That means at atm/mfm machines, pos, internet and p2p. They couldn't care less if visa/mastercard or JPMorgan is behind it. The issue is that without visa/mastercard is hard to convince banks and merchants to accept this new currency.


You mean like the eur, usd, aud, nzd, gbp, jpy? That sort of stable and reliable currency with a strong banking infrastructure?


Yeah except they are not digital currencies(i.e you cant store them on a cold wallet, you can't send or accept them without several 3rd parties involved(i.e paypal, visa, banks)


At least governments are sort of remotely accountable. If we've learned anything from the entire fucking history of the internet it's that nerds with power are not particularly accountable.


> At least governments are sort of remotely accountable

That's very "sort of", and very remote! I wouldn't trust my (the UK) Government as far as I could throw them!


Do you really think if the internet was architected by politicians or corporate suits rather than 'some nerds with power'that it would have turned out better?


No, but let's not conflate the internet and currency/


Wait, aren't you the first one to do that in your first comment in this thread?


I don’t think antihero did, I think Facebook did that with this project. Also PayPal before that.

Personally, I don’t trust any of these systems or organisations, neither tech, nor fintech, nor traditional banks. They’re all flawed for different reasons.

Technology is an attack surface the traditional banks don’t comprehend (from the horror stories I’ve heard from tech people who worked for them), and successful attacks on banking have rewards that tech… I don’t think fully appreciates.


> Technology is an attack surface the traditional banks don’t comprehend, and successful attacks on banking have rewards that tech… I don’t think fully appreciates.

True, but Tech also doesn't really appreciate banks. Banks make much of their money from transaction fees, from literally moving money from one point to another, to large IPO underwriting. Tech can certainly lower transaction fees, but a bank's transaction fees is more than just getting a job done, it's trusting that the job can get done. Banks are able to get away with large transaction fees because they have developed trust and credibility that many are willing to pay for. Tech simply sees this as an engineering challenge and ignores the non-tech legal and social guarantees that banks provide.


>you cant store them on a cold wallet

Literally the only wallet is a cold wallet. Cold hard cash.


Yeah but you can't send hard cash over the internet so let's stick to the "digital" requirement.


So you are saying there are even more benefits?


I'm saying there are less benefits because you don't own your own digital money(except if it's hard cash). The current digital payment system (paypal, visa etc) is pretty much like a glorified Spotify subscription. You don't own anything...just get a license to use it under various conditions. You can't even accept payments without a "processor" and that processor has its own t&c.


More importantly you can't travel with them without paying absurd exchange fees and aweful forex rates


Unless you use Transferwise, Revolut, Monzo or similar.


Not true, you still get screwed on cash withdrawals regardless of the service you use. Most ATMs apply DCC even when you hold the local currency


Now I think about it, I’ve never actually tried using my Revolut card in an ATM.

What I have done is used it for my day-to-day shopping in Germany for just over a year, for holidays in Switzerland, Austria, Finland, and Spain, and also as a really good source of exchange rates when transferring money from my Pounds-only bank to my Euros-only bank.

In all occasions, it deducts from the correct balance without conversion.


There are digital versions of USD and EUR eg. Tether and others.


yeah, those are the ones you can't sent 2 or 3 units of abroad in a minute by chat, where the receiver is not taxed 2-5%


Why not? Thanks to SEPA ICT I can send up to 15'000€ in less than 10 seconds — actually faster than Bitcoin or anything else — to anyone else in the EU.

Why would I need to use Libra or anything else, what does it provide me that normal money doesn't?

Why should a broken commercial currency with surveillance integration be used globally just because the US payment situation is broken?


You cannot compare the speed of the different services without bringing up settlement time, how long it takes for money to become irreversible.

Yes you can send money very quickly with SEPA, but that's not the settlement time. The money can still be reversed (although with more difficulty than credit card payments). With Bitcoin you also get a notification in seconds, but the payment becomes extremely more difficult to reverse in around 10 minutes.

So they're either equally fast or Bitcoin is faster.


> Yes you can send money very quickly with SEPA, but that's not the settlement time. The money can still be reversed

From a banking perspective, the money is settled in 10 seconds, at least with TIPS (the ECB’s platform; the ACH clear it, but the end-user behavior is the same).

Reversal (known as a recall in the standards) requires consent of the beneficiary.


Recalls don't require consent of the beneficiary.


> It will depend on the consent of the Beneficiary whether to turn back the Funds to the Originator.

SCT Inst Scheme Rulebook § 4.3.2.3 [0].

Of course, if you are talking about fraud, yes: banks may answer positively to a recall, without contacting the beneficiary, when the beneficiary is a fraudster. Indeed, local laws often require that of banks, and therefore the standards define a dedicated protocol for that.

When you break the law, many legal protections no longer apply.

[0]: https://www.europeanpaymentscouncil.eu/sites/default/files/k...


There are many cases where asking the beneficiary is not necessary, fraud is only one of them.

And to clarify, it's not really "fraud", it's "claim by the originator that a fraud occurred". Which is a very different thing, and which matters immensely in practice.


There are three cases. Fraud is one, the two others are banking mistakes. First, when the bank sends the funds twice by accident. Second, when the bank was not meant to send the funds.

In both of those cases, the beneficiary bank is not even required to send the funds back. It can require consent from the beneficiary (which is its client, after all) if it wants.

Yet in both cases, the beneficiary is not even meant to receive the funds.

Fraud works the same way: unless local law requires it, the beneficiary bank is not required to send the funds back, and can rely on beneficiary consent.


Thanks, it seems you're right.


most people most of the time care more about the time it takes to get the initial confirmation, not the actual settlement. most consumer transactions are not large enough for reversibility to matter that much.


Exactly. Which will take a few seconds with Bitcoin.


> Why should a broken commercial currency with surveillance integration be used globally just because the US payment situation is broken?

I suspect it won't be. Possibly could also catch on in developed countries, although places like Kenya and India already have home-grown non-bank phone-based payment systems. One market I can see would be remittances for international migrant workers - think the Indian workers in the UAE, or Filipinos (well, mostly Filipinas) across the Middle East.


There are newer services like Revolut proving that it can be done.

All you need is somebody's phone number and the transfer is instant and with no taxes. You can also exchange currency at the interbank exchange rate during the week. And transferring that money to your local bank account is also free of taxes.

Not sure if Revolut will last, but I've been very happy with it.


And then there’s PayID in Australia: “pay anyone using their phone number”. Only the people setting up the processing system decided that all the security required for Visa/MasterCard processing was an obstacle and they didn’t think to implement rate limiting on their facility that provides account details in response to a phone number query.

https://www.itnews.com.au/news/aussie-banks-warn-customers-a...

In this story they refer to a “spike” in queries to the database. What actually happened is that someone tried querying every mobile phone number in Australia.


Why should I send 2 or 3 euros to someone over a chat?

In Europe I can authorize a seller to directly take money from my account, if it's money for someone I trust (family, close friends) I can give them my prepaid credit card number and charge it with just the amount they need

Do you really think that Libra would make this simpler?


that's just the broken, backwards US banking system.


My revolut transaction for eur->cad didn't arrive. Now I have to pull all strings at bth banks to figure out what happened.


libra is backed by eur/usd/gbp etc.


Yeah, but in a basket, so there will still be an exchange rate risk towards each of its currency components individually.


due to the central limit, its behaviour will be more predictable


> powerful and trustworthy companies

That’s an oxymoron in general, but also specifically, did you just say Facebook is trustworthy? O_o

Low quality comment, I know, I just couldn’t resist.


The fate of Libra isn't tied to Visa/Mastercard's withdrawal. It's ultimately about whether there is a market for a new mechanism for international money transfers.

As someone who runs a business that has (small) offices both in EU and North America, let me share a quick overview of the current state of things.

When you want to transfer a non-trivial amount of money between 2 countries, you have likely received it in the originating country's currency and are planning to spend it in the destination currency. Now because you don't want to pay ~3% currency exchange fees to your bank, the only reasonable way to do this is to get an account with a business forex broker, that will offer you a rate in the ballpark of 0.5% off the spot price. You will have to do the KYC/AML [0], but the complexity of the whole transfer is basically this:

1. Do a domestic wire to your broker's office in the originating economic zone.

2. Wait for them to call you and confirm the exchange rate.

3. Receive a domestic wire from the broker's office in the destination economic zone.

You often need to show the invoices/contracts showing the origin of the funds and the purpose of the transfer, but if you are running a legitimate business that pays taxes, you will need those for accounting reasons anyway.

Now the 0.5% fee charged by the forex trader (that is bound to a bunch of rules and regulations making it harder for it to run away with your funds) is not worth putting your trust into a fully automated distributed ledger, where a lost password or a hacked computer could permanently eat away your money without any legal recourse.

So the only potential audience of a new international coin would be people actively trying to evade KYC/AML and that's exactly why the governments will do their best to prevent it from getting adoption (which is very easy since you can outright ban the fiat endpoints in your jurisdiction).

On the other end, there's a bunch of people who have never written a response to an AML inquiry and have hardly done any business outside of their own state, that are hoping to get rich quick by grabbing a stake at something they haven't fully researched and later reselling it at a profit to someone who will actually need it. I wouldn't see any reason for it to be successful long-term, sorry.

[0] https://en.wikipedia.org/wiki/Know_your_customer


What do you consider non-trivial?

I transfer money to Africa on a regular basis, and I don’t have these same issues other than the difference between published exchange rate and realized, which is about 1-1.5%. Transfer fees are minimal.

I transfer about $3,000 per month, but no I could go up to at least $10K without issue. Occasionally it can have a bit of a delay, but normally it closes in less than a minute, and I get email and text updates on the status, no calls needed.


It is trivial when you are transferring from a Western country to an African country using services like Transferwise, Worldremit, etc but I consider transferring money from Africa to a western country non-trivial. I have personally experienced this when parents are trying to pay for tuition fees, upkeep allowance, etc. This is one of the great advantages I see Libra bringing.


so parent use actual money to buy libra, transfer it and their children exchange libra back to actual money again?

i wonder how much money is actually left after the whole transaction


Generally speaking, in this context "non-trivial" means more than $10,000 - $15,000 at once. 10 is where various paper-trail requirements start to kick in (at least in the United States) and things start to get a little more complicated.


Which service, something like transferwise?


I recently tried helping someone transfer $10k from US to different country. Only after signing up, filling in all the details, and going through the entire process, was there an error message that showed a Max of $800 could be transferred.

I then just advised to use their local bank's wire transfer, which they had to visit in person at the local branch, as they had originally intended.

Nowhere in my Google searches and Transferwise articles did I see any limitations upfront. Nor did I figure out how to raise these limits after searching post-filling-out-everything.

Very disappointed to say the least. But if anyone knows if I can raise the limit, would be happy to try this again.


Is this some account specific limit or a country specific limit?


+1 transferwise


Wave?


This is a good summary. I just wanted to add that it can be easier even than that. I look after this sort of thing sometimes. I would normally have USD, GBP, EUR accounts at my local bank. Any money from abroad can be wired directly in to those accounts. If I want to trade between currencies I can then do it through my bank, which can cost me '20 pips', which means on a GBPUSD deal I pay 0.0020 over spot atm (trading around $4m a year. YMMV). This is at the click of a button, or a phone call. But I can do other convenient things through the same platform to hedge risk. I can hedge, for instance I can agree to buy sterling sell dollars at $100k a month for the next year at agreed rates to protect a contract from fx risk. I can swap currency with the bank for a few days for even more trivial fees, swaps are useful when you have too much of the one currency this week, but need it back to pay a supplier next week, or indeed if your forward contracts are arriving and you are not ready for them yet.

In summary I agree, it is not hard in NA or EMEA to send intentional funds


>1. Do a domestic wire to your broker's office in the originating economic zone.

>2. Wait for them to call you and confirm the exchange rate.

> 3. Receive a domestic wire from the broker's office in the destination economic zone.

> You often need to show the invoices/contracts showing the origin of the funds and the purpose of the transfer, but if you are running a legitimate business that pays taxes, you will need those for accounting reasons anyway

When my father used to do research in the 60/70s the way they got a paper was to write a (paper) letter to an author asking him for a copy, put it in the mail, wait for a couple of weeks, and then get an answer from the author with the paper. It was simple, easy and straightforward.

Fast forward 50 years, we have access to millions of articles at our fingertips in a second with the likes of scholar.google.com.


Just because something is faster and more convenient doesn't mean it succeeds.

Here, I can do it too: 50 years ago, I'd make fresh-squeezed juice by hand over the course of about 2 hours. Fast forward to a couple years ago, and juicero let me create fresh juice in under 5 minutes with no effort. Yet, somehow, juicero no longer exists and had very few users.

Or again, 50 years ago I'd wire money to people via a bank transfer which would take multiple days, and back in 2012 I could use liberty reserve to do the same thing instantly. And yet, somehow, liberty reserve no longer exists and had almost no users.

Comparisons that are as glancingly related as "more convenient" or "are new technology" are absolutely worthless.


Uh liberty reserve no longer exists because it was set up as a way to launder money and evade regulations. It had plenty of users doing exactly that which is why it was shut down mercilessly by federal prosecutors under the Patriot Act. Their CTO is due out of prison this year and their CEO is in the slammer until 2036 give it take. I’d suggest perusing the Wikipedia page. If you did use it you’re probably on a very sad list right now.

Juicero no longer exists because people realized they didn’t need the insanely expensive subscription juicer machine and could squeeze the juice bags with their hands to obtain the juice. Hilarity ensued. Further details are available on their Wikipedia article, too.

I’d caution you not to read into these two data points.


It seems silly to say there is no audience because it’s already possible to transfer money. Facebook is all about cloning an existing product and making it easy for millions of people use it by putting it in an app they already use for an hour every day. I think if they are permitted to launch, they will get a lot of people to use it.


I am a happy customer of both a bank and a grocery store. If one day the grocery store decides to also open a bank, I won't suddenly move my accounts there just because I go to the grocery store every week. That's why the grocery stores trying to offer credit cards usually have some loyalty programs (e.g. points/discounts for in-store purchases). And BTW, they typically just partner with existing banks and not try to butt into a heavily regulated market with no previous experience.

And if I never needed to have a bank account before, just being able to open it while paying for my food won't suddenly create the need for it.


You are not the target customer.

Grocery store handle a surprisingly large amount of money transfers and act as pseudo-banks to many of the unbanked. Some of them have their own banks on top and others have bank branches in them. Lots of people use these services.


Interestingly the grocery store bank thing more or less happened in Ontario and it’s quite good/popular: https://www.pcfinancial.ca/en


I am actually a happy user of this one (Vancouver, BC), but solely because the effective discount you get for using their card in the store is considerably higher than my regular card gives (there's a complicated system of points that add up nicely). And, yep, I still use my regular Visa Infinite for all other purchases because you can't beat their insurance and cashback rate.


Tesco, one of the largest supermarket chains in the world, also has a bank: https://www.tescobank.com/


In the U.S. it is quite common for grocery stores to have a small bank branch inside them for exactly the reason you cite.


> they typically just partner with existing banks


Grocery stores or Walmart?


Grocery stores often have a branch of an existing bank inside them, but the ones that don't often provide some financial services like cashing checks.

Wal-marts cash checks, do money transfers, and provide debit cards which act as a pseudo-bank account since they can be used with direct deposit etc.


That’s not an apples to apples comparison. A grocery store doesn’t have a network effect, Facebook does. That’s a powerful thing when we’re talking about products that exchange value with other parties in the network.


One potentially huge market is online payments and small transactions. If libra is embedded into the browser, millions of blogs could start charging for frictionless access to their content, and thousands of games would improve their experience and revenue. That s a huge and largely unserved area, unless you think that entering card numbers and private data with every spent penny is a good situation. I think Libra is going after this kind of use cases, the ones that are not possible today. If that works, and it catches on, then yeah, they ll go after the 0.5% because people will want that too.

A blockchain is also a digital signature, a verifiable programmable general purpose ledger for smart contracts. Just giving each FB user a wallet id, even without money, has a lot of potential.


Micropayments of this sort are one of those use cases that people have been trying to put into place forever, and they always founder on the fact that users hate them.


Virtual world users like them.

I put on virtual pyrotechnics shows in various grids and and get paid or tipped in either the grid's own digital currency or in Gloebits. Gloebits are better since they can be spent on various different grids and by all my accounts. I also take paypal.

https://gloebit.com/about-gloebit/


I paid the other day with metamask and i loved it. the concept made sense and was way too easy


The 'problem' you just described has nothing to do with crypto-currency as the 'solution'. Apple Pay is the most frictionless payment system I've used, can integrate with the browser, and attached to any of my credit cards.

Paying for 'bits' of content is already a thing, you can buy single article access on many of the newspaper websites today.


This is my experience with doing such transactions, minus the call from the broker. (It was all via a webapp.)

AML/KYC requirements took a scan of my passport, and two days to get verified. At which point, I was good to go.


«a lost password or a hacked computer could permanently eat away your money»

If it happens less than 0.5% of the time, then you are losing more money in fees with your forex broker.

Also don't forget the massive cashflow advantage of dealing in crypto only. Minutes to send crypto vs 24-48h + weekends/holiday delays incurred by your broker wires. That's especially true of businesses who transact with their partners/suppliers/contractors in crypto so they even avoid the fiat<>crypto conversion step.

«any legal recourse»

There is always legal recourse. Plenty of crypto thieves have been, are being, and will be prosecuted.


Fast transfers are not something that cryptocurrencies uniquely enable, so I think it is unfair to highlight that as a feature.

Transfers could (and often are) instant without cryptocurrencies too. Inside Europe most transfers clear within minutes.

The main reason why some transfers are slow is due to KYC rules which cryptos do not implement. With the same procedures in place, they'd be just as slow.


Here's the reply from Nick Szabo:

"You might want to ask yourself why the pressure has been so intense. And read some history that Bitcoin pioneers were aware of, for example the failure of e-gold. Your failure to learn from history has caused you to at great cost recapitulate the failures of the past.":

https://twitter.com/NickSzabo4/status/1182776582932332544?s=...


Whenever i read those highly derisive comments (de facto banned vaporware) , it's time to ignore those threads. Money truly makes people rage, and it's ugly to see it in written form. Crypto has ways to until its people learn to act civil


Both USGOV and EU countries are against it. You would have to be stupid to poke the bear in the eye after being warned.


Indeed: Peter Thiel says that when you're doing something right, expect tons of opposition! Best Of Luck ;o)


This is good for libra(coin)?


He is re-framing it to "when the times get tough the tough get going" mode. Its also a signal, that they are going to move forward what ever that is.

Good or Bad, its hard to tell for the project but at least you are left with the feeling that Libra team is formidable and preparing to weather the storm.

If I have to guess, something is going to come out it from this project, either a policy clarity from governments or while tinkering Libra team may pivot into some useful use case etc.


> "Its also a signal, that they are going to move forward what ever that is"

In much the same way that your keys are always in the last place you look, the last thing people say before "I give up" is often "I'm going to keep going." I expect Libra to be officially dead by the end of the year, although Facebook might slap the name onto some unrelated project in an attempt to save face.


We’ll see about this :)


Well, I don't know about that, but it's certainly good for the world. :)


I disagree. I cannot trust anything related to Facebook.


Why is that? Potentially they have a lot of power, but did they exercise it in a wrong way in public so far? I don’t think so



"Too big to innovate"


I hope this doesn't cause Facebook to give up on Libra.

I personally have no desire to own Libra. But traditional bank accounts kind of suck as a product and I would like to see more tech companies competing with them.

The problems with bank accounts:

1. They charge you fees for things

2. They try to upsell me stupid financial products

3. They are not easy to use in other countries

4. Typing in my credit card number sucks

5. Typing in my credit card number isn't secure

None of that has really gotten any better in the past ten years. It feels like banks have mostly given up on making their product better. Instead of improving their product, they just buy more expensive retail locations.

I would probably rather use a financial product produced by Google, Microsoft, or Amazon than a financial product produced by Facebook. I just don't want the rules to end up being, big tech companies are not permitted to compete with crappy banks.


The rules are big tech companies are not allowed to compete with nation states. New currencies would supplant those of nation states and reduce their power, hence the pushback.

Facebook is the last company I’d want to see dominate the coming global corporate currencies. They are unscrupulous, dishonest to the core, and willing to cheat partners and customers alike to get what they want.

IMO banks rather than currencies will be the first area tech companies can push into, then payment networks, then eventually currencies as nation states wither away.

There are some tech companies competing with banks and payment networks already, with some success, particularly in the UK. It will take a while for them to supplant traditional banks but I see it as inevitable and, for the reasons you point out, not too difficult, as the incumbents are sclerotic and unable to grasp the importance of software.


>I see it as inevitable and, for the reasons you point out, not too difficult, as the incumbents are sclerotic and unable to grasp the importance of software.

It's not inevitable at all. This is because (retail) banks operate more or less in the same way in their back office. The change is the front office - retail branches are being replaced with apps. But they have seen this before - with telephone and online banking. And the current generation of apps from the big banks is catching up (mainly UX). The only thing that really stands-out for the startups is the onboarding process.

This is going to end in a completely different way than the retail wars, because there, it was a revolution in both the front (storefront) and back (logistics of getting the product to the customers) office.


I know people who work at large banks, they work nothing like a tech company.

Tech/IT is seen as a cost centre, often outsourced, and if not outsourced performed by disillusioned teams with neither influence nor autonomy. The back end of big banks is a huge mess of legacy systems, they had to be forced to adopt open banking, and the leadership don’t recognise that everything will be software soon. They are the antithesis of tech companies.


I worked for large banks and fintech startups

It's true banks don't work like tech companies, it is also true that tech companies don't work like bank and the 100% of them failed to replace banks, because banks are more trustworthy when it's about client'money safety.

legacy systems are a good thing, it means they already solved a lot of edge cases and been working good enough for years (or tens of years)

The new shiny toy might look good, but if it does 1/20 of what's needed by the business, it's useless.

I work now in insurance, evolving legacy systems to new technologies, legacy systems suck, but they are also rock solid and a lot of things they do are vital for the company and, more often than not, save people's jobs.

A lot of rules we don't understand are there to avoid abuses

I'm working on a system that's offline from 11pm to 7am to avoid that agents created insurance policies over night making unfair competition to real agencies with offices, employees and regulated opening hours.

It's been put there probably 20 years ago, it looks silly now, but it served a purpose

In one year I've been able to replace alone maybe 1/30 of what the main legacy system does. Which, btw, sometimes still calls an even more legacy system on the backend, just like my system exposes what the new system still doesn't handle as a safer wrapper to the legacy one. It's a good pace, we have proved it can be done without breaking the workflow, now it's time to accelerate and build a little team around the project.

Evolution is layered, disruption is a jouvenile sin and usually it is bad for company's workers more than for companies.


I agree there are things both could learn from each other.

I do think established banks have a lot of baggage and entirely the wrong emphasis for a world which runs on software. Some of their old rules still encode useful information, many don't, and it will be hard to disentangle the essential from the moribund.


> I know people who work at large banks, they work nothing like a tech company.

> Tech/IT is seen as a cost centre, often outsourced, and if not outsourced performed by disillusioned teams with neither influence nor autonomy.

That may be true, but how people work is beside the point. That's a question of culture and dependent on the industry and it's maturity. Yes, it may make or break individual companies, but on the scale of industries it's not relevant.

The truth is that tech companies don't "win" by working better, they "win" by playing a different game and the game here isn't too different to the incumbents.

> The back end of big banks is a huge mess of legacy systems

Yes and no, as big banks are not monolithic nor homogenous. But this doesn't make the jobs of startups any easier either because the interfaces to existing platforms are just as necessary for them in order to interoperate.

>the leadership don’t recognise that everything will be software soon

Actually they do and they are betting on that to cut costs by automating legacy and inefficient functions.

> They are the antithesis of big tech.

They are not the antithesis, they are just at a different stage on the maturity curve. It's up to the disruptors to find enough gaps in their armour to usurp them. But I don't think that there is that much room for disruption in the retail market apart from niches players, because fundamentally their models are not that different.


That may be true, but how people work is beside the point.

I disagree.


Do you really think a Facebook currency is not going to charge fees and upsell you left, right and centre the first moment they think they can get away with it? That's as well as targeting advertising and selling data of your spending patterns.


It's not that I think the Libra product is going to be fantastic per se. I just think that competition will force all the companies to make their products better. I don't want the government to prevent companies from making products, I want to be able to choose of my own free will whether it's a good product or not.


My difficulty is, at heart, I don't want my tokens of exchange to be a product at all. I want the guarantee of universality that comes with money. Accessible to rich and poor alike, good credit or bad. Anything that tries to edge that out via the market is inherently a bad thing. Ultimately for all except stockholders. A central bank backed cryptocurrency with all the traits of universality and legal tender may be a better bet...

I am fully in favour of the various new banking services and apps that are springing up, services to manage, transfer, save and invest better etc. That's an appropriate place for the market. Even there it's needed regulation to ensure the most marginal in society can get a basic bank account, or not get stiffed on fees.


^ this


Then choose "the better product" among the myriad of banking accounts from the myriad of competing banks out there. Your problems are all problems related to bank accounts, not to the currency that gets stored in those accounts, so there is no reason at all to cry for competition on the currency level.


Pretty much my feeling.

I can never tell when discussing matters like this if the other party is expressing legitimate concerns poorly considered, or if I’m witnessing some astroturfing campaign.

JBoss was the first astroturfing campaign I learned about (and if you’re reading this, Marc, fuck you. Yeah people still remember.)

I know these sorts of things have been going on forever but it feels like it’s getting worse over time. To the point I’m not sure I know who to believe anymore.


GP is the founder of parse, acquired by Facebook. I’d imagine he has a nice chunk of FB stock :).


While there are not many Facebooks, there are thousands of cryptocurrencies. As long as Libra is exchangeable , i dont see how they can maintain a stronghold on their users and manipulate them. It's not as if the entire world has adopted libra, its going to be a long drawn and selective process in which businesses decide which cryptocurrencies to support. People don't change their friend's networks, but they re not equally selective with money, they 'll use whats convenient and good.But Libra is probably going to be the biggest onramp of them .


Size matters, particularly when it's a multinational behemoth with a strong track record of manipulating their users. Thank heavens regulators appear as disturbed as I am with the idea.

Here's the issue, well my issue. I've read more than enough history to know what happens with company currency or scrip. It doesn't have to be the mining town paying the miner in mining dollars to use at a variable rate solely at the overpriced mining store, valid only whilst they work at the mine and don't upset the foreman or his wife. Each step and use gave opportunity, gladly taken, for the mine to extract more profit.

Currency regulators permit local dollars and pounds which are an attempt to keep money in a local economy. Their constraint is fair to both the public and the market, they are purely parallel to cash, and they are tiny enough not to matter - crucially there is no profit in and of themselves. A "local California dollar" might well deservedly get a different reaction.

With Libra, well it's not hard to create a Company Scrip 2.0 scenario. In fact it's disturbingly easy. Actually, to imagine dozens upon dozens of them. Then a few dozen more purely because it's supra-national. Then a few dozen more because they are large enough to squeeze out cash without needing to be a remote company town. Yeah actually I want regulators to squish that before birth, with extreme malice.

Just one example: Facebook and Ford do a deal for FB advertising and a bit of personal data swapping, in return for Ford F150s, or maybe just a particular model to start, solely being available for Libra. You want that Ford truck, well convert some dollars into Libra. You don't see how it's disturbingly easy to create an inevitable and easily manipulated stronghold down that route? What about if the local supermarket does the same deal? Breach the licence, well you're not shopping in these stores... Even stealing universal currencies, such as dollars, does not remove your future use of or right to use dollars. Only the stolen loot is taken from you.

I'm perfectly comfortable with the anarchistic cryptocurrencies such as BTC as there is no threat to the universality of exchange, even if it did take off more than BTC yet has. Even though BTC's main use seems as medium of speculation until the bubble bursts. They can reasonably be a currency. Libra feels more universality of control than of exchange.

A currency as product - that's inherently a bad thing, as I wrote in my other reply. Even if the company is not Facebook but is behind the crypto currency alone, with a built in route to profit just by the "currency" existing. That's diametrically opposed to the needs of a currency - a universal token of exchange and legal tender. It rather removes the ability to be a currency. It should not be a product in and of itself. I expect, and pray, that regulators will erase any that have chance of becoming widespread enough to be real alternative currency beyond speculative toy. Otherwise everyone except shareholders is worse off. Now a central bank backing a cryptocurrency - held as universal and legal tender - that's an entirely different, and interesting thing.


Unlike FB friends, which is a strong moat for facebook, exchanging cryptocurrencies is trivially easy. I don't use facebook but i 'd use libra considering that it opens up a huge audience the same way way mastercard does. And in that respect, FB would have to compete with mastercard and visa for user payment data, which (should be) a well regulated realm.

> that's diametrically opposed to the needs of a currency - a universal token

Currencies dont need to be universal, at least they were not until maybe the gold standard. It's government enforcement that made them look universal, but until then , a currency was of equal holding value as any commodity like gold. That was a good hedge against government misuse imho. And , looking at the manipulation of central govt rates, there is misuse today, worldwide. That doesnt mean the only alternative is FB of course, but it could be one, and i dont see a danger in it being one.

> such as BTC as there is no threat to the universality of exchange

BTC is a direct threat to any government that prints fiat money. It's just too small yet, so your theory gives it a pass.


Mastercard is a financial service for dealing with dollars, pounds, euros etc. Libra is not. To a logical conclusion it wants to be alongside dollars and euros with Mastercard offering a Libracard.

Universality and confidence came long, long before the 19th century gold standard - to the early Middle Ages and beyond, a state, or king, set the purity of coin, the penalty for clipping, mutilating the coin and so on. The gold standard developed from, and long after coinage standard and assaying.

Again in the early ME, particularly during the Viking age, and with some overlap with coin, people used hacksilver and similar as preferred medium of exchange because there was inherent value to the commodity. Hacksilver goes long back into the dim and distant ancient past, beyond other universal coins and currencies that achieved confidence, such as Roman. So yes, it was the ultimate - and very effective - hedge, particularly as towns fell, were raided or found themselves repeatedly changing side.

Of course government can abuse rates, but the scope is amplified orders of magnitude with a Company Scrip. Libra is a company scrip that risks destabilising proper currencies, and creating islands of inclusion and exclusion. By contrast, BTC is not, and does not. The difference in regulatory response seems clear, and warranted.


> to the early Middle Ages and beyond, a state, or king, set the purity of coin, the penalty for clipping

People trusted gold at least as much as their king though, even if the roman emperor or king tried hard to push his coin. The Florin was very popular in europe but florence was a small territory. Taxes were often paid via barter. Silver and gold were not made by any government / even aluminum was once more precious than gold. You can have all of those, because people understand the value of monetary tokens as mediums of exchange, and money doesn't have to be universal. It's only in very recent decades that people have lost all control and voice about their money. With increased coordination, regulation and data exchange between central banks around the world, having choice is what cryptocurrencies bring back.


Quite, and that's why there was an overlap of things like hacksilver that had value by weight of metal, into the periods of currency - or war and turmoil. Confidence in coins of the realm goes back much further than you imply, and had islands of confidence further back, such as during Pax Romana.

Choice is what some cryptocurrencies bring - the anarchistic ones. Even there I see little to no chance of surpassing central bank backed currencies - that's just a pipe dream. Of the corporate backed cryptocurrencies, the "with profit" currencies, they're simply Company Scrip, and an entirely different species apart.


this sums up so many things wrong with capitalism in general. you get charged for stuff the moment you get to have no other choice. healthcare being the worst case.


Traditional banking replaced by company focused on good technology, sure, that sounds good. That's not what Libra aim(ed) for though.

Libra was designed as a currency to take over the world, replacing the rest.

You do not want a for-profit company to run a global currency. Sure, let them run banks, one bank won't rule the world. But the one who holds all the money, will.


I do want a for-profit company to run a global currency. I would rather there be hundreds of global currencies, with me free to choose which one I would rather use, if any.


If a for-profit company is running the currency, the users of the currency are in a loosing position. Remember, the for-profit company wants profit, so good luck fighting with them about the currency.

"hundreds of global currencies" sounds like a good idea to me too, as long as they are out of the hands of for-profit companies.


Funny. The USA seems to have the complete opposite view to yours! :D

The Federal Reserve is just about as close to a private company as any, running your entire economy. Certainly it's a for profit venture. But then that's profits funneled away from public coffers, and not to it.

Sure, the Fed has a pretty clear mandate from the Congress, deputizing them into a certain public role, but other than that, they receive little to no ‘advice’ on how to do things, and stand free to make private profit for a small cartel of privately owned banks.

The reason for this non-public setup is so that Congress won't simply print more money at will, which would be far worse.


You do realize that FED transfers it's profits to US Treasury to the tune of 100 billion dollars per year?


But unlike just about all public agencies, stock holders get to keep a fair amount too. Not to mention that a great deal of tax money goes towards servicing interest on loans. On top of that; well, let's not mince words: "Quantitative easing" is essentially theft.


Correct, the fed funnels money away from savings accounts to the Treasury, exporters, and banks.


I agree with you, just wanted to let you know that "running your entire economy" is not accurate as I don't live there. We would all be a little better by not assuming things about people :)


The context is that the Fed serves the USA, and I don't live "there" either. So "your (...) economy" is of course referring to the American economy.


If a for-profit company is running the currency, the users of the currency are in a loosing position

True, but exactly the same applies to a state running the currency, with even more evidence of malfeasance and manipulation. State currency loses significant value every year by design, and the management of it is really opaque.

I’d rather a cooperative mutually owned currency to either corporate or state control.


If you're imagining a mutual organisation of millions of people who are theoretically on equal standing and have a say in governance as far as possible, wouldn't that look rather like a state? What's the practical distinction you're drawing between a cooperative mutual organisation and a state?


You don't get to choose which state you belong to as chattel.


In general I guess you don't exactly get to choose willy-nilly which state you want to belong to, but you can make a choice to trying to get out of your current one, at least usually.


No you don’t, and that would be the difference. Our system is still remarkably feudal - obligations are assigned at birth and citizenship is an obligation, not a choice.

Of course if you’re rich or privileged there are many options.


1 and 2 are solved by a decent credit union. 3 is solved by a decent credit card, 4 and 5 are solved by Apple/Google Pay. None of these require a cryptocurrency.


What about using your money electronically without permission from a large organization?


The large organizations you want to do business with want confidence provided by large organizations as to the authenticity of your transactions and the legitimacy of your payment method.

Practically every store that took bitcoin used bitpay as an intermediary so they never actually held any btc. They just had someone else turn it into USD and send them the money.


That is completely different. Someone paying to those places could do it without permission, you are talking about the places recieving.

Also those businesses also didn't need to use bitpay to receive anything but they could for convenience.


> What about using your money electronically without permission from a large organization?

Does Libra solve this problem?


How does a Facebook currency help here?


The comment I replied to said cryptocurrency.


Libra is a cryptocurrency from Facebook, and intended as a token of exchange is also a currency. (Did that really need spelling out?) Thus the cryptocurrency Libra is no help at all shielding you from the permission of large corporations.


The comment I replied to just said cryptocurrency, so I was talking about cryptocurrency in general, not libra specifically (Did that really need spelling out?).

Also some centralized cryptocurrencies still use keys and random addresses, which means they work by default unless the addresses are blacklisted.


I think that's generally unsolved since right now you can't convert currency into _any_ cryptocoin without KYC (know your customer).


Sure you can, buy mining equipment and wait. Localbitcoins also didn’t involve KYC AML last time I tried it.



That at least is permission for that transaction and then you're on the other side. Cash cryptocurrency ATMs could be considered one way if they don't require anything more than cash.


Have you considered moving to Europe?

I'm being slightly facetious, but there are banks here that are better at all of these.


Where in europe? Banks are vastly different and there is no banking union. and they have failed in the past


There is not a “banking union” in the sense of deposit protection, but the Single Euro Payments Area means transfers between any two Eurozone banks are no different than between banks in the same country.


There is finally some competition in banking so some of these are improving.

1. In the UK at least bank accounts are completely free, as long as you don't borrow money (you can use a credit card for free as long as you pay it off every month).

2. Not really in my experience. The worst thing they do is constantly make new types of savings accounts with decent interest rates and then sneakily drop them to 0.1% a couple of years later.

3. Hasn't been an issue for me travelling around Europe and Asia. The new breed of banks don't charge you insane fees either. E.g. check out Transferwise's debit card.

4. How would Libra solve this?

5. It's actually not too bad now - more and more online shops support 2 factor authentication for credit card purchases. Plus because of the fees merchants pay you have pretty good protection against fraud.

> It feels like banks have mostly given up on making their product better.

Disagree. They finally have competition: Monzo, Revolut, Starling Bank, Metro Bank, etc.


1. They charge you fees for things

Well, they provide a service and charge for that. Seems legit to me. Specifically in the context of European banks (including Iceland, Norway and Switzerland) that charge virtually nothing for basically instantaneous transfers within those countries. If US banks suck, maybe have a word with your congressperson.

2. They try to upsell me stupid financial products

If so, change your bank.

3. They are not easy to use in other countries

Uhh, just about any bank I know of issues an ATM card, which is either attached to the Plus, or Cirrus networks. My Swiss Postfinance ATM card work mighty fine at ATMs in Bangkok, Burundi, or Bangalore. Or just about in any damn place in the world. In other words: This reasoning is total bullshit.

4. Typing in my credit card number sucks

Yeah, well. You may prefer to trust a company, which lies a lot and shuts down your account for any and all resaon, without any recourse. Let alone get hold of a real life person to rectify the issue. Frankly, I prefer the "hardship" to type my credit card number (which I know by heart anyway) than to trust Mr. Zuckerberg or Mr. Marcus. Which, in my opinion, always seem pretty much full of shit whenever they open their mouth. To each his own, I guess.

5. Typing in my credit card number isn't secure

Er, not my problem. I let my bank sort that out. They're obliged to do that and whenever I had that (rare) problem it was sorted out in a jiffy. Best of luck sorting this out with just about any major tech company.


Sounds like you should be rooting for Bitcoin and Ethereum than Libra.


I root for Bitcoin and Ethereum more than I root for Libra. But I am rooting for all of them.


> None of that has really gotten any better in the past ten years. It feels like banks have mostly given up on making their product better. Instead of improving their product, they just buy more expensive retail locations.

you should check out "online" banks like Charles Schwab. they don't do any of this fancy retail bs. they've never charged me a fee (not even when I overdrew my checking account), and they reimburse me the full ATM fee whenever I use one, no matter how bad it is.

the only thing they "upsell" you on is their trading platform, which is quite good imo. they have a bunch of great inhouse ETFs and it's now free to trade other stuff anyway.


I use a credit union. No fees. No hassle. I’ve been able to get money and pay for things using my credit union account on 5 different continents. The only exception is China where many places require Chinese credit cards. Solution: carry cash.


To #5: My credit card issuer protects me from fraud. In the 2 or 3 cases I have had a fraudulent charge, I did not have to pay for it. I'm not sure about Libra specifically, but with many crypto currencies that would not be possible.


> None of that has really gotten any better in the past ten years

not sure which country you are in but for me, UK based Transferwise largely fixes 1-3 and Paypal 4 and 5


> A Visa spokesperson told The Verge. “Visa has decided not to join the Libra Association at this time,” the spokesperson said. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.”

I suspect the regulatory pushback was the least of the problem. These companies (and PayPal) have everything to lose and nothing to gain by helping to advance Libra. The entire business model is to capture value from financial system friction. Eliminating the friction eliminates their reason for being.

It's a classic innovator's dilemma: the action that will save these companies is building the thing that will destroy their business models. They can't do it because established companies are set up to eject people persisting with such notions. That leaves the field open for an out-of-left field solution that does away with the friction and the business models it spawned.

The source of the friction is regulatory. AML. KYC. All the laws that deputize financial institutions as extensions of law enforcement. It's quite expensive.

The only way to eliminate the friction is to eliminate the regulatory liability. And that's what has been happening with Bitcoin for some time.

What is surprising was that these companies ever lent their names to the project in the first place.


Open-source cryptocurrencies that (ideally) no single entity mainly profits from, are still the future, IMHO.

I don't get why people would get excited about Libra who weren't already excited by some other cryptocurrency.

Violate an arbitrary rule in financial institutions? Guilty until proven innocent. (I have real-world experience, here)

Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.)


> Violate an arbitrary rule in crypto and... oh wait, crypto doesn't have rules and doesn't judge your morality. (Neither does cash or gold, so be careful about using this as an argument against it.)

The argument goes through just the same? Cash, gold, cryptocurrencies and bearer bonds are all popular with criminals and crazies.


Call me cynical, but the whole idea of Libra would be disruptive to the existing international payment businesses, such as the ones that just exited. So the only reason for them to join in the first place would be to basically "know your enemy" - make certain you get the first-person intel on the project's vitals and to know what to expect. Now that a couple of governments made it clear that there would be roadblocks in deploying Libra according to the original roadmap, it is no longer seen as a threat, so anyone without a direct monetization interest (Facebook itself?) is going to leave.


Probably true, but that doesn't mean it isn't a good thing. Despite the marketing about distribution, this was a power-grap by Facebook.


And here I thought the whole idea of Libra is to take marketshare from WeChat & M-Pesa.


Put more simply, it is about increasing total addressable market.


I'd argue the real reason behind it is to skirt GDPR-like privacy laws. If microfees are used for certain interactions, even if they are negligible amounts, Facebook would be required to retain the data attached to it as it's part of the transaction.


I'd argue the outcome of this will be that Facebook will launch their own payments infrastructure on top of WhatsApp. There was no need for crypto or a Libra association to begin with.

According to the leaked Facebook all-hands audio, Facebook is already planning to launch payments in Mexico by end of 2019 (https://qz.com/1719731/zuckerberg-confirms-facebook-payment-...).

I wouldn't be surprised if this goes extremely well for Facebook and WhatsApp payments becomes WeChat Pay / AliPay for the rest of the world.


Just look at what Wechat is currently doing and you can get an idea of what Facebook will be doing in the future.


WhatsApp Pay's trial in India has been delayed yet again: https://www.moneycontrol.com/news/business/whatsapp-pay-laun...

reason - 100% regulatory issues.

I would take that "2019" as "2020 or later."


Exactly this. Facebook will definitely move forward with some kind of payment system. Libra would have been fantastic for them if it had worked out but it was never their only option. They won't give up on Libra yet though.


I d certainly download whatsapp if they did. It's just mad that there is no such service in the west. It makes a lot of sense really, they 'd avoid the whole negative publicitly and they could have released it as quietly as they did with facebook credits long ago


> There was no need for crypto or a Libra association to begin with.

If you're in control of the currency it provides you more flexibility and the blockchain aspect arguably makes it easier to manage the accounting as well.


I wonder how much of this is companies distancing themselves from Facebook rather than being purely about the cryptocurrency project.


I doubt they were ever TRULY enthusiastic about this project, since its premise cuts into their primary bread-and-butter legacy business.

I suspect their involvment was almost more of a "Keep your friends close and your enemies closer" sort of thing. The idea that it's better to be involved than shut out. But if I were them, I would be low-key thrilled that this is falling apart.


The primary threat for payment processors and fiat currency is real cryptocurrency.

Libra is a fake cryptocurrency that the payment processors and governments hoped would help to hold off the cryptocurrencies for a few extra years. It would have allowed the payment processors to continue to profit from transactions and made it practical for governments to control payments and wallets.

They are probably pulling out for two reasons. One, having all of the payment processors involved makes it too obvious that it's not actually a cryptocurrency. Two, it's dead in the water, and to even have a slight hope of reviving it, that association with payment processors needs to go away. If they are able to resurrect it, expect the companies to come back down the line.


I'm sorry. Sometimes goldbugs, and the crypto hardcore, get pretty far out there on the edge. It can be confusing whether something is an interesting point, worthy of discussion... or just outright "alternative reality", like climate change denial, that you should walk away from.

Are you actually saying that:

1. The payment processors joined this consortium to AVOID helping crytocurrencies catch on in the mainstream?

2. The payment processors are lying about pulling out. Facebook secretly pushed them out, because Facebook wants to start over with a more "pure" cryptocurrency?


1. Look into the technical details carefully. Its not really a cryptocurrency except on the surface. Core aspects of the design absolutely preclude any truly distributed operation. Everything goes through a small number of nodes. It should be obvious that payment processors do not want cryptocurrencies to catch on. I know many people will never understand this, but the true purpose of cryptocurrency is to act as digital cash. This makes the payment processor business model obsolete.

2. My theory is that Visa et al voluntarily left for the time being because they could see that it was not going to work, and especially was not going to work with them sponsoring it. Facebook is never going to try for a real cryptocurrency, the model will stay the same, but if the project has any chance of moving forward (at this point it is a very slim chance) then it needs to disassociate at least temporarily from the payment processors. The technical parts will not actually become decentralized. Just the bad marketing from Visa and friends will go away for awhile.

It seems like there is a strong possibility that this particular project is going to be completely killed though anyway.

One more thing about the "alternative reality". Yes, my worldview is obviously very different from yours. But maybe if you consider carefully you may realize that your worldview may not be 100% accurate in all ways.


I think that the vast majority of the public would be much more likely to switch to a currency with Visa and Mastercard's involvement than a currency which doesn't have them on board.

I am honestly wondering which audience you think was losing confidence in this project because of Visa et al.


> Yes, my worldview is obviously very different from yours.

There's worldview, and then there's confidently stating speculative mind-reading as fact.

Like when you say that the true reason behind payment processors and governments backing Libra was to "hold off the cryptocurrencies for a few extra years." Can you source your claim? Or any of your theories? Is this something you just 'know' to be true?

The cryptocurrency community is rife with people describing in exact detail the thinking and motivation of players behind the scenes, but often it turns out to be just "Here's what I am imagining".


That's true it's speculation and I should have qualified it as such. The reason I felt motivated to state it that way though is because it seems so obvious to me that the explanations coming from these companies are marketing that contradict the technical reality. As far as other cryptocurrency people, there are a lot of people who think very differently and everyone has their own view, so maybe the negative generalizations should be tempered.

But you got your generalization in there so what the heck, here is mine. The mainstream community is rife with people who accept marketing and propaganda as truth, but often it turns out to be just "bullshit" and companies or governments were actually just doing selfish things to help themselves strategically.


On the other hand if it weren't facebook they likely would not even have been interested in yet-another cryptocurrency. Especially if it's even not available, but just a work-in-progress thing.


They've been interested for a while - Stripe used to accept Bitcoin, and various Stripe employees have said they're watching developments in the space. For that matter, a number of other big tech companies (notably Apple) said they're watching the space.

I think the main issue is that cryptocurrency still has a few unsolved research & regulatory problems (like how to handle more than 10 TPS, or how to record taxes transparently) before it's ready for mainstream adoption. No big company wants to take the risk that an unsolved research problem may not have a solution, and so they wait and see how the space evolves rather than committing large amounts of resources to it. (Other than FB, who has resources to burn.) If it starts taking off they'll buy a bunch of startups and then start throwing engineers at it; otherwise they risk nothing.


Cryptocurrencies do have scaling issues, but it's very easy to process more than 10 TPS. Just because Bitcoin chose not to doesn't mean others cannot.


If they had created this without FB (and didn't announce it at all), FB could have snuck in later and they would have taken over payments without anyone noticing


But no one would have taken it seriously without FB pushing it.


They knew it was relating to crypto from day one, they've not received new information in that regard so I don't think we can attribute that to their change of heart.

I wager it's the bad press and negative reactions (particularly from European governments) Facebook/Libra have gotten. That's something they possibly didn't anticipate.


The centralisation of Libra made it easy to kill. Bitcoin can be hampered but not outright killed, at least not over night. A death by a thousand cuts is the most likely solution but by no means guarantees Victory.


Bitcoin can be "killed" in the sense that it can become useless for the 99.99%.

Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange.

At that point, Bitcoin would be essentially dead as a rival to any currency.


> Simply hunt down vendors who accept Bitcoin and organizations who facilitate its exchange.

This is commonly a argument for having drugs illegal too. "If we hunt them down, eventually there will be no one left"

What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it.


> What we know now, is that making something illegal, could make it stronger. If Bitcoin becomes illegal in most country, would the price go up or down? Suddenly there is a black market, and opens up a whole other can of worms, so governments might not be able to simply outlaw it.

It's not as though drugs became more popular because they became illegal. Prices may have gone up because they were harder to obtain and there's less competition. Demand was still there because.. well people like doing drugs or are addicted to them.

With Bitcoin, why would a business risk legal action to accept it? There's very little incentive as far as I can tell.


I'm not disagreeing with you, but I do think there's an allure to things that have been banned or that are illegal. For example, how many young music listeners would want to listen to an album even more after Tipper Gore managed to push through that 'Parental Advisory' warning on the front of albums?

This is not exactly a completely relevant example, but Colorado did see a decrease in teen marijuana use after marijuana was legalized recreationally (granted, it has also recently seen a decrease in teen heroin use, so the legal status may not be directly causal, but I find it interesting nonetheless):

https://www.washingtonpost.com/news/wonk/wp/2017/12/11/follo...

Regarding Bitcoin, one incentive might be positive press coverage - a PR move, so to say, such as when APMEX, the popular online precious metals exchange began accepting Bitcoin in late 2017:

https://www.coindesk.com/major-gold-dealer-apmex-begins-acce...

Many of these cryptocurrencies have non-profit foundations that push for adoption by getting ad-space at major events and pushing for the acceptance of cryptocurrencies in certain companies. Litecoin has the 'Litecoin Foundation' and they managed to get advertising for Litecoin in some UFC events. More often than not, I think partnerships like these make for good PR for both companies involved - here's a piece on why the Litecoin Foundation thought that this particular partnership was useful:

https://litecoin-foundation.org/litecoin-ufc/


But they didn’t become less popular either, and instead continued to rise and grow in popularity. That’s the point, outlawing it won’t stop it.

If bitcoins were illegal then I imagine they would probably only be used in illegal transactions.


To clarify: Necessarily, if Bitcoin was illegal, any transaction with it would of course be illegal. :p That isn't to say that any and all transactions made with it, would be for the exchange of illegal goods. You can of course also use Bitcoin for the exchange of legal goods, but taking Bitcoin even for legal goods, would hence be illegal. In any case, just like people speeding, drinking moonshine, or enjoying marijuana where it's not allowed, I'm just as sure that very few would care.


Thing is, people have 'good reason' to want drugs: They feel good, and mostly, people get addicted. Moreover, there is much less of a scale requirement for drugs. It is pretty easy to make money on drugs when 0.1% of all people are using your drugs.

Whereas, a currency used by 0.1% of your friends / neighbors is totally useless.

These reasons make it 1) easier to suppress a currency 2) harder to suppress drugs.


This. Demand for drugs was, and I imagine will always be huge.


I feel like you’re reasoning is biased, I’ve seen cocaine usage for adults 18-25 reported around 0.8% to 2.0%, and it sustains an illegal industry. I unfortunately have no figures on bitcoin participation and couldn’t find anything decent when searching on mobile, but I imagine it would be a similar niche.


Bitcoin, at the moment, isn't used as a currency. Nor is it very viable as one. Instead, it is a store of value, much like gold.

Using something as a store of value has much less of a scale requirement. You only need a few people that will be willing to exchange your Bitcoin into something else in order for it to work as savings / an investment. Whereas a currency requires multiple places where you buy goods to accept it. Moreover, those places only really have a reason to accept a currency if multiple customers would use that currency.


There's a black market for drugs because people like taking drugs. On the other hand, people only like receiving cryptographic tokens on the assumption that they will be able to exchange them for something in future, something considerably less likely if giving away products and services for alphanumeric strings is illegal... and unlike drugs, the supply of cryptoassets doesn't shrink when the government makes them more difficult to sell.


> There's a black market for drugs because people like taking drugs.

Perhaps this is somewhat pedantic, but I think it's more accurate to say that there's a black market for drugs because governments have passed laws to make certain drugs illegal and some groups of people have accepted the risks that come with supplying the demand for this particular market in order to make a profit.

> On the other hand, people only like receiving cryptographic tokens on the assumption that they will be able to exchange them for something in future

It may not be exactly this simple, although this is mostly true. There are those out there that purchase cryptocurrencies to make foreign financial transactions in a way that may be considerably more difficult with their country's accepted currency. This doesn't necessarily have to be an exchange, it could simply be sending said cryptocurrency to a wallet of a relative in a foreign country.


The point is, there a market for drugs because people like to consume drugs. No one likes to consume hash codes like they consume hash.


Do you really believe that a consortium of world governments cannot mount a permanent 51% attack against all crypto-coins that they wish? But it doesn't even need to be permanent, just a few hours would send the requisite message.


Or just block port 8333, or implement DPI and null route anything that looks like a block header or transaction, or any manner of things that can be done when the "virtual" currency still has to traverse very real public infrastructure.

Will it stop it completely? No - but put enough chicanes in the way and the incentive to use it will drop below critical mass required for it to achieve its actual long term goal, which is to undermine the power of a state to control the issue of currency (and with that, taxation).

Short term goals of facilitating grift by corrupted authorities and their crypto con artist enablers will remain largely unaffected.


All of those are easily fixable in wallet software. Can't stop the signal.


Bitcoin can be killed by means other than technological.

For example it can be outlawed. Sure, people would still be able to use it, but they would be breaking the law and that would deter many, possibly enough to kill it outright.


Bitcoin does not need to be killed because it’s dead already: proved to be useless for all practical purposes, now used mostly for money laundering or other criminal activities


That's such a misguided view. Bitcoin is mostly owned as an asset because of the hype.

Criminals use other less tracable coins.


That's an interesting claim, all the time regular banknotes and coins offer way better alternatives for doing just that (e.g. money laundering and black market transactions), due to their much better relative untraceability as compared to just about all cryptocurrencies, and even so-called privacy coins.

The only thing cryptocurrency has clearly got going for it, is in relative better ease of use, and better security, as compared to coins and banknotes, especially when it comes to international transactions.

It's troublesome to move a literal ton of cash from A to B, while moving a virtual ton of cryptocurrency isn't. The cost and risk of moving said ton of cash from A to B, is also staggering compared to the relative security and ease of movement offered by cryptocurrencies.

Best of all, cryptocurrency just about removes the need to have a bank as a third party when both storing and moving your valuables. Thus it's a much bigger problem for banks, than governments. Remember, taxation still existed in a time when no valuables were traceable. So that fact that some cryptocurrencies are claimed to be untracable, doesn't really matter much to the state.


Interesting that you wrote paragraphs rebutting your first paragraph.


I didn't. You just assumed I did, which is different.


Money laundering and other criminal activities are a very profitable businesses that power an important sector of economy. If Bitcoin enables or facilitates them, it is far from what I would call useless.

Also: it will not be outlawed everywhere, some country will jump on the opportunity. So you earn bitcoins in one place, legalize then in another one, where it is legal. It's not so easy to prevent this, I'd even call an attempt futile.


Let's say, for the sake of argument that Ukraine legalizes BTC, while it's illegal everywhere else.

What you think will happen:

- Ukraine will make fat stacks from all the people who care about BTC. Crypto-libertarians will rejoice, issue fifty billion ICOs, and Ukraine's GDP will exceed that of the rest of the world. BTC will go to the moon, and anyone who didn't get on that train when its future was in doubt will be starving to death in a ditch, or working as an indebtured servant, soldering mining rigs for early adopters.

What will actually happen:

- Any Ukranian bank that touches BTC will be barred from doing business in USD. For a bank, this is as good as suicide.

- Any intermediary that exchanges BTC for a local currency (Hryvnia), without touching USD will be barred from transacting with any Ukranian banks, that don't want to be barred from doing business in USD.

- Anyone trying to use Hryvnia for any international transactions will be subject to strict AML scrutiny, because it is a well-known intermediary currency for laundering BTC. The burden of proof with AML is on you, not your accuser.

- The Ukranian Rada will quickly come to its senses, and, in order not piss in the cornflakes of the 99% of its citizenry that doesn't give a shit about BTC, will ban it, and stop being a pariah state in the world of international finance.


What a perfect example of a straw man argument you made! I just love when people tell me what they think I think!

No, hypothetical Ukraine will not issue fifty billion ICOs and its GDP will not exceed the rest of the world (btw it is rather ignorant to tie ICOs to bitcoin, they are completely different things).

What I think will happen in this hypothetical scenario, is that bitcoin will have a safe place in Ukraine where it can be legally turned in a very real cash USD, totally by an off-banking method. Then these USDs will be shipped to banks in Poland or Germany or Switzerland, which will accept it rather happily (as they usually do). Meanwhile, the rest of the world would continue using bitcoin for their day to day purposes, ignoring a worldwide ban. Some purposes will probably criminal [1], but many will have legal ones, especially in countries with failed fiat currency, like Venezuela or Zimbabwe. Because, you know, you can't really control a person who sells a pig to his neighbour and wants to have something REAL in return.

Should be mentioned, that if we pretend that just one country will legalize bitcoin, then it is more likely that this country will be the one least vulnerable to bank sanctions. Iran or North Korea are much more likely candidates than Ukraine.

Anyway, in reality, a worldwide ban is unlikely at this point, given the acceptance of bitcoin by too many jurisdictions already [2]. It's just a matter of time when it'll go to the moon and establish itself as the main world currency.

[1] In Russia all drug trade has moved online, facilitating sales with cryptocurrencies, check this investigation https://darknark.lenta.ru/ - and no Russian bank exchanges BTC for local currency. [2] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...


Wow, the second situation is actually very close to the one in Estonia.

The country with easy ICOs and many guys who became rich after launching coins, and sadly today the pariah of international finance.

The worst part of it, is that literally 99.9% of the population are totally honest persons and get punished for everyone else.

10% live in "absolute poverty" and it's certainly not the lack of money that caused it.

Hundreds of billions of USD are/were in the country.


> now used mostly for money laundering or other criminal activities That would be monero.


This is a bold claim - proven to be useless for all practical purposes by whom? Care to provide evidence to back this up?


>Bitcoin can be hampered but not outright killed, at least not over night. A death by a thousand cuts is the most likely solution but by no means guarantees Victory.

Ignoring policy attacks, and focusing on the purely technical:

A useful metric here is to compare the cost of executing a 51% attack on Bitcoin long enough to erode confidence in the software to the military budget of the top nation states.

Additionally, the broadly assumed consistency properties of Proof-of-Work cryptocurrencies fall apart in the face of a powerful network adversary who can cause arbitrary segmentation.


Everyone seems to forget that whilst a 51% attack could easily be financed by a nation state, actually getting the hardware to perform it is the bottleneck.


I'm actually kind of bummed out about this. I may not like FB, but I like the idea of a digital currency backed by a floating basket of currencies.


> a digital currency backed by a floating basket of currencies

This will be live by the end of 2019 in a similar form.

The MakerDAO stablecoin system on the Ethereum blockchain produces the DAI stablecoin, with 1 DAI pegged at 1 USD. There's currently $85M of DAI in circulation.

Each $1 of DAI is backed with $1.50 of Ether, the currency of the Ethereum blockchain.

Later this year a major upgrade will go live named "MakerDAO multi-collateral DAI". The "multi-collateral" bit is related to a basket of currencies.

By Q1 2020, the DAI stablecoin will be backed still by ETH, but also backed by USDC (a US dollar stablecoin run by Coinbase), REP (a token for the Augur decentralized prediction market), and other tokens.

Not exactly "a digital currency backed by a floating basket of currencies" but a related concept and in production very soon :-)

https://mkr.tools https://vote.makerdao.com https://makerdao.com


There were a few cryptos that tried the exact same thing before Maker. Notably NuBits and BitShares, both of who had dollar equivalents with what was at the time more collateral in their native crypto than the dollar peg. In all instances at some point the collateral value collapsed and the whole thing went kaput (more or less at once).

That said I have high respect for the Maker team and the overall idea. They are some of the best people working in crypto right now.


I’ve always found it very interesting. Do you have a good resource that explains how it really work?


This is probably your best bet: https://makerdao.com/en/whitepaper


Not one that isn't regulated and that is controlled by a company with a penchant for walking the legal gray area line.


Not only the legal gray line, but also the equally important moral gray line. Good riddance.


Devil's advocate: Pretty much every fiat currency out there is also backed by an entity with an ethical checkered past. That's one of the major political motivations behind cryptocurrencies.


Except countries have an existential interest in ensuring their citizens are, to a certain degree, well off. Facebook has no such incentive or interest or even responsibility.


So why repeat the same failures? IMO one of the promises of cryptocurrency was a federalized system where it was owned by the people, not a single entity. No matter the marketing, if Facebook is making a cryptocurrency it will have the opportunity to abuse it and change the rules whenever they want. I'd much prefer a foundation made of a group of industry, political, and technical experts that can at least pretend to be impartial.


Let's remind ourselves that the entire point of the Calibra organization from which these companies have withdrawn their applications is to decentralize the governance of the coin.

Facebook would not have unilateral control by any stretch of the imagination.


>Facebook would not have unilateral control by any stretch of the imagination.

At minimum they are the registered owner the Libra federal trademarks...that's a funny first step for a "decentralized" project. Satoshi Nakamoto never trademarked bitcoin or blockchain for that matter.


Calibra = Facebook's Libra wallet subsidiary

Libra Association is the organization these companies have withdrawn from.


Better than one regulated and controlled by USGOV. An entity with so many evil acts in its past and present it's a meme.


A lack of regulation is a bit of the draw, isn't it?

Let's not pretend any of the processors are doing this because they have ethical issues with Facebook. They are likely doing it at the behest of the Fed, the Treasury and other international currencies. It's about power.


Agree, Facebook is a malicious actor. They are a surveillance and propaganda platform. I don’t want them controlling a currency as they’d likely just abuse it.


I'm actually quite relieved about this. I don't know who I want to control such a thing, but it sure as hell isn't Facebook (or Google, Amazon, MS, Apple for that matter).

I think what it'll take is a company with a profit (i.e. subscription/fee) model that clearly doesn't rely on pimping out consumer data to any/all comers and takes GDPR privacy to heart.


What about Apple's profit model involves pimping out consumer data to any/all comers?


Then let’s have the central banks of the G7 set up a cryptocurrency that’s backed by actual reserve currency. Why put Facebook in the middle?


If the central banks of the G7 are the authority, then why bother with any crypto nonsense? You've just described the Euro, more or less. No need to burn any electricity on a proof of work & public ledger system.


This was partly my point.


I am overjoyed. Because now a truly open and decentralized solution has a chance instead.


I'm actually glad it's dead/dying. It was always going to be controlled by an elite group who answered to no one but themselves. They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions.

People keep saying oh this is proof crypto can't ever work because government. This was never a true crypto currency. It was just a private ledger tracking where actual money went. It was a stable coin at best. Its centralization is what got it killed.


>They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions.

Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs.

(Edit) I think it's fair to not trust Facebook with your currency, but keep in mind the players in the current system (governments, Banks, and credit companies) have hardly proven more trustworthy.


Wait, are you proposing that we go from "call their 800 hotline, sit on hold for 30 minutes," to "your account has been permanently disabled for violating Facebook’s Terms. We will not reactivate it for any reason. This will be our last email regarding your account."[0] ?

This does not make sense. Looks like even your credit card is vastly more trustworthy than Facebook!

[0] http://www.optimizationtoday.com/what-i-learned-when-faceboo...


>Unlike, what, my established credit card company which still blocks me randomly when I'm traveling overseas even when I explicitly call their 800 hotline, sit on hold for 30 minutes, and tell some unempathetic worker "I'm overseas, don't block me"? Yes, thank goodness libra is dying, otherwise there might actually be some innovation against the exact things you just mentioned which perfectly describe the current state of affairs.

You should just get a new credit card or bank, whatever you're using is really out of date. Most modern cards and banks have websites or phone apps you can submit a travel notice on. Takes all of 2m and prevents you getting blocked for charges in that country.


Or, get an American Express card. I got one four years ago and then went to Singapore for a consulting gig. I called them to let them know where I would be and was told to please not bother, that they expect their customers to travel.

I was also really please last month to notice that Capital One didn’t charge international transaction fees when I was in Canada.


I can instantly toggle or schedule my card availability per global region (and on/offline) through an app, with login protected by hw or app-based 2fa.

Your problems are already solved, in Europe at least. Thanks to banks and governments, ironically!


And of course the trustworthiness of Facebook.

I think the others wanted to know what's going on with this project but in the end no sane person want's Facebook to have control over currency ("to move fast and break things") or even access to transaction data (it's proven FB can't be trusted with sensible data by now).


There was absolutely no reason for this to project to exist. The only feature of digital currencies that make some of them interesting is that they are fully distributed and based on absolutely zero trust of other users on the network. What Facebook was trying to do here was take something that could be implemented in a standard centralized database, stick some marketing on it, and try to ride a hype wave that has since (rightfully) died down.


It wasn’t implemented as a proof of work currency, but as a small distributed database. At its core it’s a multicurrency fiat currency fund that you can trade ownership units of, like an ETF. But internationally on no specific stock exchange. And when you buy units of it, the currency you put into it gets added to the fund, so it isnt dilutive.

It’s basically creating a global currency out of the worlds fiat currencies, like banks did with gold long time ago. It’s quite clever and I could see the economic value and issues of something like market created globobucks.


The premise is alright until you realize that Facebook and friends couldn't possibly have enough capital to be a "bank of last resort", and financial crises without one have historically just spun out of control and wrecked economies for extended periods of time.


The point is there doesn’t need to be a bank of last resort with libra.


What about it indicates that?

Libra is backed by a basket of currencies or investments designed to spread risk around, which is a great idea unless a huge chunk goes belly up at the same time. And then what? We repeat the subprime mortgage crisis, where people also thought that there would never be mass defaults across the system at the same time?


Libra is not a bank, it’s a currency that’s pegged to other currencies. The asset backing is only because the initial value has to come from somewhere. It can’t default. It could decrease in value, but there’s no debt or counter party risk.


A run on a currency is still pretty disastrous for everybody involved, hence the need for a bank of last resort to shore up the currency when that happens.

All these alternative currencies look like they're solving a political science problem, not any actual problems that people have.


I'm thinking it's more about solving developing country problems vs. developed country problems. If your local currency is becoming zimbawbe, WhatsApp has a stable currency you can buy into with the local money changers and still is as convenient as mpesa.


A run on the currency just becomes a run on the underlying currencies, which, as a basket of global currencies, cannot all be run at once since each one is inherently relative to the others.

Second point is right on the money though!


But if a huge chunk of major global currencies go belly-up at the same time the world has much larger issues than Libra taking a, say 20% dive - the volatility in all kinds of sectors would dwarf that.

All other aspects of the design strike me as either dumb, redundant or dangerous, but this would be the one part of the system not to worry about.


Absolutely. My definition of a decentralised system is not one that's controlled by a handful of entities...


And yet, a lot of people have been confused into thinking things like The Cloud are decentralized.

I’m not sure how this got broken, but a few powerful companies seem to be running with it.


Well, relative to the tiny datacenter you might have for an office, it's "decentralized"... but yes, only in a marketing sense.


The bar for grasping decentralization fatally flexible and bends very low.

As in "If you can't immediately name the individual who has the majority of leverage over the operation of X, then X is decentralized" low.

It's little more than an incantation at this point; the only proven implementation is as a sort of verbal ink blot test for identifying marks.


Sorry, who in their right mind thinks the Cloud is decentralized? It is literally the opposite.


It is descentralized across corporations. Pretty much a cartel.


How else can facebook prevent people from moving on to wechat with its internal payment system? Why should people stick to facebook if wechat can offer a whole bunch of services that need (micro) transactions?


Facebook can have an internal payment system that uses local currencies. There is no reason it needs to create its own currency, except as a power grab. Building out a Paypal clone is fine enough.


How can it be a power grab, Libra was going to be at least an open system with it's own wallet protocols and market for implementations. A WeChat style system would be totally closed from the ground up.


No, it was going to be open to partners that Facebook picks and chooses. It was very specifically not to be a fully decentralised blockchain, which essentially means it's actually a big permissioned database, which the database owners get to control.


It's not a power grab, it's an attempt to avoid taxes and regulation, same as all the game companies do with virtual currency.


They could just get a banking license and do a stored value wallet denominated in an existing currency.


China


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