If every Westerner held in Libra an amount equal to one-tenth of their bank deposits today, the new currency outstanding would be worth over $2trn. How worried should banks be?
Considering how in debt the average American seems to be (obviously not representative of the entire Western world), I wouldn’t be surprised if it’d put them in the red.
Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies. Its completely tied to fiat, has no real privacy or ultimate control over the wallet, no value on its own or anti-inflation etc.
It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing.
The goal is for Visa, PayPal, and Mastercard (who are sponsoring it) to keep being able to profit from digital payments, and to fight against things like Bitcoin and Ethereum which are making major pushes to scale. They want to get in ahead of real cryptocurrency.
Anyone in banking or government who is concerned about cryptocurrency impacting their control will eventually figure out that Libra is the best thing they could hope for.
I am worried that they will eventually figure that out, and then get quite excited for Libra, then Libra will launch and really restrict uptake of Bitcoin and Ethereum. Once governments get familiar with their convenient Facebook Libra Financial Spy Portal they might even try to outlaw real cryptocurrencies.
It is an overall net positive. Just imagine if you live in a country with unstable currency/government. Libra might allow you to protect yourself and allow you to continue surviving (by being able to trade or buy stuff from abroad). Think Venezuela. Only problem is if you don't have a cell phone, internet or electricity.
> Banks and governments are going to realize that Libra helps to defend the them from real cryptocurrencies.
That's not really a great selling point. So far most cryptocurrency adoption has either been for speculation or illegal activity. It hasn't caught on in the mainstream at all, either as a currency or a store of value.
While it obviously hasn’t taken off as a mainstream currency, it certainly entered the mainstream mindshare. And even if it is known for illicit purchases, it’s by no means useless for legitimate purchases. The best use case now is for privacy, which I suppose is misleading since it may lead folks to falsely believe that use of cryptocurrency alone makes them anonymous. Even still, there’s hardly any alternative for that use case. I use it to pay for VPNs just as a matter of principle.
Reality: I think cryptocurrency is worse for illicit purchases than many realize and simultaneously better for legitimate purchases than many realize. Pseudonymity is more useful for average users than full anonymity.
Hard to really know for sure what dominates the volume, but based on folks I know with large amounts of Bitcoin, I’d actually guess its been mostly investing for a long time.
That said, I never store value in any crypto, but I do think it is underrated for more legitimate use cases.
That's the problem -- it hasn't really caught on yet. But Libra could be so ubiquitous and convenient, it could catch on, before Bitcoin and Ethereum. And that creates a blocker for more adoption of those things.
But real cryptocurrencies can become popular -- they just need to scale and attach themselves to something that is convenient and popular. That could happen with lots of things, for example Status IM and Ethereum. Or Lightning Networks and some WebRTC sex chat site.
But if Libra gets in there before those other things take off, it could be lights out for digital cash.
It’s becoming clear that cryptocurrency is a real threat to major incumbents, and the reason corporations have signed on to Libra is to placate their shareholders who are asking them for a blockchain play.
The benefits of digital assets are obviously better than old-school pen and paper assets. The same arguments against the internet are being applied to blockchain, and blockchain is going to win just as the internet won.
Fiat currency inflates and is subject to the whims of government. Cryptocurrencies are managed by code. I prefer the code, and I imagine citizens of countries like Venezuela and Turkey would also prefer code over their corrupt governments.
How is it clear? Ten years on there are zero cryptocurrencies in wide use as actual currencies, and blockchain has drastically changed zero industries (except maybe malware).
The Internet had many popular use cases years or decades before investor money poured in. Blockchain has already seen a bubble and a bust with exactly one popular use case: trading cryptocurrency, which itself is only really used for speculation and scams.
"Managed by code" is also not really a thing. Humans write the code! And there's no real reason to expect the humans who create the cryptocurrency ecosystem to be any more trustworthy than the humans in government.
And it’s not really managed by code anyway. Look at the DAO debacle: they started out saying the code is the law, and when someone found a bug in the code and exploited it, they changed the code by fiat. What is the point if you’re going to end up human arbitrators anyway?
> Fiat currency inflates and is subject to the whims of government.
Cryptocurrencies have proven to be subject to the whims of the masses, shooting up in value (at least in part) because of speculation. At least fiat money backed by governments try to keep them stable (in general).
I've always wondered if it would be possible to create a true decentralized stable coin. Put some sort of mechanics in the code to do proof of stake rewards if the price starts skyrocketing (increase supply) and then maybe increase transaction fees slightly if price is plummeting (decrease demand). The staking nodes would need to have something to check price on non-manipulated exchange though which could be tricky but I find it an interesting idea to think about.
The value of bitcoin has risen well over 100% for each year of it's existence.
I'd be shocked to find a person in the western world who hasn't heard of the name at least, while plenty of people I know haven't the slightest clue about slack, atlassian, etc.
That is a straw man. My point is that it hasn't caught on as a currency. It's fully caught on as an investment opportunity, which is why the value has increased so much every year (except last year, when it crashed by almost 85%!) but also doesn't make it great for everyday transactions.
> I am worried that they will eventually figure that out, and then get quite excited for Libra, then Libra will launch and really restrict uptake of Bitcoin and Ethereum.
As someone who holds the opinion that cryptocurrencies don't solve any real problems (and create new ones), this is the best argument I see in favor of Libra. It's 'Blockchain™️' but at least it's not actually anonymous or decentralized. For 100% of the parties I transact with, I want to know who they are so I can sue them if I need to and I want to be able to get my money back if I get ripped off.
I now have read that the Libra will have complete liquidity, will be pegged to multiple currencies and will earn interest (which goes to founding organizations).
How can all these things be true? Are they just using these terms with the same freedom they use the word "crypto-currency"?.
It's a multi-currency index fund consisting of deposits of currency from users. I think the goal is to make an international currency that would be stable across countries.
The goal I believe is to be 1:1 in multiple currencies (or maybe 0.9:1 or 1.1:1 as close as possible -- so if you were to buy libra with japanese yen it would cost 1:1, or possibly they'd do it based on the highest of the pegged currencies, so if euro is highest they'd go w/ 1:1 euro, then when you cash out to usd directly from libra, you'd go off the current euro:usd differential.
It's definitely complicated, and I think going to be a management / development nightmare. The best thing would've been just go with USD, or Euro since those are the most used funds currently then have a built in forex exchange to instantly change local currencies to libra based on their usd/euro pairing rate.
Yes it is true. From what I understand if there is an excessive amount of selling then they simply fund the withdraws by taking funds out of the reserves and simply "deleting" the libra tokens. Same story if there is lots of people buying. They simply put more into reserves to create new tokens. In theory they could actually put surplus reserves (over 100%) into the backing due to interest accumulation.
Libra seems like the worst of all worlds. Zero anonymity like a credit card, the untrustworthiness of Facebook, and with the paltry transaction throughput of a cyptocurrency.
I saw the greatest minds of my generation destroyed by being tasked with making financial Rube Goldberg machines.
The Libra consensus model utilizes permissioned coordinators acting within a legal framework which will certainly allow their transaction throughput to be many orders of magnitude over a traditional cryptocurrency.
Can you sign me up for anonymous credit card? Surely that must be worth it's weight in gold. My current credit card provider can see the exact item purchases I made from the supermarket then sell it off to third parties while I need to ask for and keep a paper receipt to do so.
1. unrealistic to expect libra to have zero anonymity given current regulations around know your customer/anti-money laundering rules.
2. Libra is actually operated by the libra association. Facebook only has a minority voting share in that association.
3. Transaction throughput of libra is 1,000 transactions per second compared to bitcoin's 7 transactions per second. In comparison visa does about 1,400 transactions per second currently. In theory, it would be possible to increase the transactions per second of libra if it gains widespread use.
So for (1), not appealing for anyone currently interested in the one killer app for cryptocurrencies.
For (2), I look at it this way: A swimming pool can be 99% pure water, but if it's 1% poop I don't want to dip my feet in it.
As for (3), Visa can do something like 250k transactions per second. The blockchain aspect of this system unnecessarily hobbles it, and it seems like really the blockchain aspect just tacks on a techy buzzword that offers no compelling features that a purely centralized database can't do better.
Ain't gonna touch on your 1st and last points because I don't know enough about that.
Regarding your second point, of course they're gonna abstract it. There's no way in hell people would trust it if it were labeled as Facebook Libra. The only way for it to get any momentum is by people being tricked into thinking it's some sort of an independent entity that happens to be supported by Facebook and others.
I don't buy it, and neither should anyone else. Even if they make just 5% of the profit that Libra generates... somehow, that's still 5% more than Facebook would receive otherwise. It ain't even released yet, and I already know that I'll go out of my way to avoid ever touching it. I assume most of HN readers will do the same.
"It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing."
Exactly. Why FB added this hocus-pocus isn't clear at all it isn't needed (WeChat does fine without it). A WeChat payment system that would permit individual FB account holders to send "F-Bucks" to each other at low cost would vastly disrupt the remittance payments system.
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[ 4.1 ms ] story [ 107 ms ] threadRealistic start to the article.
It is really much more like WeChat payments or Alipay or whatever than anything else. The cryptocurrency part is largely a smokescreen and marketing.
The goal is for Visa, PayPal, and Mastercard (who are sponsoring it) to keep being able to profit from digital payments, and to fight against things like Bitcoin and Ethereum which are making major pushes to scale. They want to get in ahead of real cryptocurrency.
Anyone in banking or government who is concerned about cryptocurrency impacting their control will eventually figure out that Libra is the best thing they could hope for.
I am worried that they will eventually figure that out, and then get quite excited for Libra, then Libra will launch and really restrict uptake of Bitcoin and Ethereum. Once governments get familiar with their convenient Facebook Libra Financial Spy Portal they might even try to outlaw real cryptocurrencies.
with the possibility of govts/institutions getting a hard on trying to outlaw cryptocurrency they’ll only get more popular
“uncensorable money” is more important in our world/internet that’s increasingly becoming consolidated
That's not really a great selling point. So far most cryptocurrency adoption has either been for speculation or illegal activity. It hasn't caught on in the mainstream at all, either as a currency or a store of value.
Reality: I think cryptocurrency is worse for illicit purchases than many realize and simultaneously better for legitimate purchases than many realize. Pseudonymity is more useful for average users than full anonymity.
Hard to really know for sure what dominates the volume, but based on folks I know with large amounts of Bitcoin, I’d actually guess its been mostly investing for a long time.
That said, I never store value in any crypto, but I do think it is underrated for more legitimate use cases.
But real cryptocurrencies can become popular -- they just need to scale and attach themselves to something that is convenient and popular. That could happen with lots of things, for example Status IM and Ethereum. Or Lightning Networks and some WebRTC sex chat site.
But if Libra gets in there before those other things take off, it could be lights out for digital cash.
The benefits of digital assets are obviously better than old-school pen and paper assets. The same arguments against the internet are being applied to blockchain, and blockchain is going to win just as the internet won.
Fiat currency inflates and is subject to the whims of government. Cryptocurrencies are managed by code. I prefer the code, and I imagine citizens of countries like Venezuela and Turkey would also prefer code over their corrupt governments.
The Internet had many popular use cases years or decades before investor money poured in. Blockchain has already seen a bubble and a bust with exactly one popular use case: trading cryptocurrency, which itself is only really used for speculation and scams.
"Managed by code" is also not really a thing. Humans write the code! And there's no real reason to expect the humans who create the cryptocurrency ecosystem to be any more trustworthy than the humans in government.
Cryptocurrencies have proven to be subject to the whims of the masses, shooting up in value (at least in part) because of speculation. At least fiat money backed by governments try to keep them stable (in general).
The value of bitcoin has risen well over 100% for each year of it's existence.
I'd be shocked to find a person in the western world who hasn't heard of the name at least, while plenty of people I know haven't the slightest clue about slack, atlassian, etc.
As someone who holds the opinion that cryptocurrencies don't solve any real problems (and create new ones), this is the best argument I see in favor of Libra. It's 'Blockchain™️' but at least it's not actually anonymous or decentralized. For 100% of the parties I transact with, I want to know who they are so I can sue them if I need to and I want to be able to get my money back if I get ripped off.
How can all these things be true? Are they just using these terms with the same freedom they use the word "crypto-currency"?.
It's definitely complicated, and I think going to be a management / development nightmare. The best thing would've been just go with USD, or Euro since those are the most used funds currently then have a built in forex exchange to instantly change local currencies to libra based on their usd/euro pairing rate.
I saw the greatest minds of my generation destroyed by being tasked with making financial Rube Goldberg machines.
Meanwhile when you pay with a credit card, merchant has access to very little data.
There are also various cryptocurrency backed cards which offer varying levels of anonymity.
2. Libra is actually operated by the libra association. Facebook only has a minority voting share in that association.
3. Transaction throughput of libra is 1,000 transactions per second compared to bitcoin's 7 transactions per second. In comparison visa does about 1,400 transactions per second currently. In theory, it would be possible to increase the transactions per second of libra if it gains widespread use.
For (2), I look at it this way: A swimming pool can be 99% pure water, but if it's 1% poop I don't want to dip my feet in it.
As for (3), Visa can do something like 250k transactions per second. The blockchain aspect of this system unnecessarily hobbles it, and it seems like really the blockchain aspect just tacks on a techy buzzword that offers no compelling features that a purely centralized database can't do better.
Not sure how much you swim but
7.14*10^-6% of every swimming pool is per, atleast.
Regarding your second point, of course they're gonna abstract it. There's no way in hell people would trust it if it were labeled as Facebook Libra. The only way for it to get any momentum is by people being tricked into thinking it's some sort of an independent entity that happens to be supported by Facebook and others.
I don't buy it, and neither should anyone else. Even if they make just 5% of the profit that Libra generates... somehow, that's still 5% more than Facebook would receive otherwise. It ain't even released yet, and I already know that I'll go out of my way to avoid ever touching it. I assume most of HN readers will do the same.
Exactly. Why FB added this hocus-pocus isn't clear at all it isn't needed (WeChat does fine without it). A WeChat payment system that would permit individual FB account holders to send "F-Bucks" to each other at low cost would vastly disrupt the remittance payments system.