Discussing the launch of Libra, "A new global currency"

Peter Kim Frank on June 18, 2019

Libra.org is now live. "Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of peo... [Read Full]
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How can anyone not be skeptical and pessimistic about a "currency" developed and promoted by entities whose sole motivation is profit?

 

There was an interesting series on Planet Money where they allowed Ben Horowitz to make a bet with financial journalist Felix Salmon over how many people would be using Bitcoin as a currency in a few year's time, then they actually followed through and revisited the bet in a later episode.

npr.org/sections/money/2019/02/01/...

The outcome was that Horowitz lost badly. After the time had passed people still weren't actually using Bitcoin as a currency. It's purely a wealth stash for almost all users.

But the interesting thing is that they went on to discuss how Horowitz & co., by getting in early, still "won the real bet" because Bitcoin's price had skyrocketed. So despite barely creating an actual currency, those involved in its creation made out like bandits.

You see a similar story with the other ICOs. Where the makers cash in BIG TIME and everyone else is left holding the bag. Hard to think about this situation in different terms. All the early parties have a lot of incentive to pump this up and make a lot of money, regardless of longterm intent.

It's interesting to think about how this might be perceived in a pre Cambridge Analytica (among other scandals) world in terms of how much we'd want to trust those involved, but it also is hard not to think back on Facebook's Internet.org venture (and Marc Andreessen's regrettable "what's so bad about colonialism" comment on the whole ordeal).

 

The whole principle of capitalism is that the selfish profit motivation produces a better outcome for the whole. All the evidence seems to show that capitalism is effective in that regard, and furthermore has often produced better outcomes than efforts driven via government guidance. Is there any reason to suspect that the management of a currency should behave differently?

 

Has the profit motive really produced a better outcome for the whole of society, or has it produced a better outcome for those in a position to profit at the expense of those not?

Outside the question of economic ideology -- on which I suspect we differ irreconcilably -- there's a clear conflict of interest when agents motivated by profit also control the/a medium of exchange. Look to the example of company scrip, which the US outlawed in the 30s for very good reasons.

That's possibly an excellent example. Governments all round the world tend to take a dim view of currencies they don't control. Well, wouldn't you, if you were in their position? That doesn't mean that they're right to do so, but it doesn't mean they're wrong either. Not being familiar in US economic history, was the company scrip used to defraud citizens of their savings, or were losses the result of poor or unlucky investment decisions?

Company scrip isn't about fraud or losses or anything like that. It's possibly best illustrated. In our dumb cyberpunk fifteen-minutes-into-the-future, you work for a company which pays your wages in FaceBucks instead of dollars. You can buy things with your FaceBucks or exchange them for dollars at the FaceStore; naturally, being a good profit-motivated capitalist, your employer marks up prices and charges exorbitant exchange fees, since when you pay forty FaceBucks for a twenty-dollar shirt that effectively means the company had to pay you twenty dollars less. And good luck finding an alternative, because in this example you're not an experienced worker whose particular skills are in high demand but, let's say, a humble content moderator; you've spent most of your savings in dollars on goods not available at the FaceStore (or even converted them to FaceBucks to supplement your salary); and if you try to take your resume to the next company over, they're just going to pay you in Twugerrands.

The practice has longer antecedents but was most famously adopted in the wake of the Great Depression of the late 20s and early 30s. Some corporations even ran whole municipalities as their own economic fiefdoms; you may have heard of the town of Hershey in Pennsylvania. It was immensely exploitative, but by god was it profitable!

The idea of a currency free from centralized control is noble, for all nobody's managed to really get it off the ground yet. But there are, at this point, centuries of precedent demonstrating that the only less trustworthy economic stewards than governments are profit-seekers.

Dian. Amazing. Exactly. Old history.

en.wikipedia.org/wiki/Company_scrip
en.wikipedia.org/wiki/Disney_dollar
en.wikipedia.org/wiki/Company_town

Devto dollars. Devtoville. Devtoland. Devtobank. "The Peter Kim Frank Museum of Devtoville History & Science are proud sponsors of Devgov TV. "

Only if you do all the work too.

 

No. The whole principle of capitalism is that selfish profit motivation produces a worst outcome for the whole. The global climate crisis and the massive species extinction that comes with it is the direct byproduct of capitalism.

Capitalism is effective in privatizing profits and letting all the costs on the side, where they can or cannot be absorbed by public or, in the case of the environment, natural entities.

 

One question to say what took me paragraphs, badly.

👍

 

Yikes, those partners...

  • Visa and MasterCard, so you can borrow Libra for 25% APR
  • PayPal, so each transaction has a 3% fee
  • Facebook, so all the other partners will have full access to all data, which'll eventually be leaked 😏

 
 

When I was a child, I was offered a book on futurism, one chapter about money already said "in the future big corporates will create their own currencies" so fastforward to the now future, they were right or were they already programming that idea in the brain of the next generation ;)

 

What's wrong with government ? Last time I checked they were the place where you could have even a modicum of democratic control. Unlike corporations. Those people are sick.

 

That didn't really hit me, but it's true. That does seem to be where the future's headed...

Even that image looks like kind of United Nations-esque.

The un.

They better remove that target off my planet from their logo or when I finish commenting I'll..........tweet. 😡

Looks like canola land is right in the middle there B. 👀

 

REDACTED*

*Otherwise I will burn through your code of conduct like an acetylene torch.

The world's most antisocial people run social.
The greediest run money.
The creepiest run info.

FB is not evil, the entire culture was built on an ancient burial ground or something.

 

The world's most antisocial people run social

I find this fascinating in general, and it sort of makes sense. Those who are already somewhat socially fulfilled have less of a desire to "re-invent", so social platforms do, in fact, seem to be run by the outsiders. It's not necessarily a bad thing depending on what anti-social means in the context.

I'm definitely pro-social but fairly introverted and it gives me a certain perspective which informs the work I do in this space. It's fascinating to hear the different feedback on certain concepts or ideas from different people who fall on different parts of the spectrum from anti-social to pro-social (or whatever) and introvert to extrovert. I don't want to generalize, but it does seem like certain tech scenes attracts a lot of anti-social folks, regardless of where they fall on other spectrums. And it's kind of scary.

 

Let's try generalizing. 🤣

It makes sense in the:

"How do I get friends Siri?"
"Build a friendship app"

"How do I get a girlfriend Siri?"
"Build a dating app"

way.

It's the opposite of healthy. Look at the damage everywhere rn.

Inexperienced, insecure, mental issues, social issues, connection issues, fits, mistakes & bad decisions. Personality distortion everywhere. The better you are at tech, the more likely you should work on other skills, away from machines.

Your (anyone) experience informs all areas of the site, so better/more experience is worth more than more code. Someone else should be coding & you should be traveling to places where your users are & experiencing what they do. Before, not after.

The whole point is to do things that scare you, that force you to grow, learn, evolve. Many tech people I've met want to have more fun/be more normal social but resort to comfort zones. They can be rich, smart & successful & still not be invited to the cool parties (not something I care about but many do & many pretend not to). Unhappiness in tech is very high, I don't follow their lead.

{Authoritarian} tech screams things like 'diversity', 'inclusion' & 'friendliness' but is extremely monolithic & mono-cultured. Mostly sitting at home/office waiting for likes. It's cover. Good tech is as opinion-less as possible (do you want plumbers & electricians & supermarkets to decide for you?). TCP/IP for conservatives only? Any edict is authoritarian by nature so less is more. Shouters = worse offenders. Perfect social media = manic depression.

I prefer 20yr old kids with a small world view, microdosing & mental issues to not be telling 70yr olds how to live mostly because some people with money thought they could code.

If you can barely hold a good party, entertain a small table, do fun group activities, I will not consider you "social" regardless of your tweets.

What tech leadership needs is more pasta grannies, disco dancers & old wise heads from remote places or whatever.

youtube.com/user/pastagrannies

All big tech people should find someone cool (not as in fancy garms, cool like Peter) to help them normalize a bit. Grounding. Surround yourself in non-tech people.

It's better than it was.

Mostly I don't use social media unless I am a cat, car brand or something. It's work.

Thanks Ifenna,

My slogan was "We Make Things", I saw your bio so I followed you on twitter, but you beat me to it. 🤣

 

I was actually hoping you'd jump in on this thread. This seems to be closer to the prevailing opinion I'm seeing here, on Twitter, HN, Reddit, etc. But I'm intrigued to watch it all play out (if not similarly reticent).

 
 

Adding to many good points people have already made against this development:

  • National currencies and the organizations that control it are under scrutiny by government organizations that, in theory, protect the interests of the people. No such protection exists for cryptocurrency.
  • National currency inflation is, in theory, regulated by government organizations explicitly to benefit the local economy. It benefits workers at the expense of the creditors and money-hoarders. This solution becomes impossible with a 'global' currency. We've recently seen an example with the Greek financial crisis, were Greece would have profited from a higher inflation of the Euro, but this would have harmed Germany (we did get some inflation in the end).
  • A private 'blockchain' is no more than a stack. It only serves as a tech demo or to people into a false sense of security.
  • A 'stablecoin' is just a trust (or fake, if it is self-backed, but that's not the case here). There is no benefit to consumers to using a 'stablecoin' over using a FIAT currency such as dollars or euros.

What's proposed here is a bank that doesn't have to follow any pesky regulations.

 

Well diagnosed Dr.

What's the treatment?

😃

 

Like we hadn't enough control with banks already, now big corps want to join the party.

I want to add that it's difficult to anticipate all this. I don't think it's good or bad, times change and sooner or later traditional currency as we know will evolve in one way or another.

 

If it helps people in 3rd world countries have access to wealth-growing opportunites they wouldn't have otherwise, I'm all for it. Facebook has a presence in almost every corner of the globe, so it stands to reason their involvement would be critical for wide adoption by people who lack access to the global economy.

How Facebook will choose profit from this, however, will be another matter entirely. Only time will tell, but I am skeptical that their involvement is purely altruistic.

 

Coming to from a 3rd world country, I’m still not buying. There is absolutely nothing in it for “us”, no possibilities beyond what we can already do. A lot better than relying on a foreign game coin (because it’s not much more than that) would be to actually pay taxes, as we already do, and develop these countries, as we are already doing, since the 1st/3rd world classification exists.
Say tomorrow everybody in X developing country moves to FaceBucks. What happens? The country is broke, there is no money for streets, safety, health systems, etc. Instead of helping the poor country, it’s destroying it, and giving all the profits and data to BigCo instead.
People in developing countries don’t need more opportunities via internet coins, they need their country to develop. And that’s only done through local commerce, startups, entrepreneurs, and fair international business (which a mostly American big corporation owned coin isn’t)

 

Since I'm also from a 3rd-world country (though I live and work in the US), I will say that if I felt there was a way to make money that Facebook unlocked, I would take it. Making money is making money, as the bill collector doesn't care how you made it. The question is, can Facebook unlock any opportunity that is not already available through regular banking systems or bitcoin? That remains to be seen.

FWIW, I am keenly aware of the history of 1st world countries "helping" 3rd world countries. It's not a pleasant trip back through history, and the world is still actively dealing with the damage wrought to this day.

 

Facebook has a presence in almost every corner of the globe

that's scary though

 

"... empowers billions of people." - Empowers them to do what exactly? What is it that they didn't have the power to do before, that conducting their transactions in Libra will allow them to do? Except evade taxes, maybe.

 
 

not trying to defend facebook but, appears that facebook is simply sponsoring the organization that is responsible for this.

 

Yeah, this is definitely an interesting take on this. We probably shouldn't mischaracterize this if possible. It's actually not clear to me precisely what the different involvement of different parties is.

But I'd also say that it seems like Facebook is deliberately trying to distance itself in ways that may be overstating the distance.

Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting.

Just like Facebook does a pretty good job of helping people forget that they own Instagram and WhatsApp etc. creating subsidiaries and generally trying to benefit as much as possible without associating so much (due to their own shaky brand) certainly seems like the play they would be making.

Technically their involvement in stuff like this will have to be fairly public because they are a public company, but they will probably try to obfuscate as much as they can as well.

 

you do bring up a good point. i don't trust facebook at all. they have 12 page white paper, hundreds of pages of info, and the source code. i will sift through all of that and write a conclusion later this week.

 

The issue I see with it is the amount of control they will have as, while they have just as many votes as anyone else they have invested the most so will have more control over the project. - I went more in depth about this in my seperate comment.

Either way it will be interesting to see how libra is adopted and what twists and turns it takes in the future.

 

I'm actually quite optimistic about the project. Worst case scenario, they will make huge steps in researching blockchain and help develop truly independent currencies and we can avoid Libra by using fiat currencies as we do today.

 

I think worst case scenario Facebook and governments have access to even more private data :D

 

If I understood the whitepaper correctly everyone will have access to the full ledger, so Facebook won't have any special treatment regarding this. However, wallets are based on pseudonyms and you can have multiple wallets (similar to Bitcoin) so it won't be easy to link a wallet to a human.

Hoyos asserted that the project whitepapers contain various promises he described as "contradictory." For instance, one section indicated that Libra user accounts are "dissociated from their real-world identity." But in a separate document on Calibra, the digital wallet associated with Libra, Facebook stated that "Calibra will use Facebook data to comply with the law, secure customers' accounts, mitigate risk and prevent criminal activity" -- but not for ad targeting purposes.

from thestreet.com/investing/stocks/wit...

The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity.

from newsroom.fb.com/news/2019/06/comin...

Which means that, at least for Calibra users (which would become the defacto standard wallet, since they have the majority of users), there seems to be a way for FB to associate transactions to identity and governments can request those.

I think it's too early to be optimistic or pessimistic, I just don't trust FB :-)

 

I am certainly skeptical of this new platform and it will no doubt be successful as so far crypto currencys have been seen as a pretty hard to use and not for the general public.

While it is true they (Facebook) get as many votes as any other backers on the board this isnt strictly true as they have invested a great deal more in the company so have more influence over decisions. While you can argue this isnt true, and it certainly isnt on paper. Te fact is they have more inluence as the other backers dont want them pulling out of the project for instance.

 

Overall, it seems the primary value for these things is international travel. If you're already a frequent international traveler, you've probably already got a travel-oriented credit card in your wallet. Such cards typically already take care of the problems Libra is targeted towards solving.

Given both Facebook's track record and that of other e-payment services' (like Venmo's) trackrecords on privacy, I'll probably just stick with using travel-oriented credit cards. Presumably, they'll remain at least as widely accepted as new-tech options and retain a information leak-radius I'm already comfortable with. Plus, with credit cards, I don't have to play the gameroom-token game.

 

There is big money involved in crypto and big names getting in the space. This can only mean that they see real potential. We can be sceptical about the intentions of facebook but no matter what innnovations can jump out of this project for the benefit of other projects. Facebook has already contributed a few major programming innovations why not contribute crypto innovations.

Not everything is ready the same way we could not imagine the feature rich application we have now in 2000. So we need more people getting involved so we can start putting the pieces together.

I believe we are on the same place as web was in early stages only here the potential is realized, back in the early days of the internet most of us could not see were this was going. Back than people were putting their money in dot com bubble but right now the potential and use cases have already been realized at least by the people in the space.

 

The only thing I like about everything I've read on TC and the website is lower fees for people sending money abroad.

I think it's too soon to be for or against it.

I don't know enough technically about it to know if it can be hijacked like Bitcoin was, but it seems that they are putting defenses against that.

 

Have started to read their white paper and make a summary here wellexplained.com/economy/libra.html

Actually it's well intentioned a bit like Google's "don't do evil" now we all know what Google's mantra became with time ;)

 

Interesting to compare this 'global currency' initiative with Initiative Q (initiativeq.com/knowledge/payment-...), who are trying to build something similar, in a different way (people first).

I would really like to see honest answers to 'what are you doing this for?', but that's unlikely, although I suspect escaping national regulation is a big part of it for some members, and simply getting more money flowing (so they can take their cut) works for others - both greed-driven. Perhaps if these things were referenced to well thought out global scale improvement such the UN Sustainable Development Goals (un.org/sustainabledevelopment/), I might have a bit more faith!

 

Libra is a stablecoin, which means its value won't rise or fall, 1 Libra might always be worth 1 US-Dollar. And it isn't the 1st stablecoin, technically they just seem to copy Tron. But it will be interesting to see if Libra will actually be used as a currency, i.e. people use it to buy things instead of HODL'ing the coins. With all those companies backing Libra, it might very well become wide-spread soon... however Amazon is missing.

I think Libra is the anti-Bitcoin and betrays most of its values. But I am glad to see Facebook's brilliant developers working on such a project. We're still in the salad days of blockchains, so any type of research, experiments, and projects are much appreciated.

 

Facebook used Rust language by Mozilla in Libra. A new trend?

 

still optimistic about fb? how many more times do they have to fuck up?

 

Take the definition of cryptocurrency and reverse it, now you have "Libra".

 

In Spanish "Libra" is equivalent of the British pound, ergo, if this new cryptocurrency will get to be embraced here, it will undoubtedly provoke some confusion.

 

Thanks for the link, I didn't know they had a website already for it :)

 

Is there anything that this thing solves that is really a problem society has to solve ?

 

So why the optimism? The suspense is killing me!

 
 

Mostly, I'm surprised it's built in Wordpress. Which I have no problem, but considering the players I wouldn't have expected it.

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