Facebook plans cryptocurrency debut(techcrunch.com)
techcrunch.com
Facebook plans cryptocurrency debut
https://techcrunch.com/2019/06/06/facebook-libra-launch/
344 comments
>Can anyone explain what the point of a pegged cryptocurrency is?
What was the point of arcades taking your quarters and issuing you tokens for the machines? Why not just allow the machines to take your quarters?
The idea is for the issuer to take real money from you and issue you Monopoly money which the issuer can track and control. In a worst case scenario the issuer can make up new rules (change their terms and conditions on you) or declare bankruptcy/dissolve and not honor the redemption of your stable coins at all.
What was the point of arcades taking your quarters and issuing you tokens for the machines? Why not just allow the machines to take your quarters?
The idea is for the issuer to take real money from you and issue you Monopoly money which the issuer can track and control. In a worst case scenario the issuer can make up new rules (change their terms and conditions on you) or declare bankruptcy/dissolve and not honor the redemption of your stable coins at all.
But that doesn't really answer the question being asked. If the cryptocurrency is completely controlled by a centralized authority who has absolute rights over the system, why bother with the technical and cognitive hurdles of using a blockchain? A standard ledger in a centralized database is more than adequate for that task, and much easier to maintain.
I responded to a few comments in kind, and I’d say it’s impossible to answer in a vacuum without knowing the actual token use case/function.
Generically, we have seen instances where centralized ledgers/databases are manipulated and permit double spend. Even in the case of multi billion dollar publicly traded companies going Private, during due diligence we have seen upward of double the issued shares of stock than actually exist. In such a case we have the corporation with a centralized stock ledger, stock trusts with their own centralized ledgers, etc... but the mistake of double spend still happened. In those cases Blockchain would have never allowed those errors, one such case cost the buyer $150M personally post acquisition. Not to say that is in anyway applicable here, but without even knowing the token function we can’t say, but it just goes to show Blockchain does have some use cases and benefits where centralized ledgers have failed costing hundreds of millions.
Generically, we have seen instances where centralized ledgers/databases are manipulated and permit double spend. Even in the case of multi billion dollar publicly traded companies going Private, during due diligence we have seen upward of double the issued shares of stock than actually exist. In such a case we have the corporation with a centralized stock ledger, stock trusts with their own centralized ledgers, etc... but the mistake of double spend still happened. In those cases Blockchain would have never allowed those errors, one such case cost the buyer $150M personally post acquisition. Not to say that is in anyway applicable here, but without even knowing the token function we can’t say, but it just goes to show Blockchain does have some use cases and benefits where centralized ledgers have failed costing hundreds of millions.
Plenty of blockchains have allowed double spending as well due to errors in coding of either the clients, the blockchain implementation itself, or due to faulty contracts.
Well sure there has been shitty code that has allowed doublespend or unintended transfers...but the satoshi nakamoto Blockchain did solve the problem of double spend on a decentralized peer to peer network, do you disagree?
Take the current status of publicly traded companies, they require a lot of middlemen to manage these centralized stock ledgers, including, the corporate general counsel, underwriters/investment banks, stock trust, stock exchanges, and stock brokers/trading apps.
Each one of those middlemen takes a significant slice of the pie, whereas Blockchain would allow corporatations to bypass all these middlemen and allow stock to be issued and traded P2P.
Is there a reason you believe the existing centralized stock ledgers of public companies and system of middlemen is more advantageous than having P2P stock on a distributed ledger/network?
Take the current status of publicly traded companies, they require a lot of middlemen to manage these centralized stock ledgers, including, the corporate general counsel, underwriters/investment banks, stock trust, stock exchanges, and stock brokers/trading apps.
Each one of those middlemen takes a significant slice of the pie, whereas Blockchain would allow corporatations to bypass all these middlemen and allow stock to be issued and traded P2P.
Is there a reason you believe the existing centralized stock ledgers of public companies and system of middlemen is more advantageous than having P2P stock on a distributed ledger/network?
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Absolutely nothing: the problem cryptocurrencies solve is allowing mutually distrusting parties to engage in transactions.
The only potential advantage of such a system over an RDBMS is the inability to reverse transactions without people taking serious notice, simple git-style hash chains generally solve this too, often with reduced overhead.
The only potential advantage of such a system over an RDBMS is the inability to reverse transactions without people taking serious notice, simple git-style hash chains generally solve this too, often with reduced overhead.
In this case it's simply being used as a system of control while distancing FB from the responsibility for issuing currency. Facebook wants to own the money you spend and collect a vig on each transaction. The parent was just pointing out that's the real motivation here. If you go looking for a technical reason you won't find one.
Unask the question and ask who benefits instead.
Unask the question and ask who benefits instead.
It puts their currency in the same semantic basket as Bitcoin and Ethereum. The effort to give these other currencies legitimacy also gives Facebook’s currency legitimacy; many people who support these other currencies will also support Facebook’s. If Facebook’s currency is attacked, it becomes (in some sense) an attack on all cryptocurrencies.
Come on, I'd say it gives the currency an aura of bullshit.
Real currencies (USD, EUR, ..) are stored by visa / mastercard in regular databases, so why not facebook's currency ?
Real currencies (USD, EUR, ..) are stored by visa / mastercard in regular databases, so why not facebook's currency ?
No, because this goes against the principles of most of the community.
It's why you didn't see anyone actually supporting Venezuela's Petro.
It's why you didn't see anyone actually supporting Venezuela's Petro.
can't be further from the truth. Bitcoin,Ethereum supporters want decentralisation while FB coin is totally centralised
Technically I can't think of one. I think the last line of the article might be the key: "By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency."
That plus cryptocurrencies is still a buzzword that generates interest and speculation (especially since they've rebounded a bit these past few months).
That plus cryptocurrencies is still a buzzword that generates interest and speculation (especially since they've rebounded a bit these past few months).
I think there are two aspects. One is that it probably actually is a more robust technical approach, and they don't need to do a lot of research, because there are open source projects they can easily adapt.
Number two, they want to get in ahead of other cryptocurrency. They don't want to wait around for Bitcoin or Ethereum to become an expected form of payment, because by that time they won't be able to cash in. If they have their own cryptocurrency, they can take advantage of the hype for bitcoin etc., but still control and profit from it directly.
Number two, they want to get in ahead of other cryptocurrency. They don't want to wait around for Bitcoin or Ethereum to become an expected form of payment, because by that time they won't be able to cash in. If they have their own cryptocurrency, they can take advantage of the hype for bitcoin etc., but still control and profit from it directly.
> why bother with the technical and cognitive hurdles of using a blockchain
A blockchain can be implemented in a very simple way when operated by a centralized authority. What adds complexity to it is the consensus protocol required for decentralization when you cannot trust all parties in the network.
A blockchain can be implemented in a very simple way when operated by a centralized authority. What adds complexity to it is the consensus protocol required for decentralization when you cannot trust all parties in the network.
Transparency.
The main gain is in acting as a trusted clearing system.
Clearing takes less time than FedWire or ACH.
Settlement, on the other hand, still has to go through the Federal Reserve.
Clearing takes less time than FedWire or ACH.
Settlement, on the other hand, still has to go through the Federal Reserve.
But using a database as a ledger would clear faster than even the fastest blockchain, wouldn’t it? Or am I misunderstanding what you mean by “clearing”. I’m assuming you mean how long it takes for person A to get money to person B.
What takes time in clearing is not information transmission.
Most of the time is spent managing risk. Sure, that includes persistence, but that is also marginal. You also have to validate integrity, authenticity, cross-reference against legal requirements (eg. enforce rates, detect fraud — including internal fraud, apply sanctions lists, estimate AML-CFT risk, …). You have to make sure all accounting rules are followed. You have to abide by the procedures that you and the regulator determined. All that with no downtime.
All of this takes time. Historically, a large part was manual. While automation has helped, there are quite a few clearing houses where an army of programmers is spent battling the chaos.
A system least tolerant to inconsistencies and most tolerant to failure, increases reliability while reducing risk. The cryptographic properties of a distributed blockchain help there, regardless of whether the system has open membership (which is not Facebook’s case, unlike most cryptocurrencies).
A different ledger design can be equally powerful or more. In fact, I expect that a lot of the compliance and accounting logic can be expressed elegantly in a custom design.
Most of the time is spent managing risk. Sure, that includes persistence, but that is also marginal. You also have to validate integrity, authenticity, cross-reference against legal requirements (eg. enforce rates, detect fraud — including internal fraud, apply sanctions lists, estimate AML-CFT risk, …). You have to make sure all accounting rules are followed. You have to abide by the procedures that you and the regulator determined. All that with no downtime.
All of this takes time. Historically, a large part was manual. While automation has helped, there are quite a few clearing houses where an army of programmers is spent battling the chaos.
A system least tolerant to inconsistencies and most tolerant to failure, increases reliability while reducing risk. The cryptographic properties of a distributed blockchain help there, regardless of whether the system has open membership (which is not Facebook’s case, unlike most cryptocurrencies).
A different ledger design can be equally powerful or more. In fact, I expect that a lot of the compliance and accounting logic can be expressed elegantly in a custom design.
Can't a database be potentially breached and suddenly my account has all the "currency" copied I to it from yours?
Until Quantum Computing comes of age, this is theoretically much harder with DLT / blockchains.
Until Quantum Computing comes of age, this is theoretically much harder with DLT / blockchains.
All banks are effectively running a huge database at the core, yet that's not a common problem. They have procedures, they have backups and they have human oversight. The last element is key, if somebody manages to hack into the system and send all the money into their own account the bank's administrator can detect the problem and say "well, that's clearly not supposed to happen, let's roll that back".
On a decentralized, trustless blockchain you have no such thing. So you either end up hard-forking like Ethereum did after their DAO debacle (but then are you a decentralized trustless system anymore?) or you continue normally and basically the people who lost their money are screwed.
On a decentralized, trustless blockchain you have no such thing. So you either end up hard-forking like Ethereum did after their DAO debacle (but then are you a decentralized trustless system anymore?) or you continue normally and basically the people who lost their money are screwed.
Blockchains can (and quite often do) have bugs in their implementation too, they're not entirely magic.
And importantly the tokens can be unilaterally devalued without having to change the slots or recalibrate. So instead of 25¢ and next step being 50¢ if using the same config, they can charge you 27, or 48 or 50¢ for the token and not have to reconfigure the machine one bit.
It also allows for the possibility of selling at discounted rates for volume. $1 for 4 tokens, but $10 gets you 50 instead of 40.
There is _some_ inherent value in this. Decoupling the currency rate from a unit of time play provides an entrypoint for the store to incorporate value models that aren't captured by currency alone.
In the volume discount case, this allows them to incorporate fixed overhead models into the pricing scheme for game time.
I don't dispute the point, however, that the model does allow for abuse along other lines, and is often used that way in practice.
There is _some_ inherent value in this. Decoupling the currency rate from a unit of time play provides an entrypoint for the store to incorporate value models that aren't captured by currency alone.
In the volume discount case, this allows them to incorporate fixed overhead models into the pricing scheme for game time.
I don't dispute the point, however, that the model does allow for abuse along other lines, and is often used that way in practice.
Plus the regulatory checks can be limited to cashing out and converting the coins to fiat. Instead of within each geographic or existing regulatory boundary within the network.
impossible for stable coins. I am awed by the level of ignorance here
>It also allows for the possibility of selling at discounted rates for volume. $1 for 4 tokens, but $10 gets you 50 instead of 40.
I think at the point of discounts of a USD stable coin...a good arguement could be made that is an investment contract/security that needs to be registered.
If that were true, it would highlight how SEC is treating cryptocoins differently than say gift cards (which are often sold with discounts).
Of course either way FB could in theory probably register their coin with the SEC anyway without much difficulty.
I think at the point of discounts of a USD stable coin...a good arguement could be made that is an investment contract/security that needs to be registered.
If that were true, it would highlight how SEC is treating cryptocoins differently than say gift cards (which are often sold with discounts).
Of course either way FB could in theory probably register their coin with the SEC anyway without much difficulty.
And they also make money in seignorage (profit in undredeemed tokens). The tokens cost 25 cents to buy but certainly don't cost 25 cents to make, so that delta is profit. A lot of tokens are "saved for next time" but next time never comes, and then you discover those tokens in a drawer somewhere a decade later long after they're no longer spendable.
So, there’s obvious benefits for FB. What are the benefits for users? Are people actually going to want to use this?
For users, the advantage would be an easy to use stable-coin, that is more accessible to the average person. Right now, most crypto currency has plenty of complexity to it. FacebookCoin will probably work more similarly to CashApp vs. Bitcoin.
It means most people using it won't even realize it's a Blockchain token. It'll be like "Facebook Bucks". But then it also offers the flexibility of a blockchain token to more advanced users (withdraw to your own wallet, send to an exchange, etc).
It means most people using it won't even realize it's a Blockchain token. It'll be like "Facebook Bucks". But then it also offers the flexibility of a blockchain token to more advanced users (withdraw to your own wallet, send to an exchange, etc).
This is the same reason why cryptocurrencies haven’t seen general adoption: none of that has any inherent value to someone who isn’t already a convert.
Things which would matter are “can transfer real money to a friend with less markup than Apple/Google/PayPal”, “can sell things online at better terms than PayPal”, “can make transactions at a low enough rate that a business model requiring micro-payments is viable”, etc.
Facebook has a few wrinkles where that could be interesting - micropayments for games and content in particular - but it’s unclear what a blockchain adds to that since you’re already centralized on a single massive company which negotiates on take-it-or-leave-it terms.
Things which would matter are “can transfer real money to a friend with less markup than Apple/Google/PayPal”, “can sell things online at better terms than PayPal”, “can make transactions at a low enough rate that a business model requiring micro-payments is viable”, etc.
Facebook has a few wrinkles where that could be interesting - micropayments for games and content in particular - but it’s unclear what a blockchain adds to that since you’re already centralized on a single massive company which negotiates on take-it-or-leave-it terms.
I agree, but [more general] cryptocurrencies do already check a few boxes:
- is cash you can email
- prevents hostile monetary policy from stealing your wealth (inflation, negative interest rates, haircuts, etc)
- keeps working when you travel (unlike Paypal / credit cards which often get frozen)
- uncensorable transactions that ignore borders
- can send large $ amounts anywhere for ridiculously cheap
- more vertigo than a theme park
“cash you can email” may be a cool-sounding bumper-sticker but it's not how I'd describe something which requires operating a complex multi-party system. Similarly, “large amounts for ridiculously cheap” has historically not been true and given how much highly-visible and easily blocked infrastructure a blockchain requires to be online in order to operate, “uncensorable” is more of a hypothetical aspirational goal than a given (an envelope of USD is much safer).
“hostile monetary policy” is especially dubious in this context where it's supposedly pinned to the USD but even in other cases it's a hard sell for most people: do you a) put your money into a bank account, investment, or other asset you expect to do better than inflation or b) put everything into a complex system with no guarantees that it'll be operating in 5 years, fraud protection, etc. and hope that the conversion fees you pay on both sides will be lower than the difference?
“keeps working when you travel” could potentially be an area where it could match the credit card system except that it either means that you're traveling with a ton of cash and no recourse if someone steals it or, if like most people you use a managed service somewhere else, hoping that you don't trip the same kind of security measures which banks use for the same reasons. Given that most people do not travel that frequently and most travelers do not have significant issues using credit cards while abroad, it's unclear to me that this will be enough of a compelling advantage.
“hostile monetary policy” is especially dubious in this context where it's supposedly pinned to the USD but even in other cases it's a hard sell for most people: do you a) put your money into a bank account, investment, or other asset you expect to do better than inflation or b) put everything into a complex system with no guarantees that it'll be operating in 5 years, fraud protection, etc. and hope that the conversion fees you pay on both sides will be lower than the difference?
“keeps working when you travel” could potentially be an area where it could match the credit card system except that it either means that you're traveling with a ton of cash and no recourse if someone steals it or, if like most people you use a managed service somewhere else, hoping that you don't trip the same kind of security measures which banks use for the same reasons. Given that most people do not travel that frequently and most travelers do not have significant issues using credit cards while abroad, it's unclear to me that this will be enough of a compelling advantage.
I'll bite on the first one. Cash has a complex infrastructure underpinning it - legislating, printing, securing, distributing, managing policy / rates, etc. It keeps the dollar you get today (mostly) spendable tomorrow. You're simply so accustomed to it you ignore it. Same way most people don't think about the pistons on their car, now that the user experience of driving is straighforward. Eventually folks will do the same for the complexity underpinning crypto.
Case in point: I bought a new phone from overseas a few weeks ago. Paypal / wire fees were expensive, and after three days TransferWise (suggested by the seller) still couldn't make my new account work. I wound up paying in crypto, took about 5 minutes and cost me less than a buck. So yeah: cash I emailed.
Case in point: I bought a new phone from overseas a few weeks ago. Paypal / wire fees were expensive, and after three days TransferWise (suggested by the seller) still couldn't make my new account work. I wound up paying in crypto, took about 5 minutes and cost me less than a buck. So yeah: cash I emailed.
But it really depends on being able to transact at one of the very limited set of vendors who would accept crypto, especially overseas.
It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.
So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.
Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.
You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.
I doubt this will be the case, even if the “scaling issue” is solved.
I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.
A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.
The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.
This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.
That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.
For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.
Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.
Crypto currency has two properties competing digital currencies lack.
True peer to peer transactions and censorship resistance.
They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.
But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.
When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.
Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.
They will be subject to as many regulations as PayPal, Apple, Venmo, etc.
They will also have the same need for security and fraud protection.
It’s a chicken/egg problem because without an extensive ongoing economy which would allow one to conduct a significant portion of total spending in crypto, it will be required to buy and sell back and forth to fiat.
So far costs of exchanging crypto to fiat are significant. I tried to figure out a way to use it to transact with a vendor I do business with overseas. We don’t care about bitcoin, we were just looking for a cheaper way to make the remittance.
Doing it with crypto was harder and more expensive than even PayPal. Especially because it subjects you to volatility risk and information blocks due to transacting between 3 currencies: USD-BTC-EUR.
You could argue that as “adoption” increases (using crypto as real currency) this problem would lessen.
I doubt this will be the case, even if the “scaling issue” is solved.
I don’t see any reason that crypto will lower the cost of securing transactions. Currently, the cost of digital transactions include fraud protection and regulatory compliance.
A currency that operates out of the jurisdiction of government cannot scale, as being a “black market” currency is inherently limited is scope.
The biggest problem is that distributed, peer to peer, currencies provide a vastly larger attack surface for hackers. They also require large scale duplication of security practices, implemented by relatively inexperienced (at providing security) users.
This is the worst of all worlds. The drastic consequences of being hacked either require the user to undertake the costly risk mitigation strategies and accept the risk of losing funds or...use custodial solutions like exchanges or banks.
That means at least a lower cost per user for security, but it shouldn’t be any lower than cost of bank security practices, at best.
For proof-of-work coins the cost of securing the network must also ultimately be borne by users. There are not infinite speculators willing to cover the mining costs.
Ultimately, this leads to a currency that has a high cost. It therefore will lose out to centralized currencies.
Crypto currency has two properties competing digital currencies lack.
True peer to peer transactions and censorship resistance.
They also have some properties that make them useful as a vehicle for pure speculation, which is a perennial interest of humans.
But the type of transactions that benefit from the peculiar properties of these digital token systems are not that numerous, and are mostly black or gray market activities.
When you add in the fact that it is trivial for governments to crackdown on crypto currencies, just by making them illegal, or even just enforcing existing tax regulations that make each transaction a taxable event,it’s clear the odds are stacked against crypto currencies becoming widely adopted.
Facebook is not going to be able to avoid the costs that other digital cash systems have. So they may succeed, but their token will not really be in the same category as the “real” crypto currencies.
They will be subject to as many regulations as PayPal, Apple, Venmo, etc.
They will also have the same need for security and fraud protection.
"prevents hostile monetary policy" -- except this isn't true. Crypto has just taken monetary policy decisions out of the hands of the electorate, however tenuous a chain of authority that is (voters -> president -> Fed chair), and placed it in the hands of either "the original developers" or "whoever has 51% of network computation".
That is an absolutely horrible trade-off for anyone who wants a democratically run currency.
That and the irreversibility in cases of fraud make crypto a complete non-starter for me. I want to be able to reverse transactions if someone starts siphoning off my coin; and I want to be able to use the force of law to do so, if I win a lawsuit or even just don't want thieves to steal my money.
What is the crypto answer to "someone stole your private key and is stealing your money"?
That is an absolutely horrible trade-off for anyone who wants a democratically run currency.
That and the irreversibility in cases of fraud make crypto a complete non-starter for me. I want to be able to reverse transactions if someone starts siphoning off my coin; and I want to be able to use the force of law to do so, if I win a lawsuit or even just don't want thieves to steal my money.
What is the crypto answer to "someone stole your private key and is stealing your money"?
I'm not a crypto fan so don't take this the wrong way, but I think the crypto answer to "someone stole your private key and is stealing your money" is the same as the non-crypto answer to "someone stole your ATM PIN and is stealing your money." Namely, you ask police and prosecutors to track down the perpetrator to get your money back.
ATMs have security measures like daily download limits, unusual locations triggering denials or ID checks, etc. which cryptocurrencies lack.
There's a really big difference between your potential losses being capped zero to a few hundred dollars vs. “everything you own and half of the community will say it was your fault”.
There's a really big difference between your potential losses being capped zero to a few hundred dollars vs. “everything you own and half of the community will say it was your fault”.
No reason you couldn't have some of these features in a crypto wallet. Lots of schemes are being created with with multisig, smart contracts, and social recovery methods. Here is one around freezing transfers not to a known address.
https://www.coindesk.com/ethereum-startups-team-to-offer-ban...
In reality, the attack surface with crypto’s is ever expanding.
There’s no free lunch, and the minimal security provided with crypto currencies is provided at a high cost.
There’s no free lunch, and the minimal security provided with crypto currencies is provided at a high cost.
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Probably have to wait for the whitepaper to come out to give a fair opinion/analysis (rather than an article about the future release of the whitepaper).
Once the actual use case/function of the token is know then one could answer if there is a benefit to users and if a Blockchain token makes sense over a database.
Once the actual use case/function of the token is know then one could answer if there is a benefit to users and if a Blockchain token makes sense over a database.
As many mobile app games have shown, you don't need a cryptocurrency to achieve this, just some arbitrary point system. I think GP was asking, "Why Cryptocurrency?" since the benefits of blockchain don't really translate to this system.
It allows for a tiered system. Average users will use the token entirely within the Facebook ecosystem. Advanced users will have the ability to withdraw their tokens from Facebook's system and utilize them on other platforms.
Look at Paypal USD Balance. It's really just a "token" issued by PayPal, an IOU where 1 PaypalUSD = 1 USD Debt from Paypal. But PayPalUSD can only be used within Paypal.com. The only way to bring PayPalUSD outside of Paypal is to call in your debt to PayPal and withdraw the money to your bank.
PayPal has always said that their success relies on people holding PayPalUSD. People who keep their money in PayPalUSD are the ones making PayPal bank. First of all, it costs Paypal next to nothing if that user sends their PayPalUSD to another user. Yet they collect transaction fees. Furthermore, PayPal can throw this money into low-risk investments and earn 3-4% on it.
Facebook tokens are PayPalUSD 2.0. They can be used within the Facebook.com ecosystem. But on top of that, people can withdraw them and use them outside of Facebook.com. Basically, any website can start integrating these FacebookCoin. It means less people will need to cash out, and will instead keep their money in FacebookCoins.
Look at Paypal USD Balance. It's really just a "token" issued by PayPal, an IOU where 1 PaypalUSD = 1 USD Debt from Paypal. But PayPalUSD can only be used within Paypal.com. The only way to bring PayPalUSD outside of Paypal is to call in your debt to PayPal and withdraw the money to your bank.
PayPal has always said that their success relies on people holding PayPalUSD. People who keep their money in PayPalUSD are the ones making PayPal bank. First of all, it costs Paypal next to nothing if that user sends their PayPalUSD to another user. Yet they collect transaction fees. Furthermore, PayPal can throw this money into low-risk investments and earn 3-4% on it.
Facebook tokens are PayPalUSD 2.0. They can be used within the Facebook.com ecosystem. But on top of that, people can withdraw them and use them outside of Facebook.com. Basically, any website can start integrating these FacebookCoin. It means less people will need to cash out, and will instead keep their money in FacebookCoins.
That doesn’t require a blockchain based system though. A single entity can secure a crypto currency.
You can convert PayPal directly into US dollars at your bank, so I don’t think they would see any benefit to supporting such a distributed token system unless the could make a cut on every transaction.
I’m having a hard time seeing Facebook being able to support a stable coin without being subject to the same regulations and cost as any other system.
Perhaps they will get a competitive advantage through data mining and could charge smaller transaction fees.
You can convert PayPal directly into US dollars at your bank, so I don’t think they would see any benefit to supporting such a distributed token system unless the could make a cut on every transaction.
I’m having a hard time seeing Facebook being able to support a stable coin without being subject to the same regulations and cost as any other system.
Perhaps they will get a competitive advantage through data mining and could charge smaller transaction fees.
An IOU isn't automatically a token though. For the token analogy above, there is no reason for the arcade to start using blockchain instead of little metal tokens (even if there is some marginal benefit of the new tokens being usable at any location, and that the metal tokens no longer need to be produced).
We could trade arcade tokens wherever we wanted, but we don't because there is no expectation of value received for the token holder. If Facebook doesn't open some ecosystem for their coin soon, the whole measure seems to be nothing but a database (as parent commenters have noted).
Well, cryptocurrency is a point system. Consider it as a specification to a point system, which allows points to be exchanged across applications.
Like most existing Blockchain projects, maybe no benefit over database to the users...but I don’t think it’s fair to say without knowing the actual use case/function/purpose of the token, so probably have to wait for the release of the whitepaper to form an opinion.
> "Why Cryptocurrency?"
Because it's cool and everyone is doing it.
Because it's cool and everyone is doing it.
The point of arcade tokens is to prevent people breaking in to machines, feeding them slugs instead of coins, and reduce the number of employees with access to unlimited free quarters.
I would disagree and that the real point is for them to make their money up front on the token exchange. When you change $5 for tokens they don't care whether you spend them on games or use them as pogs, they have already made their $5 just as if you had pumped it all into the machines. If they change your $5 for just quarters there is no guarantee you will pump those into the machines, you might instead use them to buy a pack of gum or something and they never see that money. You can walk out with a pocket full of quarters and it will still be useful, this allows you to stop when you feel satisfied and they lose out on that money, a pocket full of tokens gains you nothing, might as well use them all up and then maybe you will want to keep going and convert a few more dollars. Very smart.
Beyond that many also use it as a way to introduce inflation and take a cut right off the top so instead of $1 getting your 4 tokens they can say make it so $1 only gets you 3 tokens and most people don't even notice. Now when you start pumping tokens in the machines in your mind you still feel like you're spending 25 cents when in reality you're spending 33 cents. Instant markup for increased profit.
Beyond that many also use it as a way to introduce inflation and take a cut right off the top so instead of $1 getting your 4 tokens they can say make it so $1 only gets you 3 tokens and most people don't even notice. Now when you start pumping tokens in the machines in your mind you still feel like you're spending 25 cents when in reality you're spending 33 cents. Instant markup for increased profit.
So here's a rant on the topic picked at random, discussing loss rates to employee theft in this business on the order of 20% (and that's with tokens!): https://frank-thecrank.com/are-you-losing-arcade-business-ga.... The same rant puts the base level of 'walk-away tokens' (the condition you describe) at 0.5-1% of the total.
Then why doesn't Facebook just go the Microsoft route and have "points"? (FB already has a credits system).
The point was to reduce the opportunity for insider cash theft while servicing machines?
That is a beautiful analogy.
don't forget, they can "get hacked", and, "whelp, it's over guys. we promise to do whatever we can to recover the lost coins. the case has been turned over to law enforcement. We won't give up hope that someday they may be able to recover something."
On paper, you're basically entirely right. Stablecoins including FB are all smokescreens to sell managing fiat on an internal database for you with "blockchain" wrapped around it. This project and stablecoins in general have nothing to do with cryptocurrencies. With that said i can tell you at least one solid reason why any issuer would do it. At a bare minimum they can earn overnight on the holdings since stablecoins don't kick back interest to date. Although with stablecoin competition that should probably start happening until it squeezes to 0 and then it really wouldn't make any sense except to like monetize spying on you I suppose or something. But to take an example, at this point tether is generating 75mm a year for free for it owners at 0 risk. It's the crypto equivalent of a "free" checking account that doesn't pay interest. Not that any exchange was paying interest for fiat deposits in the first place so i'm not sure to what extent that's relevant for cryptoexchangess, but for FB obviously it would since they're starting from 0.
With that said I can imagine one reason why users would care for USD stablecoins. The US has made owning and dealing with USD directly an absolute horrendous nightmare for international users and US citizens abroad following FATCA et al. And this way you can claim you never owned or touched USD which means whoever is holding stablecoins for you instead of USD doesn't have to file truckloads of paperwork for you to open the account. That's a regulatory loophole though one could imagine the US would start complaining about if this really took off.
There's one remote reason I can think of that people would flip to stablecoins vs fiat if they had some tax view that that wasn't a constructive sale and it could benefit from some likekind kind of treatment since its a "crypto" and not a "fiat". It's obviously a silly argument and there's no way the IRS would fall for it (nor do they even accept it between regular cryptos) but i can't speak for other jurisdictions.
With that said I can imagine one reason why users would care for USD stablecoins. The US has made owning and dealing with USD directly an absolute horrendous nightmare for international users and US citizens abroad following FATCA et al. And this way you can claim you never owned or touched USD which means whoever is holding stablecoins for you instead of USD doesn't have to file truckloads of paperwork for you to open the account. That's a regulatory loophole though one could imagine the US would start complaining about if this really took off.
There's one remote reason I can think of that people would flip to stablecoins vs fiat if they had some tax view that that wasn't a constructive sale and it could benefit from some likekind kind of treatment since its a "crypto" and not a "fiat". It's obviously a silly argument and there's no way the IRS would fall for it (nor do they even accept it between regular cryptos) but i can't speak for other jurisdictions.
>That's a regulatory loophole though one could imagine the US would start complaining about if this really took off.
Seriously. I don't see the fundamental difference in a digital widget that is used to transfer value backed by hard currency from transferring money between accounts by wire. It's like leaving a box on your doorstep by drone instead of truck and saying you're not delivering packages because the mechanism is different.
This sounds to me like they're opening bank accounts and debit payment services by a different name with the added bonus they can devalue your account at will and you have no FICA protection or chargeback mechanism.
Seriously. I don't see the fundamental difference in a digital widget that is used to transfer value backed by hard currency from transferring money between accounts by wire. It's like leaving a box on your doorstep by drone instead of truck and saying you're not delivering packages because the mechanism is different.
This sounds to me like they're opening bank accounts and debit payment services by a different name with the added bonus they can devalue your account at will and you have no FICA protection or chargeback mechanism.
You might be interested to learn about MakerDAO / DAI[0], which is a stablecoin pegged to USD using CDPs (collateralized debt positions) and decentralized governance.
0: https://makerdao.com/en/dai
0: https://makerdao.com/en/dai
This is an interesting project. The big question for Maker is, will decentralized governance work across the life cycle of this product? The nightmare scenario for a stablecoin is volatility, and governance in this space have historically resulted in volatility.
> This project and stablecoins in general have nothing to do with cryptocurrencies.
I would disagree, using a central authority to sign transactions and exchange crypto back to fiat is fine, but the real power of a cryptocurrency is the ability to generate wallets and create transactions without having to register a profile with a central authority. Whether facebook allows that or not would really determine whether they are a cryptocurrency or just a normal bank.
I would disagree, using a central authority to sign transactions and exchange crypto back to fiat is fine, but the real power of a cryptocurrency is the ability to generate wallets and create transactions without having to register a profile with a central authority. Whether facebook allows that or not would really determine whether they are a cryptocurrency or just a normal bank.
Which is basically my "regulatory loophole" comment.
> But to take an example, at this point tether is generating 75mm a year for free for it owners at 0 risk.
Tether has got hundreds of millions of dollars worth of funds seized from their banks.
Tether has got hundreds of millions of dollars worth of funds seized from their banks.
True. But they still 2-3 billion working for them for free. And then that's a specific example where they went and made poor choices with their funds etc. On paper if all you do is create a "stablecoin" and segregate funds in an interest bearing account and don't touch them then its free running interest to you.
> But to take an example, at this point tether is generating 75mm a year for free for it owners at 0 risk. It's the crypto equivalent of a "free" checking account that doesn't pay interest.
It sounds more like an ETF than a checking account since the coins are directly tied to a "basket". If the SEC agrees, they'll likely eventually require that the dividends and interest from the basket go to the coin owners.
It sounds more like an ETF than a checking account since the coins are directly tied to a "basket". If the SEC agrees, they'll likely eventually require that the dividends and interest from the basket go to the coin owners.
>There's one remote reason I can think of that people would flip to stablecoins vs fiat if they had some tax view that that wasn't a constructive sale and it could benefit from some likekind kind of treatment since its a "crypto" and not a "fiat". It's obviously a silly argument and there's no way the IRS would fall for it (nor do they even accept it between regular cryptos) but i can't speak for other jurisdictions.
The IRS have already made explicit that crypto to crypto is taxable and treated as capital gains/loss. Some stay in stablecoin so that they can be more liquid in the ecosystem. Simply, there are more exchange pairs for stablecoins, and some stablecoin allow storage in personal hardware wallet rather than exchanges.
The IRS have already made explicit that crypto to crypto is taxable and treated as capital gains/loss. Some stay in stablecoin so that they can be more liquid in the ecosystem. Simply, there are more exchange pairs for stablecoins, and some stablecoin allow storage in personal hardware wallet rather than exchanges.
Have you transferred money across borders to an individual lately?
As much as I want to criticize this FB is probably in an excellent position to navigate the kyc minefields.
Have you transferred money across borders to an individual lately?
Actually yes.
From Switzerland to my brother in Belgium. It was transferred on the same business day at no expense to him or me. Look up SEPA[1] for details.
Just because the American banking system is the complete shits this does not necessarily apply to the rest of the world.
[1] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
Actually yes.
From Switzerland to my brother in Belgium. It was transferred on the same business day at no expense to him or me. Look up SEPA[1] for details.
Just because the American banking system is the complete shits this does not necessarily apply to the rest of the world.
[1] https://en.wikipedia.org/wiki/Single_Euro_Payments_Area
Across very cooperative borders in wealthy Europe, sure.
Do you think it's as easy for those in India, China, or Kenya, for instance?
Do you think it's as easy for those in India, China, or Kenya, for instance?
Entirely this, many in the West have no idea how difficult crossborder banking actually is for the vast majority of human beings on Earth.
And FBcoin won't make it any easier, capital controls in India and China won't just go away (not that FB is even allowed in China). Centralized entities will be regulated to maintain the status quo.
Yes, it's all legal issues. If the government doesn't want money to easily be sent in/out of the country, this isn't going to change that
"the West" being Europe. Transfers are still a huge pain in the US.
>Do you think it's as easy for those in India, China, or Kenya, for instance?
Actually yes. Take a look at xoom.com and it's competitors for example (flat rate money transfers at a fraction of swift fees). Only issue is getting money out of those countries. But that is a political and national issue.
Actually yes. Take a look at xoom.com and it's competitors for example (flat rate money transfers at a fraction of swift fees). Only issue is getting money out of those countries. But that is a political and national issue.
And how about Venezuela?
Or for people without a bank account?
Or for people without a bank account?
Are people actually using BTC in Venezuela, or do they just claim to be from Venezuela, and are asking for donations into their wallet?
> Or for people without a bank account?
I'm having strong doubts that you actually understand how the world banks. There are hundreds of millions of people who don't have bank accounts, and use electronic payments through their cell providers.
> Or for people without a bank account?
I'm having strong doubts that you actually understand how the world banks. There are hundreds of millions of people who don't have bank accounts, and use electronic payments through their cell providers.
Western Union will let you put physical cash in someone's hand from across the world if you are willing to pay their fees.
Venezuela barely has a functioning electrical grid, so cryptocurrency would not seem to be a foolproof solution there.
Venezuela barely has a functioning electrical grid, so cryptocurrency would not seem to be a foolproof solution there.
Kenya is a relatively bad example. While a lot of people are underbanked mobile banking and - payments took off in a spectacular way.[1]
It's probably easier to transfer funds via M-Pesa then from a bank account in Delaware to a bank account in Detroit
And, at least in theory, America is a wealthy country without any borders.
[1] https://en.wikipedia.org/wiki/M-Pesa
It's probably easier to transfer funds via M-Pesa then from a bank account in Delaware to a bank account in Detroit
And, at least in theory, America is a wealthy country without any borders.
[1] https://en.wikipedia.org/wiki/M-Pesa
You’re right. I find it stupendously easy to move money within/into Kenya.
I can easily pay a street seller from my US bank account, directly to his/her phone, in seconds.
Pains me to say this because I had this international bank/credit card to M-Pesa transfers idea a decade ago, a professor dissuaded me from pursuing it.
5 years later, a bunch of services launched and many are thriving.
I can easily pay a street seller from my US bank account, directly to his/her phone, in seconds.
Pains me to say this because I had this international bank/credit card to M-Pesa transfers idea a decade ago, a professor dissuaded me from pursuing it.
5 years later, a bunch of services launched and many are thriving.
India has paytm, There are providers like worldremit who transfer money in a few hours. ( transfered recently from Europe to India)
IBM is working in conjunction with the Stellar protocol to try to solve this issue.
Check out IBM world wire.
https://www.ibm.com/blockchain/solutions/world-wire
Check out IBM world wire.
https://www.ibm.com/blockchain/solutions/world-wire
Both the US and the eurozone are kind of single market currency unions where you would expect money transfers to be relatively convenient. As soon as you make a transfer outside of the EU you'll get hit by arbitrary and outrageous correspondent bank fees and delays. Payment services like TransferWise's "borderless accounts" get around this by pooling capital in various banks internationally, matching transfers against each other, etc.
SWIFT transfers aren't particularly slow or expensive these days. I use TransferWise but it's not cheaper in all cases.
It totally depends on the source and destination of the transfer. My girlfriend's small art house cinema recently transferred money to pay a filmmaker for festival participation and the correspondent bank fee was something like 60 euros on a 100 euro transfer.
Try Transferwise, those kind of fees are insane.
Just use Bitcoin? I mean I know people give it a lot of shit for some reason, but this is a perfect usecase for it.
So instead of a 60 euro fee, they need to spend ~.5-1.5 hours walking the director through how to set up a wallet and how to turn the internet money into actual hard currency? For someone that isn't already familiar, using bitcoin isn't exactly the most user-friendly experience.
Or Pirate Arr, or Litecoin
With Litecoin block generation halving in about 60 days soon it may not be affordable.
SEPA is okay, but it's typically not "same business day". Just this week I initiated a transfer on Tuesday and it only arrived Thursday morning. This was between two Belgian accounts.
There is some update regarding SEPA. Not mandatory atm but in a year instant transfers using SEPA will be real. Now 2 working days max. https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...
https://www.paymentsjournal.com/sepa-instant-payments-in-act...
Your banks are slow. Many process SEPA transfers a lot faster than that, try N26 to Revolut if you're curious.
Also the SCT inst scheme has started being rolled out.
Also the SCT inst scheme has started being rolled out.
This was to move money between trading accounts. I don't think these new nimble "mobile" banks offer stock trading accounts just yet.
edit: also, those banks are UK ones. I'm not inclined to open accounts there with Brexit going on. Foreign accounts are also a pain for tax admin.
edit: also, those banks are UK ones. I'm not inclined to open accounts there with Brexit going on. Foreign accounts are also a pain for tax admin.
N26 is German. Revolut is London based but has an ECB license.
Yes, the SEPA scheme is old and working only during business days according to the TARGET2 calendar, but you definitely can process a transfer within a couple hours (my online stock broker does).
Yes, the SEPA scheme is old and working only during business days according to the TARGET2 calendar, but you definitely can process a transfer within a couple hours (my online stock broker does).
Where do you live that you have to report you own foreign accounts? Asking companies to report them might be justified, but individuals?
same in Netherlands afaik. https://www.iamexpat.nl/expat-info/dutch-expat-news/dutch-ta...
genuinely asking, why would not be justifiable? That is tax on personal income and capital gains just like any other.
It creates a burden for people in that they have to do more paperwork. That time could have been spent on productive economic activity instead.
On another level, why should the state have a list of my accounts at all? It already sees all the accounts at banks within their territory. They don't need to concern themselves with accounts outside their jurisdiction.
In the context of income taxes, it should be enough to report total earnings, regardless of which specific account holds them.
On another level, why should the state have a list of my accounts at all? It already sees all the accounts at banks within their territory. They don't need to concern themselves with accounts outside their jurisdiction.
In the context of income taxes, it should be enough to report total earnings, regardless of which specific account holds them.
The N26 app is garbage. Revolut is OK, but it's a money changing service, not a bank. I did a transfer from the Revolut account and it took 3 days. Topping up is fast because it charges your card, rather than doing a transfer.
The Transferwise borderless account is pretty good, at least I much prefer it to Revolut - since SEPA transfers happen same day, the app is better and the debit card is free.
Transferwise refused to open an account for my company because its address was a PO box.
Yeah, this isn't exactly what I meant sorry.
I'm always disappointed at the lack of passport stamps in Europe these days.
Have you transferred money across borders with good recommendations lately?
Sending money across borders is historically super complex and expensive, you're right. The WorldBank estimates that it costs an average of 8% in total fees (transfer fees + exchange rate mark-up) to transfer money internationally.
For international transfers with banks and cash-based money transfers, this is still true.
But, in the last 10 years, we've seen hundreds of new online money transfer operators innovating in the field (way before crypto) starting with Xoom in the first wave and then TransferWise, Remitly, WorldRemit, InstaRem, Azimo and hundreds of others...
Sending $300 to Mexico to any agent location to pickup cash will cost you $2 with the cheapest option: https://www.monito.com/send-money/united-states/mexico/usd/m...
$1000 from Canada to a bank account in the Philippines in minutes? $6 https://www.monito.com/send-money/canada/philippines/cad/php...
etc...
These new innovative services are up to 10x cheapers than banks or traditional cash-based money transfers, often faster and much more convenient.
Sending money across borders is historically super complex and expensive, you're right. The WorldBank estimates that it costs an average of 8% in total fees (transfer fees + exchange rate mark-up) to transfer money internationally.
For international transfers with banks and cash-based money transfers, this is still true.
But, in the last 10 years, we've seen hundreds of new online money transfer operators innovating in the field (way before crypto) starting with Xoom in the first wave and then TransferWise, Remitly, WorldRemit, InstaRem, Azimo and hundreds of others...
Sending $300 to Mexico to any agent location to pickup cash will cost you $2 with the cheapest option: https://www.monito.com/send-money/united-states/mexico/usd/m...
$1000 from Canada to a bank account in the Philippines in minutes? $6 https://www.monito.com/send-money/canada/philippines/cad/php...
etc...
These new innovative services are up to 10x cheapers than banks or traditional cash-based money transfers, often faster and much more convenient.
Don't know about Monito but I've used TransferWise many times. First it's not straight forward, it takes time (several days), and it's freaking expensive. These numbers you quote are pretty far from what I spend when transferring money between France, the UK and the US.
> Have you transferred money across borders to an individual lately?
Yes, frequently. Using TransferWise or FairFx, depending on where the recipient was, but inclusive of Thailand, USA, Ecuador, and Canada. The process was entirely painless, fast, and the transfer was cheap as chips, while bringing to bear the full weight of European bank regulations to protect me as a customer.
Yes, frequently. Using TransferWise or FairFx, depending on where the recipient was, but inclusive of Thailand, USA, Ecuador, and Canada. The process was entirely painless, fast, and the transfer was cheap as chips, while bringing to bear the full weight of European bank regulations to protect me as a customer.
> The process was entirely painless, fast, and the transfer was cheap as chips, while bringing to bear the full weight of European bank regulations to protect me as a customer.
I wish more people on HN would understand the importance of this. I've said it here before but I think it's worth repeating. Banks want to send your money internationally and, as you've said, are more than capable of sending your money quickly and cheaply. Any time an international bank transfer is a pain in the ass it's by design to protect consumer interests and/or to protect government interests. There's a reason you can't just rock up to the teller at Wells Fargo and send $1,000 to North Korea the same way you can if you needed to send $1,000 to Canada.
I wish more people on HN would understand the importance of this. I've said it here before but I think it's worth repeating. Banks want to send your money internationally and, as you've said, are more than capable of sending your money quickly and cheaply. Any time an international bank transfer is a pain in the ass it's by design to protect consumer interests and/or to protect government interests. There's a reason you can't just rock up to the teller at Wells Fargo and send $1,000 to North Korea the same way you can if you needed to send $1,000 to Canada.
Ok, well what if I want to send money cheaply? Lol, it seems like that is a good usecase....
I don't care about the reason that banks have for sabotaging their own service. That is not my problem.
I don't care about the reason that banks have for sabotaging their own service. That is not my problem.
> transfer was cheap as chips
I used TransferWise once a few years ago from USD to CAD and it cost ~1.4% all-in. That's cheaper than my bank but still very expensive if you're transferring your whole salary every pay period like I was. I ended up using Bitcoin instead.
Is it cheaper now?
I used TransferWise once a few years ago from USD to CAD and it cost ~1.4% all-in. That's cheaper than my bank but still very expensive if you're transferring your whole salary every pay period like I was. I ended up using Bitcoin instead.
Is it cheaper now?
I paid 0.5% all in on a salary-sized GBP/THB transfer a few days ago.
My question was "what does blockchain bring to the table compared to a regular database?".
How does using a blockchain/cryptocurrency make it easier to sidestep regulations compared to a regular old database?
How does using a blockchain/cryptocurrency make it easier to sidestep regulations compared to a regular old database?
Sidestep regulations - if you build a system that doesn't allow you to do certain things (e.g. change balances at will), then the government cannot force you to do them.
But again - it's not about regulations. It's about interoperability. Centralised money transfer stuff is not new (PayPal? Banks?), the problem with it was always integration with other systems.
Also, if it's a centralised database, it's hard to build real startups on top of it. Look at what happened to startups building on top of Twitter APIs when Twitter decided to change them. If you build some parts on top of a public blockchain, it gives guarantees related to accessibility of those parts in the future.
But again - it's not about regulations. It's about interoperability. Centralised money transfer stuff is not new (PayPal? Banks?), the problem with it was always integration with other systems.
Also, if it's a centralised database, it's hard to build real startups on top of it. Look at what happened to startups building on top of Twitter APIs when Twitter decided to change them. If you build some parts on top of a public blockchain, it gives guarantees related to accessibility of those parts in the future.
fair call, considering it's all permissioned, to pathetically argue the point I don't really care much for:
I guess you could claim some sort of providence of money movements using a git like system but realistically I think it's likely the marketing department had far more to do with the decision than the engineering dept.
You only have to look at wechat's dominance thoughout Asia to realise whatapp could get absolutely blown away by the all-in-one messenger/payment system if it took off in the West.
I guess you could claim some sort of providence of money movements using a git like system but realistically I think it's likely the marketing department had far more to do with the decision than the engineering dept.
You only have to look at wechat's dominance thoughout Asia to realise whatapp could get absolutely blown away by the all-in-one messenger/payment system if it took off in the West.
>My question was "what does blockchain bring to the table compared to a regular database?".
You cannot compare blockchain with a regular database. A blockchain is more like an append-only store, or a WORM drive where each "file" or "record" is digitally authenticated and signed/hashed in a way to make undetectable modifications extremely difficult and/or expensive.
You cannot compare blockchain with a regular database. A blockchain is more like an append-only store, or a WORM drive where each "file" or "record" is digitally authenticated and signed/hashed in a way to make undetectable modifications extremely difficult and/or expensive.
> You cannot compare blockchain with a regular database.
Yes, you can. That it is different, and the resulting difference in utility, is the exact point of such a comparison.
Yes, you can. That it is different, and the resulting difference in utility, is the exact point of such a comparison.
I can almost guarantee you that regulators will step in and regulate the living crap out of this system if it's found to be actively used for high rates of cross-border transfers and foreign exchange. Governments are a lot smarter than people give them credit for. Once the regulation kicks in, all of a sudden the value of this diminishes greatly.
What minefields?
Wetern Union, HiFX, PayPal, MoneyGram,Azimo work just fine.
Wetern Union, HiFX, PayPal, MoneyGram,Azimo work just fine.
That does not really answer the question.
The main use so far has been to allow crypto exchanges to let you trade between cyptocurrencies and dollar equivalents without getting involved with banking regulations or banks. If you set up a crypto exchange doing say bitcoin - usdt, it's basically just software you can upload without needing accounts, licenses etc assuming the owners are nominally not in regulated countries.
I think the primary value from having a public hash chain in this case is that Facebook can't really do malicious things secretly. If they were to perform the procedure you describe, it would require very publicly listing all the accounts they are devaluing, and it isn't actually obvious that the impact on the value of the coins in those accounts would be significant. The value of the USD didn't instantly drop when it stopped being backed by the gold standard, and a coin that Facebook refuse to trade for cash would just be a "fiat" version of the currency, which could definitely retain value.
Today, when PayPal or Patreon shuts down an account, we only find out if that person complains and anybody pays attention. I imagine creators might prefer a platform that doesn't have obvious ways to easily shut them down, and where Facebook can claim to a court that doing so requires fundamentally compromising the security of the system.
Today, when PayPal or Patreon shuts down an account, we only find out if that person complains and anybody pays attention. I imagine creators might prefer a platform that doesn't have obvious ways to easily shut them down, and where Facebook can claim to a court that doing so requires fundamentally compromising the security of the system.
Well, one good reason to use cryptocurrencies is that you don't have to deal with visa/mastercard crap. You can send and accept payments without all kind of requirements(i.e pci).
Stable coins are really what bitcoin should have been: digital money! Now bitcoin is just a big casino owned and run by dubious entities/exchangers/trading platforms with no oversight.
Stable coins are really what bitcoin should have been: digital money! Now bitcoin is just a big casino owned and run by dubious entities/exchangers/trading platforms with no oversight.
Funny how 90% of the commenters seem to totally miss parent's point. We get why a pegged digital currency is useful, just not why it has to be a "blockchain".
A pegged "cryptocurrency" can just be designed as a centralized service (e.g. a REST API backed by a traditional database) without losing any of its properties. The "crypto" and "blockchain" bits are marketing.
A good rule of thumb is this: could someone have come up with this pre-Bitcoin? If the answer is yes, it's not a (decentralized) cryptocurrency.
A pegged "cryptocurrency" can just be designed as a centralized service (e.g. a REST API backed by a traditional database) without losing any of its properties. The "crypto" and "blockchain" bits are marketing.
A good rule of thumb is this: could someone have come up with this pre-Bitcoin? If the answer is yes, it's not a (decentralized) cryptocurrency.
A "Blockchain" is merely a public database. That's it.
Git is a Blockchain. Do you think that git is useless?
Git is a Blockchain. Do you think that git is useless?
Well that's precisely what I have issue with.
No I don't think a "blockchain" is merely a public database nor that git is a "blockchain". The term "blockchain" was initially defined as the proof-of-work data structure that Bitcoin uses to store transactions and its definition was later slightly expanded to describe that same data structure used in other cryptocurrencies. If it now just means "public database" then we've lost a useful word.
> Git is a Blockchain. Do you think that git is useless?
Git also uses merkle trees but the similarity pretty much ends there.
No I don't think a "blockchain" is merely a public database nor that git is a "blockchain". The term "blockchain" was initially defined as the proof-of-work data structure that Bitcoin uses to store transactions and its definition was later slightly expanded to describe that same data structure used in other cryptocurrencies. If it now just means "public database" then we've lost a useful word.
> Git is a Blockchain. Do you think that git is useless?
Git also uses merkle trees but the similarity pretty much ends there.
Proof of work is merely one form of consensus algorithms.
There are many forms of consensus algorithms.
> Git also uses merkle trees
Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
People try to make these concepts way more complicated than they actually are. A lot of this crypto stuff is actually quite simple.
There are many forms of consensus algorithms.
> Git also uses merkle trees
Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
People try to make these concepts way more complicated than they actually are. A lot of this crypto stuff is actually quite simple.
It was the only one at the time. Since then a few alternatives have been proposed but none that rival PoW, at least in terms of security.
> Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
I wouldn't say so, the block chain is a chain, not a tree. Actually, the use of merkle trees to represent transaction data is an implementation detail. Bitcoin would have worked fine without them (though "lightweight" clients would have suffered a bit).
I second that it's a simple concept though.
> Blockchains are not a complicated concept. They are merely a merkle tree combined with a consensus algorithm. That's it.
I wouldn't say so, the block chain is a chain, not a tree. Actually, the use of merkle trees to represent transaction data is an implementation detail. Bitcoin would have worked fine without them (though "lightweight" clients would have suffered a bit).
I second that it's a simple concept though.
They're doing it to skirt GDPR laws. When GDPR passed, all users were automatically opted out of personal data sharing, targeted marketing, etc. With ZuckCoin, they're going to pay users a small amount of coins to use the site, but in order for users to be eligible for that they'll be required to opt into all of the personal data sharing stuff. And since it will be considered a monetary transaction, Facebook will be required to keep the data from every transaction for 10 years for tax purposes. People won't even be able to ask that Facebook delete their data because they'll be required to store it for 10 years.
edit: If you want to listen to the explanation in more detail, Meanhash explained it on a recent episode of the Hashr8 podcast: https://h4shr8.libsyn.com/meanhash
https://www.reddit.com/r/CryptoCurrency/comments/bx9dik/face...
edit: If you want to listen to the explanation in more detail, Meanhash explained it on a recent episode of the Hashr8 podcast: https://h4shr8.libsyn.com/meanhash
https://www.reddit.com/r/CryptoCurrency/comments/bx9dik/face...
I don't see how that brings any benefits GDPR-wise.
"required to opt into" doesn't count as freely given consent, so it doesn't change anything; GDPR-wise doing this is exactly the same as simply using the data without asking for the opt-in.
If they're "required to keep the data from every transaction for 10 years for tax purposes" means that they're allowed to use that data for that particular purpose only; GDPR-wise taking data gathered for tax purposes and using it for ad targeting is just as forbidden as "simply" taking data without permission and using it for ad targeting.
"required to opt into" doesn't count as freely given consent, so it doesn't change anything; GDPR-wise doing this is exactly the same as simply using the data without asking for the opt-in.
If they're "required to keep the data from every transaction for 10 years for tax purposes" means that they're allowed to use that data for that particular purpose only; GDPR-wise taking data gathered for tax purposes and using it for ad targeting is just as forbidden as "simply" taking data without permission and using it for ad targeting.
It prevents covert malicious behavior by the issuer (i.e. they can't just change a database entry and deny they did so).
> Can anyone explain what the point of a pegged cryptocurrency is? Since you are dependent on the issuing entity to honour the stated peg
In this case there wouldn't be a single issuing entity: "the cryptocurrency would indeed be pegged to a basket of currencies". I had written about the idea of a stablecoin tied to a basket of currencies, e.g. J M Keynes' Bancor and the Word Currency Unit, a few years back.
> why not just have your balance be an entry in a regular database maintained by that entity? What exactly does the blockchain gain you here?
If it is controlled by a centralised organisation there would appear to be little point of "blockchain", but maybe as the article says "By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency".
In this case there wouldn't be a single issuing entity: "the cryptocurrency would indeed be pegged to a basket of currencies". I had written about the idea of a stablecoin tied to a basket of currencies, e.g. J M Keynes' Bancor and the Word Currency Unit, a few years back.
> why not just have your balance be an entry in a regular database maintained by that entity? What exactly does the blockchain gain you here?
If it is controlled by a centralised organisation there would appear to be little point of "blockchain", but maybe as the article says "By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency".
>Can anyone explain what the point of a pegged cryptocurrency is?
Because it has a completely stable value, from the standpoint of someone who always uses that currency. Let's say it's pegged to USD. Boom, if I'm in the US and everything I do is in USD, this cryptocurrency can suddenly be the same as actual dollars from my standpoint. There's virtually no difference.
The USD has an almost completely stable value to the standard person in the US. Everything they do is in USD. They don't care about some fluctuations vs other currencies vs EUR etc. I'm not saying there are zero affects, of course there are, but there's really nothing they can do about it. EUR goes up 10% to the USD, ok something they buy which is imported from europe is maybe 10% more expensive in USD.. there is nothing they can do about that, so the USD is still completely stable from their perspective. It's not like most people are saying "Oh 1% of my purchases this year are coming from Europe, so I'm going to hold 1% of my assets in EUR to mitigate this affect".
>What exactly does the blockchain gain you here?
Given the above, that means that the crypto currency is now 100% the same as holding USD. I'm not holding cyrpto as a diversifier, or to get magically rich by a big crypto move. I would actually hold crypto TO USE IT.
Maybe I want to send my brother $50 who lives in a different place. Wouldn't it be cool to just send some crypto knowing that it's virtually exactly $50 when I send it and always after that? Open the phone on some app, click a button and boom. Without having to worry about any intermediary bank etc.
This whole notion that crypto SHOULD NOT be pegged is looking at some dystopian future where a currency like the USD is not stable anymore. And hey, I'm not saying that could never happen.. but the world will have pretty much exploded if that ever happens so I'm not sure your cryptocurrency will help much in that case.
Crypto right now is a get rich quick scheme with extremely little actual use cases. Pegging one to the USD would make it usable- which should be the whole point...
Because it has a completely stable value, from the standpoint of someone who always uses that currency. Let's say it's pegged to USD. Boom, if I'm in the US and everything I do is in USD, this cryptocurrency can suddenly be the same as actual dollars from my standpoint. There's virtually no difference.
The USD has an almost completely stable value to the standard person in the US. Everything they do is in USD. They don't care about some fluctuations vs other currencies vs EUR etc. I'm not saying there are zero affects, of course there are, but there's really nothing they can do about it. EUR goes up 10% to the USD, ok something they buy which is imported from europe is maybe 10% more expensive in USD.. there is nothing they can do about that, so the USD is still completely stable from their perspective. It's not like most people are saying "Oh 1% of my purchases this year are coming from Europe, so I'm going to hold 1% of my assets in EUR to mitigate this affect".
>What exactly does the blockchain gain you here?
Given the above, that means that the crypto currency is now 100% the same as holding USD. I'm not holding cyrpto as a diversifier, or to get magically rich by a big crypto move. I would actually hold crypto TO USE IT.
Maybe I want to send my brother $50 who lives in a different place. Wouldn't it be cool to just send some crypto knowing that it's virtually exactly $50 when I send it and always after that? Open the phone on some app, click a button and boom. Without having to worry about any intermediary bank etc.
This whole notion that crypto SHOULD NOT be pegged is looking at some dystopian future where a currency like the USD is not stable anymore. And hey, I'm not saying that could never happen.. but the world will have pretty much exploded if that ever happens so I'm not sure your cryptocurrency will help much in that case.
Crypto right now is a get rich quick scheme with extremely little actual use cases. Pegging one to the USD would make it usable- which should be the whole point...
The few reasons to use blockchain at this time is to maintain an optic of trust: that even if you don't fully trust the provider of the token, you can trust the transparency provided by the technology. My judgment is that FB is positioning itself to be ready for when or if the space finds its "mosaic" moment. Otherwise, it is still an investment in a novel tech that is already proven useful for money transference; large sums of money have already been put up by the sector to mitigate and update regulatory risk and compliance.
This will probably be great for people who trade a lot of cryptocurrencies. In some countries crypto-crypto trading is free from taxation. When cyclic crypto bubble bursts and multi-year downtrend starts, you have to sell those cryptocurrencies for USD and pray exchange does not go bankrupt/hacked/exit scam or withdraw and pay taxes. Right now there are some forms of stable coins issued by private companies with no guarantee of buying back issued tokens. Very unstable market. FBCoin may change this. I believe first customers will be cryptcurrency exchanges.
Is Facebook going to get a banking license? If not this lets them offer bank like services while holding everyone's deposits and making money off the interest.
somehow there seem to be many roll outs of stable coins of late.. the infamous Tether, DAI by Maker, USDC by Circle, GUSD by Gemini, TUSD and countless more https://www.coingecko.com/en?category_id=36&view=market
Worth noting that Maker is different than those other because there's no central authority holding fiat money to maintain the peg. Their stablecoin Dai is minted "out of thin air" and the price peg is maintained via an interest rate mechanism built into the smart contract.
There's only one real advantage of a pegged crypto currency: easy and cheap transfer. It's generally a pain in the ass to move money, everyone wants a cut. Wire transfer, international wire tranfer, paypal - they all want their cut. For a simple update of a single row in some database.
You asked two different questions. I'm not going to answer the one about why Facebook is creating a pegged cryptocurrency (other commenters have done a good job of that).
As for the value of blockchain here, there is absolutely none. Facebook is creating a currency and labeling it a cryptocurrency which denotes the use of a blockchain, when in reality considering they're the central issuing authority of the currency and are the ones who determine it's value/inflation rate (i.e. pegging as you rightly described). Therefore using a blockchain for decentralized settlement and provenance here serves absolutely no real purpose and you are correct in pointing out that they can just keep everything in a database (which is likely what they will actually do).
As for the value of blockchain here, there is absolutely none. Facebook is creating a currency and labeling it a cryptocurrency which denotes the use of a blockchain, when in reality considering they're the central issuing authority of the currency and are the ones who determine it's value/inflation rate (i.e. pegging as you rightly described). Therefore using a blockchain for decentralized settlement and provenance here serves absolutely no real purpose and you are correct in pointing out that they can just keep everything in a database (which is likely what they will actually do).
One potential reason is you can get the token listed on a cryptocurrency exchange but other than that. I do not know. If you use cyrptocurrency you are almost always better off with a decentralized crypto.
I suspect the answer is micro transactions.
No one has figured out how to do it at scale using USD. Cryptocurrency theoretically offers a solution, but is still mostly unproven.
Whoever figures it out could potentially save the news business.
No one has figured out how to do it at scale using USD. Cryptocurrency theoretically offers a solution, but is still mostly unproven.
Whoever figures it out could potentially save the news business.
no fees, easy to send money to relatives abroad. PayPal was for eBay. this is for FB
Extra detailed tracking of users.
From Facebook's perspective, the advantage is that everyone has already forfeited any expectation of privacy wrt financial transactions, since they're recorded on a public ledger. They would be able to link certain transaction events (i.e., ones that happen over Messenger or other Facebook properties) to real identities, so this project will give them tons of data to mine
Haven’t thought about this but it makes perfect sense. Thank you for providing this insight.
I guess, ad companies will be ad companies at the end of the day. They will do everything for better targeting and more data.
This made me a little sick to my stomach. I thought I was jaded, but imagine the worlds economy running in FB.
They probably want to be the West's WeChat.
Have they said no private transactions supported?
I will revisit this thread in 2021 just to see how wrong everyone was. FB has billions of users that interact with its product everyday. People who make plans, attend events, split all sort of bills.
A borderless stablecoin will be a gamechanger. It can fuel commerce but above that it will kill many middlemen and rightly so.
A borderless stablecoin will be a gamechanger. It can fuel commerce but above that it will kill many middlemen and rightly so.
Every new financal technology tries to kill the existing middlemen, then replace them with new middlemen who promise to be better. Turns out, these new middlemen (1) never fully comprehend how complex modern finance is, which raises costs, and (2) are human and thus become corrupt, whether subtly or unsubtly, over time.
I also have a sneaking suspicion that, in conjunction with point (1), many of these modern finance plays also totally fail to comprehend the vast investment into technology that traditional finance companies have made. They see a shitty iOS app, think "wow Old School Bank is never going to understand computers, let's disrupt them", so they start with an amazing iOS app, then struggle to reliably implement the rest of the stuff that matters (process automation, scalability, government relationships, customer support).
Point being, the world turns, time goes on, the players might change, but the game doesn't.
I also have a sneaking suspicion that, in conjunction with point (1), many of these modern finance plays also totally fail to comprehend the vast investment into technology that traditional finance companies have made. They see a shitty iOS app, think "wow Old School Bank is never going to understand computers, let's disrupt them", so they start with an amazing iOS app, then struggle to reliably implement the rest of the stuff that matters (process automation, scalability, government relationships, customer support).
Point being, the world turns, time goes on, the players might change, but the game doesn't.
I don't understand your point. No one is disagreeing about the contribution that big finance has made in shaping our current systems. FB raised money, got listed. There's tons of financial system which helped them and help everyone from invoices to making a trip everyday.
But that doesn't mean something better can't come up. People don't hate banks for the monolith but their monopoly like nature that had stifled innovation and displayed outright criminal behavior. Don't forget 2008 recession was triggered by banks. Recent libor scandal..
About the technology investments. I would argue against this. Banks are more regulatory and defend my turf play than a technology play. Have you ever worked for a bank or any finance facing institution. There's layers and layers of clutter. Whole party is one big monolith, sucking money from places that it doesn't deserve.
Biggest benefit banks provide as in traditional banks is the account and trust that, that money in the account will remain on the name of holder. That trust as well was breached multiple times during withdrawal limits and freezes.
We all need better alternative. May be FB won't be the one. May be bank themselves will become more open and lean. But someone needs to push. There's a lots of money to be made and quite frankly FB deserves it for trying.
But that doesn't mean something better can't come up. People don't hate banks for the monolith but their monopoly like nature that had stifled innovation and displayed outright criminal behavior. Don't forget 2008 recession was triggered by banks. Recent libor scandal..
About the technology investments. I would argue against this. Banks are more regulatory and defend my turf play than a technology play. Have you ever worked for a bank or any finance facing institution. There's layers and layers of clutter. Whole party is one big monolith, sucking money from places that it doesn't deserve.
Biggest benefit banks provide as in traditional banks is the account and trust that, that money in the account will remain on the name of holder. That trust as well was breached multiple times during withdrawal limits and freezes.
We all need better alternative. May be FB won't be the one. May be bank themselves will become more open and lean. But someone needs to push. There's a lots of money to be made and quite frankly FB deserves it for trying.
> Banks are more regulatory and defend my turf play than a technology play. There's layers and layers of clutter.
Why do you think this is? Do you think its just because "hur hur they're evil"?
I'm not saying there isn't some of that. But I am saying:
1. The big banks have discovered something that the small, modern banks haven't. YET. They will. Its that banking sucks, and we need the regulatory hurdles.
2. If you think these small banks don't have the potential to be just as evil as the big ones currently are, you're delusional. Money corrupts everything. Google and Facebook used to be the darling of the tech community, and look at them now. If they can turn so suddenly, anyone can.
Maybe we need a better system. Maybe we dislike the system we have, but we can't have a better one. Maybe we need better people. But, you can't change human nature.
Healthcare is a similar industry. Its ridiculously huge. Everyone needs it. There's trillions of dollars in it. Plenty of money. Then Theranos comes along and thinks that the old way of doing things is overrated. And then they die. Because, fun fact, agility and leanness works in some industries, but its mostly industries that don't actually matter.
Why do you think this is? Do you think its just because "hur hur they're evil"?
I'm not saying there isn't some of that. But I am saying:
1. The big banks have discovered something that the small, modern banks haven't. YET. They will. Its that banking sucks, and we need the regulatory hurdles.
2. If you think these small banks don't have the potential to be just as evil as the big ones currently are, you're delusional. Money corrupts everything. Google and Facebook used to be the darling of the tech community, and look at them now. If they can turn so suddenly, anyone can.
Maybe we need a better system. Maybe we dislike the system we have, but we can't have a better one. Maybe we need better people. But, you can't change human nature.
Healthcare is a similar industry. Its ridiculously huge. Everyone needs it. There's trillions of dollars in it. Plenty of money. Then Theranos comes along and thinks that the old way of doing things is overrated. And then they die. Because, fun fact, agility and leanness works in some industries, but its mostly industries that don't actually matter.
> Maybe we need a better system. Maybe we dislike the system we have, but we can't have a better one. Maybe we need better people. But, you can't change human nature.
Do you have some sort of evidence for that? "We can't have a better (system)" is a pretty bold statement to make without some kind of supporting evidence. Absolute truths require absolute evidence.
Do you have some sort of evidence for that? "We can't have a better (system)" is a pretty bold statement to make without some kind of supporting evidence. Absolute truths require absolute evidence.
I can't see how you'd think those are absolute truths when they're all prefixed with the word "Maybe".
You're saying that yet Monzo and Revolut (the cool iOS apps you're mentioning) are killing the banking system already in Europe/UK.
"Killing" is a pretty funny word to use.
Everything is easy when you're small. Look at Simple in the US; they have an awesome iOS app, a few interesting features, they gained customers, became more popular, and... feature development stopped. Their pace of externally-facing innovation has DRAMATICALLY slowed over the past three years. They've done automated expense allocating w/ recurring goals, family accounts, and protected savings accounts with a high interest rate, and that's, like, it. In three years. They don't even have 2FA w/o SMS.
Why is that? I don't know. But I have a suspicion: Banking is fucking difficult. Its insane. There's regulation and red tape everywhere, you make one mistake and you instantly not only lose customers but could ruin their lives. Its fundamentally not an easy industry to operate in. So, they have to allocate a ton of engineering effort into the back-office side of things, which is exactly what every other bank does. Simple even contracts with BBVA to handle the accounts, which should make some things easier.
Crypto doesn't change anything at all. Again, its easy and awesome when its small, and Crypto also has an advantage that regulation has been slow to catch up, so in some ways they can just shrug their shoulders and say "its not real money, you can't have the same expectations." For now. As it gets bigger it'll become subject to the same regulations that fiat is subject to, and years later it'll look exactly the same. The underground networks, including Bitcoin, can maybe escape some of this due to the lack of centralized corporate backing, but Facebook can't.
Everything is easy when you're small. Look at Simple in the US; they have an awesome iOS app, a few interesting features, they gained customers, became more popular, and... feature development stopped. Their pace of externally-facing innovation has DRAMATICALLY slowed over the past three years. They've done automated expense allocating w/ recurring goals, family accounts, and protected savings accounts with a high interest rate, and that's, like, it. In three years. They don't even have 2FA w/o SMS.
Why is that? I don't know. But I have a suspicion: Banking is fucking difficult. Its insane. There's regulation and red tape everywhere, you make one mistake and you instantly not only lose customers but could ruin their lives. Its fundamentally not an easy industry to operate in. So, they have to allocate a ton of engineering effort into the back-office side of things, which is exactly what every other bank does. Simple even contracts with BBVA to handle the accounts, which should make some things easier.
Crypto doesn't change anything at all. Again, its easy and awesome when its small, and Crypto also has an advantage that regulation has been slow to catch up, so in some ways they can just shrug their shoulders and say "its not real money, you can't have the same expectations." For now. As it gets bigger it'll become subject to the same regulations that fiat is subject to, and years later it'll look exactly the same. The underground networks, including Bitcoin, can maybe escape some of this due to the lack of centralized corporate backing, but Facebook can't.
Simple got acquired by BBVA(a giant 150 yrold banking conglomerate) in 2014. That’s my guess as to why they’ve stopped innovating, it’s a tale as old as acquisitions have existed.
Also, they got acquired because they had no profitable business model.
Being banned from using their app because I’m not a US citizen, I really do not feel for them at all.
Simple is really bad... nothing compares to Monzo and Revolut in the US.
A payments system on Facebook makes a ton of sense and would be very useful. I just don't get why it has to be cryptocurrency.
Two things I can think of:
- you can get transparency (the entire ledger must be public, so you reduce the risk of many kids of internal fraud and manipulation.)
- you can use these coins outside the facebook ecosystem -- I can't think of immediate value here, but I can see a long play where Facebook can turn into a bank
- you can get transparency (the entire ledger must be public, so you reduce the risk of many kids of internal fraud and manipulation.)
- you can use these coins outside the facebook ecosystem -- I can't think of immediate value here, but I can see a long play where Facebook can turn into a bank
Surely the long play is turning Facebook into sovereign nation state? Only half-joking...
This is the first and only comment I've read that actually gives credence to the idea of FB making it as a cryptocurrency, but it still falls short of a simple idea and gives FB too much credit for being an "open" player. FB is the issuer, why can't they just provide APIs to their ledger and APIs for settlement so it can be used outside of their direct ecosystem, but still allows them full control? FB wants to keep people in their ecosystem.
wait a second, when did facebook say that the ledger will be visible to the public?
Biggest benefit of using blockchain and cryptocurrency here is open trust (this term is the best way I can think about describing this). Any internal database is subject to all kind of human and technical errors. But with a network of trusted parties that solves the Byzantine Generals Problem. This becomes secure and trusted as trust is given. No one can hack it at will without taking the 50% of the network down and compromising multiple entities. This is a bizarre technical, social and economic feat. I wish Apple was the one pulling this instead of FB. But quite certainly there are more FB users than iPhone users.
Not true for stablecoins, which aren't really cryptocurrencies. The most important single-point-of-failure in currencies is the supply mechanism, which must be trusted. The supply of centralized stablecoins can't be trusted. It is open to human greed, errors and hacking. Do you trust Mr. Zuckerberg having control of the future money supply?
Centralized stablecoins should be illegal, because the issuer can print money from thin air without collateral, unlike banks which are regulated and the money supply is controlled with interest rates.
Centralized stablecoins should be illegal, because the issuer can print money from thin air without collateral, unlike banks which are regulated and the money supply is controlled with interest rates.
A feature of cryptocurrencies like ethereum or bitcoin is they can be anonymous and unregulated which can make small transactions cheap. You can get an ethereum address and I can send you 10c worth of it for maybe 2c in costs and that's it. To do similar in fiat we each need financial institutions which may have to spend a fair bit each to do KYC on us. It remains to be seen where Facebook will fit on the regulated/unregulated spectrum. Somewhere between the two I imagine.
Facebook already had Facebook Credits around 2011-2012, but it was killed in 2013.
Don’t forget that Facebook is extremely capable of reading the public. It could be a marketing tool designed to capture early adaptors.
They’re also capable of the self delusion that is depressingly common for large companies.
I agree and it really does blow my mind how powerful their service could be if fully utilized as an internal intelligence gathering tool.
Cryptocurrencies are trustless in principle. You don’t have to trust that FB updated your balance in their database correctly or tampered with historical data when you can simply pull all the transaction history from the blockchain and verify for yourself and with peers from the network.
What else would it be? Some in house software, mysql based currency system?
What is it about cryptocurrency that people still don't get?
What is it about cryptocurrency that people still don't get?
Wouldn’t Facebook just become the middleman instead of visa or whoever?
I agree to the extent that many seem to acknowledge the transfer and remittance use case but seem to think that the market is already filled by niche players -- the fact that FB doesn't have to contend with network effects because everyone already has Messenger and/or WhatsApp is a huge deal.
It is simultaneously the case that FB can't build this and then magically be exempt from each jurisdiction's laws related to cross-border transfers. It's not like a real decentralized coin where there's no real enforcement mechanism, each government will know exactly where to knock and FB will play ball with reporting requirements, etc.
I think the right analogy is that they want to be to the rest of the world what AliPay is to China -- ubiquitious, so that it will very quickly be the case that you know everyone supports it in the world so you don't need to carry around your credit cards. Sort of like what Apple and Google Pay would want to be but with a larger incentive for retailers to adopt it as it has instantly higher penetration among users. It also might be more likely that messaging payments to a retailer becomes the norm instead of NFC (like how everyone in China pays for a restaurant check with AliPay by simply sending payment via message to the address, usually on the table in a QR code).
I'm not sure that it needs to be a blockchain but I assume it's about making the economics work by cutting out middlemen. If FB gets everyone to use this in their daily lives, however, it'll be a huge win for FB even if they don't make money on it directly -- because purchase data is very valuable, but also because you can't feasibly get rid of FB once it becomes your normal payment method.
It is simultaneously the case that FB can't build this and then magically be exempt from each jurisdiction's laws related to cross-border transfers. It's not like a real decentralized coin where there's no real enforcement mechanism, each government will know exactly where to knock and FB will play ball with reporting requirements, etc.
I think the right analogy is that they want to be to the rest of the world what AliPay is to China -- ubiquitious, so that it will very quickly be the case that you know everyone supports it in the world so you don't need to carry around your credit cards. Sort of like what Apple and Google Pay would want to be but with a larger incentive for retailers to adopt it as it has instantly higher penetration among users. It also might be more likely that messaging payments to a retailer becomes the norm instead of NFC (like how everyone in China pays for a restaurant check with AliPay by simply sending payment via message to the address, usually on the table in a QR code).
I'm not sure that it needs to be a blockchain but I assume it's about making the economics work by cutting out middlemen. If FB gets everyone to use this in their daily lives, however, it'll be a huge win for FB even if they don't make money on it directly -- because purchase data is very valuable, but also because you can't feasibly get rid of FB once it becomes your normal payment method.
You might have a good point, but why present it in this way? It is needlessly condescending and makes people want to not believe you. You could have easily stated your case for how much utility and adoption you think this will have without looking down your nose at people who hold a different opinion.
Comments like this devalue the entire conversation being had here by pushing people either towards twitter style shitposting/flamewars, which are terrible ways to have conversations, or simply causing those who would like to comment to not engage. Either way, can you not?
Comments like this devalue the entire conversation being had here by pushing people either towards twitter style shitposting/flamewars, which are terrible ways to have conversations, or simply causing those who would like to comment to not engage. Either way, can you not?
Wow, downvoted for pointing out the shitty tenor of conversation on this site. I don't know why I participate any more
Bingo. I completely agree. Yes, it is kind of a hassle to have FB using this globalcoin rather than just use a standard decentralized crypto but it is a start at least.
Why do they need a crypto currency to achieve that? How is it superior to just a number in a database to represents your balance on facebook? Facebook is centralized what advantage does a decentralized currency have for them?
Venmo/Paypal seem to have no problem achieving this without a blockchain.
Venmo/Paypal seem to have no problem achieving this without a blockchain.
If you want global adoption, make it open. That's what Android does. That's what Linux does. That's what cryptocurrency achieves. That's what Facebook wants.
I am all for borderless stablecoins and agree with everything you say except that you imply that we should let Facebook and and control it, which makes no sense.
I don't understand why you're assuming "everyone" here will be wrong. I have yet to see a comment that has detracted from the value this brings to Facebook. What doesn't make any level of sense is why it's being labeled a cryptocurrency. It's a currency controlled by Facebook. That's no different than regular money issued by a central bank.
A few points:
- some pegged currencies are still decentralised (e.g. MakerDAO) - they rely solely on smart contracts - even with a centralised peg, you have to trust an organisation to keep the collateral, but the contract can state that anyone can move the funds around, so the managing organisation cannot just remove funds at will
Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?)
- some pegged currencies are still decentralised (e.g. MakerDAO) - they rely solely on smart contracts - even with a centralised peg, you have to trust an organisation to keep the collateral, but the contract can state that anyone can move the funds around, so the managing organisation cannot just remove funds at will
Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?)
I'm sorry but you're just muddying the water here - Facebook's currency is centralised by both Facebook and peg to USD and there's no need for interoperability at the currency level - Facebook will provide the APIs for working with the currency.
As envisioned by Facebook, the whole 'crypto' aspect of it is pointless.
MakerDAO is not decentralised, simply because the ETH/USD price feed isn't decentralised. If the servers providing the feed get hacked, say goodbye to your ETH collateral.
Stakeholder vote elects a smart contract that takes the median of dozens of price feeds controlled by various independent parties, so it's decentralized to some extent, and decentralization is not a clear-cut binary attribute.
They might integrate with ChainLink, a decentralized oracle network: https://chain.link
That's just "decentralization" by obscurity. (emphasis on the quotes)
That aside, the main problem isn't centralization but rather the trust level. The point is to not have to trust someone isn't serving you the false data. Contracts must be created and ran only when the data can be cryptographically verified to be true.
There are no trustless oracles if any of the required data are outside of the settlement system (e.x. blockchain). Even when the data are inside, you still have cases of collusion that make things problematic.
People are trying to sell something that's close to impossible. Especially when they try to add infinite flexibility on it. Even with the currently low stakes there have been incidents of "oracles" getting compromised. There are several strategies to try and camouflage a centralized oracle to a faux decentralized entity but eventually if stakes get high enough, your entity will become a target and it'll become once again obvious what's happening.
That aside, the main problem isn't centralization but rather the trust level. The point is to not have to trust someone isn't serving you the false data. Contracts must be created and ran only when the data can be cryptographically verified to be true.
There are no trustless oracles if any of the required data are outside of the settlement system (e.x. blockchain). Even when the data are inside, you still have cases of collusion that make things problematic.
People are trying to sell something that's close to impossible. Especially when they try to add infinite flexibility on it. Even with the currently low stakes there have been incidents of "oracles" getting compromised. There are several strategies to try and camouflage a centralized oracle to a faux decentralized entity but eventually if stakes get high enough, your entity will become a target and it'll become once again obvious what's happening.
You are exactly right and it’s astonishing how most of the commenters here are confident about their views despite not getting it.
To provide another example besides the ICO: you can use a pegged blockchain-based coin to trade on Uniswap or any other decentralized exchange. This would not work with the database based coin. The idea is not to gain efficiency, the idea is to gain interoperability with the blockchain ecosystem.
To provide another example besides the ICO: you can use a pegged blockchain-based coin to trade on Uniswap or any other decentralized exchange. This would not work with the database based coin. The idea is not to gain efficiency, the idea is to gain interoperability with the blockchain ecosystem.
> Also, compared to a centralised database, you have an interoperability aspect - if it's just an organisation keeping everyone's balances, it's hard to make those balances interact with the rest of the blockchain ecosystem (e.g. how do you participate in an ICO, if the crypto balances are stored in one system, and token balances are stored in another? implement APIs for every single one of them?)
I'm pretty sure its much easier to make a single request to a single well defined server, as opposed to connecting with a swarm of peers, downloading the entire blockchain, verifying it, and computing your balance by traversing the entire history.
Its not like there is some universal "blockchain API" that computers come from the factory ready to understand. Specialised code has to be written to deal with every new cryptocurrency.
I'm pretty sure its much easier to make a single request to a single well defined server, as opposed to connecting with a swarm of peers, downloading the entire blockchain, verifying it, and computing your balance by traversing the entire history.
Its not like there is some universal "blockchain API" that computers come from the factory ready to understand. Specialised code has to be written to deal with every new cryptocurrency.
they are struggling to keep the peg. indeed how much magic central banks are using to maintain a stable currency
Ultimately, the goal seems to be "one currency to rule them all." The peg may prove necessary only initially, to gain confidence.
Unlike most other currencies, Facebook's new currency will be readily available to and easily usable by virtually everyone everywhere, and it will likely have very low transaction costs -- much lower than those of most financial intermediaries. You will be able to use it as easily from New York as from Timbuktu, bypassing the inefficiencies and high fees of the legacy financial system.
Why use traditional nation-backed money when you can click a button on your phone instead?
Facebook seems to be gradually morphing into a sort of planet-wide nation.
Unlike most other currencies, Facebook's new currency will be readily available to and easily usable by virtually everyone everywhere, and it will likely have very low transaction costs -- much lower than those of most financial intermediaries. You will be able to use it as easily from New York as from Timbuktu, bypassing the inefficiencies and high fees of the legacy financial system.
Why use traditional nation-backed money when you can click a button on your phone instead?
Facebook seems to be gradually morphing into a sort of planet-wide nation.
> Why use traditional nation-backed money when you can click a button on your phone instead?
Wait, you can't do that with your nation-backed currency? In Australia, I can literally open my bank app and send money to any Australian account with just a phone number and they receive it in 30 seconds or so with no fees...
Yeah, international transfers are a little harder, but for domestic transfers it's super easy.
Wait, you can't do that with your nation-backed currency? In Australia, I can literally open my bank app and send money to any Australian account with just a phone number and they receive it in 30 seconds or so with no fees...
Yeah, international transfers are a little harder, but for domestic transfers it's super easy.
Here in the US, moving money is a huge PITA. Unless you both bank at the same bank, money usually takes days to move. And banking at the same bank is no guarantee it will happen faster.
Private party transactions up into the thousands of dollars (say, buying a used car) generally require cash.
It's incredibly archaic.
Private party transactions up into the thousands of dollars (say, buying a used car) generally require cash.
It's incredibly archaic.
It's not like there isn't already tons of innovation in the fast-international-transfers space. PayPal is one and has been around for years. TransferWise is newer and direct-to-your-account.
They’ll also be able to track more purchases people make to sell you more ads
> with zero fees via Facebook products including Messenger and WhatsApp
reminds me of the classic "If You're Not Paying For It, You Become The Product"
edit: the prototypical crypto (bitcoin) has fees as the final (after there's no more new btc) incentive for miners to process transactions. but this doesn't?
probably we'll have to look at their white paper but if Facebook is the only actor running this network why make it a cryptocurrency at all?
reminds me of the classic "If You're Not Paying For It, You Become The Product"
edit: the prototypical crypto (bitcoin) has fees as the final (after there's no more new btc) incentive for miners to process transactions. but this doesn't?
probably we'll have to look at their white paper but if Facebook is the only actor running this network why make it a cryptocurrency at all?
> but if Facebook is the only actor running this network why make it a cryptocurrency at all?
They're selling a seat at the governance table for $10 million. I suspect in an effort to put this new token in the decentralized/not a security bucket the SEC views ETH. That allows them to avoid registration and the enforcement headache Kik is currently dealing with. Quite clever on Facebook's part. Zuckerberg is smart enough to give up a bit of control and toe the line ("decentralized"... among his Wall Street friends) rather than retain complete control and run head-first into a regulatory brick wall. FTA:
> Facebook is in talks to create an independent foundation to oversee its cryptocurrency, The Information reports. It’s asking companies to pay $10 million to operate a node that can validate transactions made with its cryptocurrency in exchange for a say in governance of the token. It’s possible that node operators could benefit financially too. By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency.
They're selling a seat at the governance table for $10 million. I suspect in an effort to put this new token in the decentralized/not a security bucket the SEC views ETH. That allows them to avoid registration and the enforcement headache Kik is currently dealing with. Quite clever on Facebook's part. Zuckerberg is smart enough to give up a bit of control and toe the line ("decentralized"... among his Wall Street friends) rather than retain complete control and run head-first into a regulatory brick wall. FTA:
> Facebook is in talks to create an independent foundation to oversee its cryptocurrency, The Information reports. It’s asking companies to pay $10 million to operate a node that can validate transactions made with its cryptocurrency in exchange for a say in governance of the token. It’s possible that node operators could benefit financially too. By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency.
> if Facebook is the only actor running this network why make it a cryptocurrency at all?
Marketing.
Marketing.
You're not off the hook if you pay either. Paying for something doesn't necessarily mean you aren't the product.
A cryptocurrency that violates one of the main tenants of cryptocurrencies. The fact is doesn't require a centralized authority.
This is basically Twitch bits and shouldn't be classified as a cryptocurrency. As others have stated, probably the only reason to use one is because an existing blockchain can simply be used under a new brand.
It's PayPal or Venmo or whatever existing money transfer service you like, but with Facebook Dollars.
Exactly. A blockchain that is fully controlled by one entity is just a database.
Didn't Kik try and do something similar as well and came under fire from the SEC?
Kik's problem was they advertised it as an investment and promised large returns, but failed to register the ICO with the SEC.
The main issue with SEC is that everything that claims or "wink wink nudge nudge" implies that you should buy The Thing from them because it's going to jump in value is essentially an investment proposal that's potentially fraudulent and thus needs to meet SEC regulations.
Stablecoins, where you explicitly state that it's never ever going to appreciate and make you richer by just holding it, don't meet that criteria so SEC doesn't (and isn't allowed to) regulate them.
IRS/tax issues, and AML/KYC (anti money laundering/know your customer) laws still are a potential issue, but that's not handled by SEC.
Stablecoins, where you explicitly state that it's never ever going to appreciate and make you richer by just holding it, don't meet that criteria so SEC doesn't (and isn't allowed to) regulate them.
IRS/tax issues, and AML/KYC (anti money laundering/know your customer) laws still are a potential issue, but that's not handled by SEC.
Thanks for the clarification, both.
I don’t think this will be particularly successful. We already have a variety of ways to send money. Yes Facebook is big, but so is, say, Apple and it’s Apple Pay functionality.
I don’t know what use case this solves that isn’t fairly competitive already although it will probably have a bitcoin style valuation bubble. It’s also sort of capped in its utility. If it overshadows national government currencies... the governments will be incentivized to block it. That was true of Bitcoin but it’s doubly true of Facebook. And Facebook has to abide by laws so it can’t just quietly work regardless of regulations like other crypto.
And what can I buy with this? If I need to convert to dollars, is an easy facecoin swap plus a facecoin to dollars swap really be more convenient?
Edit: on Apple Pay, I’m pretty sure you can send cash. But I don’t know, because I haven’t ever had the need to do this... which is I suppose my point.
I don’t know what use case this solves that isn’t fairly competitive already although it will probably have a bitcoin style valuation bubble. It’s also sort of capped in its utility. If it overshadows national government currencies... the governments will be incentivized to block it. That was true of Bitcoin but it’s doubly true of Facebook. And Facebook has to abide by laws so it can’t just quietly work regardless of regulations like other crypto.
And what can I buy with this? If I need to convert to dollars, is an easy facecoin swap plus a facecoin to dollars swap really be more convenient?
Edit: on Apple Pay, I’m pretty sure you can send cash. But I don’t know, because I haven’t ever had the need to do this... which is I suppose my point.
> it will probably have a bitcoin style valuation bubble
It's a stable coin so it can't have such a bubble. It's main utility will probably only be cross border p2p payments for countries that allow it.
It's a stable coin so it can't have such a bubble. It's main utility will probably only be cross border p2p payments for countries that allow it.
That doesn’t feel like something that’s useful for messenger integration? Messenger integration implies to me local transactions for minor debts and splitting fares and what not.
Facebook's blockchain will most likely be a consortium of corporate validators. In this case you could say that the blockchain is "just" a normal distributed append-only hash-linked ledger with public verifiable records, but nowadays the more concise term for that is "blockchain."
Every git repository counts as a blockchain by that definition.
Indeed you could even think of them as embodying the "proof of work" principle in that you naturally look for the branch with the most work done to find the true Schelling point fork for your own contributions.
(By the way, I often see these two points in the same thread: "blockchains should be replaced with centralized SQL databases" and "Git repositories are just like blockchains" which makes me wonder if Git repositories also ought to be replaced with centralized SQL databases.)
(By the way, I often see these two points in the same thread: "blockchains should be replaced with centralized SQL databases" and "Git repositories are just like blockchains" which makes me wonder if Git repositories also ought to be replaced with centralized SQL databases.)
> blockchains should be replaced with centralized SQL databases
Blockchains whose tokens are subject to the authority of a central issuer anyway should be replaced with centralized SQL databases. Bitcoin/namecoin/etc. can't be replaced with centralized databases. FBCoin can, as can any blockchain that is supposed to track meatspace resources(since physical resources are subject to the authority of the local government/men with guns anyway).
> Git repositories are just like blockchains
Nope, I don't consider this to be true. Blockchains are supposed to have decentralized consensus and allow arbitrary nodes to propose changes.
Blockchains whose tokens are subject to the authority of a central issuer anyway should be replaced with centralized SQL databases. Bitcoin/namecoin/etc. can't be replaced with centralized databases. FBCoin can, as can any blockchain that is supposed to track meatspace resources(since physical resources are subject to the authority of the local government/men with guns anyway).
> Git repositories are just like blockchains
Nope, I don't consider this to be true. Blockchains are supposed to have decentralized consensus and allow arbitrary nodes to propose changes.
A centralized SQL server isn't public.
Turning it into a Blockchain makes it public, which is a significant advantage.
Turning it into a Blockchain makes it public, which is a significant advantage.
The purpose of using a blockchain scheme to issue a centralized liability is probably to increase trust in the system due to the public verifiability of issuance and transfers.
Seems to me that "trust" is the last thing the average joe would associate cryptocurrency with. A database with a public audit trail might be a better idea if you want that, but that certainly doesn't sound as trendy and exciting as "blockchain".
Indeed, the blockchain concept is more exciting and understandable for a lot of people, so in that sense branding their consortium-controlled cryptographically verifiable ledger as a blockchain seems like a good PR decision.
Well git model has a lot of issues with scaling repo size - git extensions like GVFS and LFS are used to remedy the problem but they break the decentralized part so you have this hybrid solutions.
Aka Perforce...
Yes.
Which is oe of the reasons my eyes roll so hard when "business types" and "idea guys" decide they need to explain "blockchain" to me, but have never heard of Merkel Trees...
Which is oe of the reasons my eyes roll so hard when "business types" and "idea guys" decide they need to explain "blockchain" to me, but have never heard of Merkel Trees...
Merkle Trees, named after Ralph Merkle
https://en.wikipedia.org/wiki/Merkle_tree
https://en.wikipedia.org/wiki/Merkle_tree
Only if a javascript file counts as an entry in a ledger.
Yes! They are!
Git repos are absolutely Blockchains!
People don't understand how simple the concept of Blockchain is.
Git repos are absolutely Blockchains!
People don't understand how simple the concept of Blockchain is.
Merkle Tree.
except for "append-only" and "verifiable records"
Git is "append-only". Just like a normal blockchain, you can't modify an older commit without rewriting all the commits since then.
Git also supports signed commits.
Git also supports signed commits.
So Git could be a somewhat reasonable backend for a cryptocurrency... if only its hash function weren't broken.
Not quite since git purposefully excludes the computationally hard proof of work requirement.
In git you use other external signals to determine which fork to select in the case of diverging histories.
With blockchain, all participants are untrusted, so you just go with the longest chain by convention, and rely on the fact that it’s extremely difficult to build such a chain.
In git you use other external signals to determine which fork to select in the case of diverging histories.
With blockchain, all participants are untrusted, so you just go with the longest chain by convention, and rely on the fact that it’s extremely difficult to build such a chain.
Yeah, you would need to overlay Git with a client that selects a repository’s master branch based on a PoW scheme included in the commits.
Your definition is missing the "block" from blockchain and it's also missing a concensus protocol.
Well obviously a distributed database needs a consensus protocol.
At some point the "blockchain not Bitcoin" crowd will wake up to the fact that Bitcoin's value proposition is censorship resistance. Nobody can block you from making a payment. The idea is still revolutionary, as evidenced by the large number of people for whom Bitcoin still doesn't look like anything (other than maybe something scary or bad).
Whatever Facebook comes up with will be the antithesis of censorship resistant. There is no point to buy or use it because it solves no problems for regular people.
Which brings us to why Facebook is bothering. For the simple reason that governments print currencies. Control (through censorship) and self enrichment ( through inflation).
This only works by compelling people to use the currency. My prediction is that Phase 2 of this ridiculous plan is to force people on Facebook to use the token while gradually cutting third party payment processors out.
Whatever Facebook comes up with will be the antithesis of censorship resistant. There is no point to buy or use it because it solves no problems for regular people.
Which brings us to why Facebook is bothering. For the simple reason that governments print currencies. Control (through censorship) and self enrichment ( through inflation).
This only works by compelling people to use the currency. My prediction is that Phase 2 of this ridiculous plan is to force people on Facebook to use the token while gradually cutting third party payment processors out.
" There is no point to buy or use it because it solves no problems for regular people."
I disagree with that statement. It does solve the problem of getting paid through facebook (which a lot of people do and use). It surely promotes and carves Facebook deeper into their lives, but it solves a problem.
Im not for this offering, but its not hard for me to see why it has a chance of mass aadoption. Hopefully it fails.
I disagree with that statement. It does solve the problem of getting paid through facebook (which a lot of people do and use). It surely promotes and carves Facebook deeper into their lives, but it solves a problem.
Im not for this offering, but its not hard for me to see why it has a chance of mass aadoption. Hopefully it fails.
So it's a cryptocurrency that's basically the equivalent of a gift card or Chuck-E-Cheese token? How is this different from in-game currency that isn't backed by Crypto?
Seems that FB is just riding the buzzword wave.
Seems that FB is just riding the buzzword wave.
Yes but it can still be useful. Facebook is basically planning to compete directly with amazon in ecommerce space. In the future, you won't even have to leave facebook to buy something. The merchant will be able to process orders directly through facebook.
Also my guess is informal trading markets will form using this facebook currency. If everyone is using the same form of payment then cross boarder trade becomes much easier. No more foreign exchange hassles. I've already seen it happen with stuff like amazon gift cards but recently amazon removed the ability to check the balance of amazon gift cards. I have already moved away from accepting amazon gift cards for this very reason. If facebook's coin is widely used and can be used to buy a lot of different stuff then I would definitely shift my informal trading to the facebook coin.
Also my guess is informal trading markets will form using this facebook currency. If everyone is using the same form of payment then cross boarder trade becomes much easier. No more foreign exchange hassles. I've already seen it happen with stuff like amazon gift cards but recently amazon removed the ability to check the balance of amazon gift cards. I have already moved away from accepting amazon gift cards for this very reason. If facebook's coin is widely used and can be used to buy a lot of different stuff then I would definitely shift my informal trading to the facebook coin.
I’m not sure how anyone has even the slightest trust in Facebook anymore.
Why is it that people still use the service? Is convenience really that powerful?
Why is it that people still use the service? Is convenience really that powerful?
I have exactly zero trust in Facebook but I have had so many irritating moments and missed opportunities due to ditching my account years ago that I am seriously considering reopening it again.
The main aspect I'm considering these days is that I'm not important in the grand scheme of things so there's no rational reason to increase difficulty in things that do really matter such as having memorable experiences while I can in exchange for privacy or to make some statement. In a sense, I will have privacy anyway out of just being a data point out of billions.
It's not that Facebook is convenient but rather that not having it can be inconvenient depending on your context.
The main aspect I'm considering these days is that I'm not important in the grand scheme of things so there's no rational reason to increase difficulty in things that do really matter such as having memorable experiences while I can in exchange for privacy or to make some statement. In a sense, I will have privacy anyway out of just being a data point out of billions.
It's not that Facebook is convenient but rather that not having it can be inconvenient depending on your context.
You have zero trust in Facebook, and Facebook has zero trust in you. Perfect use case for blockchain, right?
People are just habituated towards opening FB every time they're bored. I used to do that myself until a few years back. Consumers aren't buying anything on FB though, but advertisers are.
Considering how many veritable snake oil products gets advertised the platform, not to mention political propaganda pushed as "promoted posts", I can't help but wonder if this push to crypto is FB's way of hiding who its ad buyers are in the future.
Considering how many veritable snake oil products gets advertised the platform, not to mention political propaganda pushed as "promoted posts", I can't help but wonder if this push to crypto is FB's way of hiding who its ad buyers are in the future.
I use Facebook. Is there any way they can harm me as a result apart from maybe trying to show adverts which I don't see. (I use uBlock and fbpurity).
It's more big picture. Your individual data is useless. The data of a huge % of the US (or other country, or planet) is extremely powerful. As a facebook user you contribute to that data.
So, no you individually using fb or not doesn't really matter other than on principle. I don't use it because I find them morally reprehensible, but I also understand my boycott is purely symbolic unless another 100m or so people join me (probably won't happen).
So, no you individually using fb or not doesn't really matter other than on principle. I don't use it because I find them morally reprehensible, but I also understand my boycott is purely symbolic unless another 100m or so people join me (probably won't happen).
One more boycotter here.
More likely a boycott will prove unnecessary; the biggest threats to Facebook are (a) fashion and (b) facebook.
... but not using Facebook makes me feel better.
I think Facebook will slowly decay into irrelevance.
One thing that really surprises me is how few startups are taking on Facebook. Obvious strategy is to work at the edges; there are so many opportunities abound to undermine them. Don’t build a new Facebook, instead just carve off their features incrementally and be the Instagram of events, classifieds, chat, video, news sharing, interest groups... huge scope for innovation. Facebook is the SAP of social networks, it’s time to move on.
More likely a boycott will prove unnecessary; the biggest threats to Facebook are (a) fashion and (b) facebook.
... but not using Facebook makes me feel better.
I think Facebook will slowly decay into irrelevance.
One thing that really surprises me is how few startups are taking on Facebook. Obvious strategy is to work at the edges; there are so many opportunities abound to undermine them. Don’t build a new Facebook, instead just carve off their features incrementally and be the Instagram of events, classifieds, chat, video, news sharing, interest groups... huge scope for innovation. Facebook is the SAP of social networks, it’s time to move on.
Society is addicted. Many people even consider Facebook so vital to everyday life that they believe access to Facebook is a right that the government should guarantee to its citizens. This is a cultural problem that is difficult to tackle, but I think it'll require a cultural shift before people realize that Facebook is just a website that they don't have to use.
If you're interested in conspiracy theories, this may be a way for Facebook to circumvent GDPR, since financial data needs to be kept for at least 10 years. Once you make any trade using this currency, you won't be able to request deletion of personal data, since it's required to be kept as financial information.
What benefit does Facebook gain from getting the ability to store my personal data for tax purposes? That doesn't give them the permission to do anything else with it anyway.
If they were going to use the "for tax purposes" data for ad targeting or something else, then that's a GDPR violation - if they're going to intentionally violate GDPR, then they might as well simply store and use the data without permission and lie that it's been deleted; there's no need to bother with the charade.
If they were going to use the "for tax purposes" data for ad targeting or something else, then that's a GDPR violation - if they're going to intentionally violate GDPR, then they might as well simply store and use the data without permission and lie that it's been deleted; there's no need to bother with the charade.
why couldn’t they delete everything but your trade data?
At the minimum they'd need to store your name and address, probably birthdate too. It would just complicate the whole process of leaving Facebook.
so they’d delete everything but that. the rest of the leaving process would be the same (I recently did it myself, it wasn’t too bad, but more annoying than I’d like).
don’t get me wrong, i’m no fan of facebook and their data practices, but i don’t agree with what you said above.
don’t get me wrong, i’m no fan of facebook and their data practices, but i don’t agree with what you said above.
Circumventing GDPR might not be the principal aim, but I'm sure it's a nice side effect.
Okay, so like, I'll defend them on this in principle. That said, can you address, like, you know, the myriad scandals you have BEFORE doing something ELSE? It's a bad look.
The timing isn’t great for the antitrust investigations. It’s not a particularly monopolistic move, but it creates new threat vectors for narratives of their potential villainy.
E.g. “Facebook’s market abuse could easily extend to coercing its millions of ad customers to use its cryptocurrency, enabling nefarious ad campaign spending for political causes without a way to trace the source.”
E.g. “Facebook’s market abuse could easily extend to coercing its millions of ad customers to use its cryptocurrency, enabling nefarious ad campaign spending for political causes without a way to trace the source.”
Do they really need to address scandals? My understanding was that there's always some ruckus but it seems to slide right off their backs in a matter of months.
> That said, can you address, like, you know, the myriad scandals you have BEFORE doing something ELSE
Meh, this feels like the Jordan Peterson "Set Your House in Perfect Order First" fallacy. Plenty of very flawed people (and presumably companies) have literally driven humanity forward.
Not sure I think Facebook's payment processing system is going to drive humanity forward, but insisting people clean up their shit first -- or even be generally reasonable human beings or companies -- excludes most artists, civil rights leaders, and technology companies.
Meh, this feels like the Jordan Peterson "Set Your House in Perfect Order First" fallacy. Plenty of very flawed people (and presumably companies) have literally driven humanity forward.
Not sure I think Facebook's payment processing system is going to drive humanity forward, but insisting people clean up their shit first -- or even be generally reasonable human beings or companies -- excludes most artists, civil rights leaders, and technology companies.
The most logical thing for Facebook would be to create something similar to the Chinese payment systems Alipay and WeChat Pay, bound directly to your Facebook account and maybe even issuing credit to some accounts. Completely different from a pseudonymous cash-like cryptocurrency like Bitcoin or Tether.
Those are single-market, single-currency products no? Facebook wants one coin to serve all it's 2.4bn users - a larger user base than USD I might add.
I think the angle here is international blockchain Venmo with a goal to convince the non-destitute Facebook holdouts to finally sign up so that they can commerce.
For the record I doubt that will work. The early adopters will be scammers and people duped into thinking this is their get rich quick opportunity.
For the record I doubt that will work. The early adopters will be scammers and people duped into thinking this is their get rich quick opportunity.
> The early adopters will be scammers and people duped into thinking this is their get rich quick opportunity.
It's a stablecoin. There's no get rich opportunity.
It's a stablecoin. There's no get rich opportunity.
If it really is pegged to a basket of multiple currencies that makes it a bit of a forex instrument, not just a 1:1 exchange. Someone, somewhere could probably make a bit of money on mispricing or market movements.
Oh hell, I was excited until I read this "Team: Facebook’s blockchain project is overseen by former PayPal President and VP of Facebook Messenger David Marcus." I just can't see leadership being good for Crypto if his tenure at Paypal is any indicator.
And here I thought that the zuccoins in the last FacebookCTF was an obvious joke.
Were there flags that were supposedly "zuckcoins" or something similar?
Facebook will be able to pair transaction data (consumer, product, cost, merchant) with their entire social graph. They can then offer licenses to run nodes with the ability to access all that data.
My main curiosity with this is whether or not self-custody will be an option, or if it will be a hybridized Venmo/Blockhain implementation that is limited to the FB app as the only wallet.
Payment system built into Facebook will be incredibly successful. Most small businesses don't even bother with a website, nowadays a Facebook group and Instagram account is enough - so it's only natural to process payments there as well.
However, it is not going to damage Bitcoin in any way. Main use case for Bitcoin is buying drugs. No one is going to be paying for drugs with a currency tied to their real-world identity.
However, it is not going to damage Bitcoin in any way. Main use case for Bitcoin is buying drugs. No one is going to be paying for drugs with a currency tied to their real-world identity.
I find it funny that bitcoin fails to do what it was created to do and that people are so invested in it they can't change it or let it die. You can't buy a cup of coffee without paying large confirmation fees or delaying the transaction for day to weeks. There was talk about decentralizing smaller transactions to ease up on that but that defeats the whole purpose of bitcoin.
Many new inventions fail to do what they set out to originally do.That does not make them less valuable. Viagra started out as an anti-angina drug, Coca cola was originally a cough syrup, VCRs found an initial niche in recording porn.
If Bitcoin fails as a currency but succeeds as a store of value, that's still a win.
If Bitcoin fails as a currency but succeeds as a store of value, that's still a win.
With https://lightning.network you can.
>You can't buy a cup of coffee without paying large confirmation fees or delaying the transaction for day to weeks
Yes you can. On BSV which is the legacy bitcoin
Yes you can. On BSV which is the legacy bitcoin
Hahahah!
Let me know when Craig Wright actually signs the genesis block, and cryptographicly proves that he is Satoshi, and does so publicly in a way that I can personally verify.
When that happens, I will give you 1000$ worth of BSV.
It won't happen though.
Let me know when Craig Wright actually signs the genesis block, and cryptographicly proves that he is Satoshi, and does so publicly in a way that I can personally verify.
When that happens, I will give you 1000$ worth of BSV.
It won't happen though.
Regardless if he is satoshi or not my statement is still correct: on BSV isntant transactions work and it scales to visa levels today. Oh, and he doesn't owe you any proof.
I use Shift for coffee purchases and don't pay fees.
People built on top of Bitcoin.
People built on top of Bitcoin.
> It could be used to offer low or no-fee payments between friends or remittance of earnings to familys from migrant workers abroad who are often gouged by money transfer services.
Doesn’t Transferwise already fill this niche? These days you can send several hundred dollars to and from the US for around $2-4 in fees, whereas the fees used to be $40-60 from traditional banks or Western Union.
Doesn’t Transferwise already fill this niche? These days you can send several hundred dollars to and from the US for around $2-4 in fees, whereas the fees used to be $40-60 from traditional banks or Western Union.
So you're saying you understand the value proposition and that it's been successful elsewhere, but you don't understand why Facebook would want to do it, or why it might make sense for the company who already has messaging apps on billions of phones?
Am I the only one concerned about giving even more information to Facebook about my spending?
I have long been skeptical of cryptocurrencies, but I think that such beliefs are rooted more in crappy misapplications and hype then reality. Can anyone link some sources that may be able to change my mind?
Who knew back in 1988 that what the Economist predicted would come true?
https://i.imgur.com/mWj0d3f.png
https://i.imgur.com/mWj0d3f.png
Though I think they were predicting a currency that would replace national currencies in the manner of the Euro which I can't see Facebook's doing.
How do you think the community standards and cryptocurrency are going to interact? If Facebook deplatforms you, do they take your zuccbucks?
What is the best way to profit from all this crypto hype, as a rational person who’s convinced all coins will eventually go to zero?
Start offering a $99 course on how to profit from FB Libra. Doesn't matter if you don't know anything about it, because the people who buy shovels during a gold rush usually know even less.
Getting involved is risky - even if you are right (and I think you are), the price could still increase by a large amount for a long time before sense reasserts itself.
As Keynes apparently did not say: "The market can stay irrational a lot longer than you can stay solvent."
If you hit your trading / credit limits you could lose a lot of money despite being right in the long run.
And as Keynes definitely did say, "In the long run, we are all dead."
As Keynes apparently did not say: "The market can stay irrational a lot longer than you can stay solvent."
If you hit your trading / credit limits you could lose a lot of money despite being right in the long run.
And as Keynes definitely did say, "In the long run, we are all dead."
Pretty sure facebook coin is a stable coin. You cant make money trading it. You can only make money by using it for trading.
A rational person would observe that something with no intrinsic value could very well be overpriced far longer than you can afford to short.
Ironically it may be to buy something like bitcoin and sell when it goes up. Reasoning: a) there are obviously hype believers who will buy and push the price up when optimistic and b) they tend not to sell being believers whereas as a skeptic you can.
You can go on deribit.com or bitmex.com and buy put options or sell future contracts.
Scam others.
Not sure how they can solve the 51% attack in the beginning when you have massive asic farms ready to roll in an instance
You have to pay $10 million, and presumably enter into some contracts / business arrangements, to run a full node
So it's basically just a virtual currency a la Twitch Bits, Riot Points,
old Xbox Points etc. but running on blockchain
So to summarize, the Facebook plan might look like this: (IANAL, so please correct me)
- Create a global currency that can only be used by FB users and through FB apps.
- Invest a billion in pegging the currency to make it stable and position it as the unchallenged WorldMoney™, but it will eventually carry its own weight in the long term.
- Collect direct purchase information like crazy, their ultimate wet dream (I know GDPR is not circumvented by the taxes thing, but it's as simple as asking "Can I track your purchases?" and people will simply say yes.)
- Implement this scheme as a blockchain to dodge antitrust laws (or whatever applies when you become a worldwide financial entity) by distributing the operation/management/governance among interested parties.
- Even receive some millions from said companies to hold that power in the first place.
- Still hold the real power over the implementation at the end of the day, but not the accountability.
- Dodge taxes like crazy wherever you can, charge fees whenever you want, etc.
- Make users comply to whatever conditions you want because at some point it will become mandatory to have a FB account.
Am I missing something?
EDIT: - Pay their employees and finance their worldwide operation with monopoly money.
- Create a global currency that can only be used by FB users and through FB apps.
- Invest a billion in pegging the currency to make it stable and position it as the unchallenged WorldMoney™, but it will eventually carry its own weight in the long term.
- Collect direct purchase information like crazy, their ultimate wet dream (I know GDPR is not circumvented by the taxes thing, but it's as simple as asking "Can I track your purchases?" and people will simply say yes.)
- Implement this scheme as a blockchain to dodge antitrust laws (or whatever applies when you become a worldwide financial entity) by distributing the operation/management/governance among interested parties.
- Even receive some millions from said companies to hold that power in the first place.
- Still hold the real power over the implementation at the end of the day, but not the accountability.
- Dodge taxes like crazy wherever you can, charge fees whenever you want, etc.
- Make users comply to whatever conditions you want because at some point it will become mandatory to have a FB account.
Am I missing something?
EDIT: - Pay their employees and finance their worldwide operation with monopoly money.
Will there be any financial advantage to owning Libra coins (or whatever they’ll be called) early?
This should be blocked by lawmakers if they are serious about their recent tech monopoly chatter
“Facebook plans gift card system”
To all the cryptocurrency devotees dreaming of a new world cryptocurrency displacing existing government-backed central banks - be careful what you wish for, it just might come true. This might be the next phase of surveillance capitalism, like Orwell except driven by a private corporation for profit rather than accountable governments for "the greater good".
SEC: we are going to fine Kik alot of money for unauthorized ICO
Facebook: hold my beer
Facebook: hold my beer
This is not an ICO.
The biggest nonsense I've ever heard.
Is there anything more here than a payment system?
[deleted]
I remember reading about company money in history books. Looks like we’re going back in time.
Facebucks? Rhymes with...
More and more I get the feeling that the majority of the HN crowd are FB employees.
Any other post about crypto is a scam. Any other tech than react is immature. Etc etc.
Have fun at FB guys, I hope your share vest soon
Any other post about crypto is a scam. Any other tech than react is immature. Etc etc.
Have fun at FB guys, I hope your share vest soon
This comment breaks the site guidelines, which ask you not to post insinuations about astroturfing. Those are internet poison and nearly always imaginary. (I've written about this ad nasueum for anyone who wants more explanation: https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...).
So please don't do that, and please don't post unsubstantive comments in general. We're hoping for thoughtful conversation here, not flames.
https://news.ycombinator.com/newsguidelines.html
So please don't do that, and please don't post unsubstantive comments in general. We're hoping for thoughtful conversation here, not flames.
https://news.ycombinator.com/newsguidelines.html
Are you joking? In every thread about FB besides this one, almost every single comment actively bashes FB.
This is something I've wondered... Do all Facebook/Google employees drink the Kool aid? Are there no privacy proponents?
You have to have loose morals & ethics, be a misanthrope, or be completely oblivious to the world to even work at Facebook or Google anymore.
I think you could make that case easily for Facebook but less easily for Google. The number of useful Google products (AOSP, for instance) is enormous. They contribute massively to open source†. Their co-founders clearly have less evil tendencies that Facebook's founder. Their free products are insanely useful. A lot of Google's products have a price tag attached to them especially for the enterprise sector where they don't trade your data. I would compare Google to Apple and Microsoft and Amazon. Facebook is a totally different entity – I'm of the opinion that Facebook should _never_ have been allowed to acquire WhatsApp and Instagram.
† Before anyone points out that FB contribute to open source… they've about, what, 50 projects, Google has over 2,000 and has been running that Google Summer of Code project for many years which supports 1,000s of projects outside Google.
† Before anyone points out that FB contribute to open source… they've about, what, 50 projects, Google has over 2,000 and has been running that Google Summer of Code project for many years which supports 1,000s of projects outside Google.
This is objectively wrong. Take a look at how often Facebook is mentioned in the title of submissions in the last month, sorted by number of upvotes: https://hn.algolia.com/?query=facebook&sort=byPopularity&pre...
The entire top 10 are entirely negative of Facebook.
The entire top 10 are entirely negative of Facebook.
Not an FB employee but like many HN members with assets in tech stocks, a sizable portion of my portfolio consists of FB stock from the days when it was around $50.
FB has made me good money, and I don’t get shaken by what I see on the news. At the end of the day, FB still does more good things than bad, and I am more likely to take them seriously when they set out on a new venture.
FB has made me good money, and I don’t get shaken by what I see on the news. At the end of the day, FB still does more good things than bad, and I am more likely to take them seriously when they set out on a new venture.
> At the end of the day, FB still does more good things than bad
I don't think this is a claim you can make these days without a good argument behind it. It certainly seems false to me.
> I am more likely to take them seriously when they set out on a new venture
This is real, though. Whatever FB are, they're not dumb and whatever they do should be taken seriously.
I don't think this is a claim you can make these days without a good argument behind it. It certainly seems false to me.
> I am more likely to take them seriously when they set out on a new venture
This is real, though. Whatever FB are, they're not dumb and whatever they do should be taken seriously.
There's def a sizeable representation of FB folks on HN, know some personally.
ravenstine(1)
No doubt to try and boost their share price.
Public company, that is their job and legal fiduciary duty.
As far as I know there is no legal requirement to do so.
Indeed there isn’t:
> Third, corporate directors are not required to maximize shareholder value. As the U.S. Supreme Court recently stated, "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." (BURWELL v. HOBBY LOBBY STORES, INC.) In nearly all legal jurisdictions, disinterested and informed directors have the discretion to act in what they believe to be the interest of the business corporate entity, even if this differs from maximizing profits for present shareholders. Usually maximizing shareholder value is not a legal obligation, but the product of the pressure that activist shareholders, stock-based compensation schemes and financial markets impose on corporate directors.
https://www.lawschool.cornell.edu/academics/clarke_business_...
> Third, corporate directors are not required to maximize shareholder value. As the U.S. Supreme Court recently stated, "modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." (BURWELL v. HOBBY LOBBY STORES, INC.) In nearly all legal jurisdictions, disinterested and informed directors have the discretion to act in what they believe to be the interest of the business corporate entity, even if this differs from maximizing profits for present shareholders. Usually maximizing shareholder value is not a legal obligation, but the product of the pressure that activist shareholders, stock-based compensation schemes and financial markets impose on corporate directors.
https://www.lawschool.cornell.edu/academics/clarke_business_...
One thing it does _not_ get you is censorship resistance. If the central authority wants to take away coins from a wallet, all it needs to do is to simply state that it will not honour the peg for coins originating from that wallet. This can be tracked by FIFO, dilution or any other stated accounting principle, and renders the balance in that wallet worthless.