Libra Coin

[Doppleganger]

On the shortlist of "things that are more terrifying than an atomic bomb detonation", I wouldn't have put Facebook getting into crypto in the top 3.

But once fridge logic hits, you realize that this is actually very scary. Facebook and Google were in the news lately as Democrats have promised to "break them up" if elected to office.

Libra is Facebook's response to that.

It was so alarming the G7 launched a task force to investigate and potentially shut it down. Here's why.

Originally Posted by Financial Times

This week, Facebook and 27 other partners announced a plan for a new digital currency called Libra that could be used to send money around the world. If things go according to plan, some of the world’s largest corporations will oversee this new currency, through an independent association based in Switzerland that has a membership fee of $10m.

If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies, which also include Visa, Uber, and Vodafone. If global regulators don’t act now, it could very soon be too late.

I’ve been a cryptocurrency sceptic, believing that the instability and regulatory challenges are just too sizeable. But Libra is different because it is a “stablecoin”, with a value pegged to a basket of currencies and other assets. Anyone, whether they use Facebook or not, can buy in with a local currency and cash back out at any time.

Vital decisions about Libra’s administration, security and underlying assets will be made by the Switzerland-based Libra Association — essentially Facebook and its largely corporate partners. To avoid complaints that setting up this coin would give a single company dangerous powers, Facebook has smartly limited itself to a single vote on the commission.

That doesn’t make the prospect of Libra’s success any less frightening. This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests — profits and influence — ahead of public ones.

Let us imagine that Libra works as planned. Hundreds of millions of people around the world will be able to send money across borders as easily as they send a text message. The Libra Association’s goals specifically say that ability will encourage “decentralised forms of governance”. In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations.

The Libra Association promises to choose stable currencies and assets unlikely to suffer inflationary crises. The sponsors are right that a liquid, stable currency would be attractive to many in emerging markets. So attractive, in fact, that if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls.

Decentralisation is a popular Silicon Valley buzzword but it has decidedly failed in monetary policy. Centuries of financial instability led to the gradual emergence of today’s network of central banks. After many mistakes, we have learnt that we want a central bank to act to increase or decrease the monetary supply in moments of contraction or expansion. This power to help keep an economy stable is something we should be reinforcing and improving, not endeavouring to demolish.

But what, if it's crypto, that means that corporations don't control the money supply, right? It's a finite supply unearthed by miners, right? Wrong.

Originally Posted by Wikipedia

Libra will not rely on cryptocurrency mining. Only members of the Libra Association will be able to process transactions via the permissioned blockchain.

Libra service partners, within the Libra Association, will create new Libra currency units based on demand.

Having a central authority control the supply of crypto defeats the entire purpose of a distribution ledger. Blockchain as a brand name is being appropriated as a front for what is, essentially, tech corporations wanting to replace governments as the source of the money supply.

Entities whose whole existence is to make money...will be doing literally that. We're heading for a 1980's dystopia where corporations will be the de facto rulers of Earth.

But with more likes/dislikes.

Let's talk about this!

[Heather]

On the one hand, a cryptocurrency that doesn't have dozens of people committing the horrific waste and carbon footprint that is mining is a dream come true on many levels. On the other hand, literally everything else said.

Let's stick to trying to make blockchain not eat electricity like a guzzlord on weed.

[Shuckle]

I was tentatively there until facebook decided "yes, we are now going to print money." Dopple's statement is not hyperbole. Facebook can literally buy countries with this in 10-20 years, especially with the looming threat of climate change on the horizon. This needs to be stopped.

[Concept]

Originally Posted by Doppleganger

It was so alarming the G7 launched a task force to investigate and potentially shut it down.

How, exactly? What're the G7 going to do, implement a "Great Firewall" of our own if Facebook don't shut down their currency? Force these companies to break up into smaller units? "Oh sorry, we're actually registered in this country over here we just happen to also be available through the internet in your country". Forgive me if I'm being dense here - I'm hardly an expert - but it strikes me that even if the G7 decide to regulate or bad Libra it's not immediately obvious they're capable of enforcing it.

National governments remain the biggest players in global affairs for now as they have done for the past ~400 years, but increasingly their dominance is waning. I suspect that within our lifetime they'll become more a curiousity than anything else (in the same way that most people in the UK can't name their councillers, don't vote for them and care even less I reckon it's more likely than not the same will become true of Prime Ministers and Presidents within the next ~50 years). We have planes and the internet now. Globalisation isn't going back in its box. The central idea common to all right-wing populists in the West these days - that we can go back to the days of 19th century nation states divided primarily on cultural lines - is a delusion. More to the point it's a dangerous delusion because the longer we spend operating under it, the longer we spend not having any active part in the structure of the world of tomorrow whilst it's busy being built around us.

Realistically the ways forward are twofold. Firstly, supranational organisations/free trade zones/shared currencies become more important than ever. The EU is the flagship example, with the Eurozone. The Eurozone is a good advertisement for the perils of supranational currencies when so much fiscal policy is still decided at the national level though. Nations need to be more willing to pass this kind of policy-making authority onto the same level the currency works at. Secondly, we need to acknowledge that what we really fear here isn't the demise of the nation state, it's the loss of the democratic accountability we've spent so long forcing onto nation states. They didn't start with that. It's was forced on them afterwards by their citizens. The same can be true of companies from their customers.

[Doppleganger]

Originally Posted by Concept

How, exactly? What're the G7 going to do, implement a "Great Firewall" of our own if Facebook don't shut down their currency? Force these companies to break up into smaller units? "Oh sorry, we're actually registered in this country over here we just happen to also be available through the internet in your country". We have the face the facts that even if the G7 decided they wanted to shut down Libra, it's not immediately obvious that they're actually capable of it any more.

I don't know either! But I have a few idea. Anti-trust like lawsuits to break up the companies into smaller entities, making it harder to vest power in supermassive corporations. Massive taxes on all digital transactions. Arrest of the board members on the grounds of treason.

Originally Posted by Concept

National governments remain the biggest players in global affairs for now as they have done for the past ~400 years, but increasingly their dominance is waning. I suspect that within our lifetime they'll become more a curiousity than anything else (in the same way that most people in the UK can't name their councillers, don't vote for them and care even less I reckon it's more likely than not the same will become true of Prime Ministers and Presidents within the next ~50 years). We have planes and the internet now. Globalisation isn't going back in its box. The central idea common to all right-wing populists in the West these days - that we can go back to the days of 19th century nation states divided primarily on cultural lines - is a delusion. More to the point it's a dangerous delusion because the longer we spend operating under it, the longer we spend not having any active part in the structure of the world of tomorrow whilst it's busy being built around us.

I don't know how it is in the UK, but in the midwest, it's just like the 1990's for people who choose to or are forced to remain unplugged. So when right wingers talk about stuff like this, they actually have an audience they're reaching - mostly poor individuals who aren't plugged in to the digital landscape like yuppies and millennials.

Since North America is an enormous landmass with mostly empty uninhabited space, it's basically ultra metropolises versus everything else. And that also applies to sleeper towns of considerable wealth and size (~$20M GDP, 100,000 residents). While 95% of the population is in urban centres, I doubt that most of the wealth is concentrated there - at least 50% comes from suburban and rural areas. And that money is most threatened by Libra coin.

Originally Posted by Concept

Secondly, we need to acknowledge that what we really fear here isn't the demise of the nation state, it's the loss of the democratic accountability we've spent so long forcing onto nation states. They didn't start with that. It's was forced on them afterwards by their citizens. The same can be true of companies from their customers.

No, I think people are legitimately afraid of their governments being undermined by corporations. I don't think people are bothered much by democratic accountability when they are apathetic about voting and cynical about the political process. What does it matter if there are two parties, both are bad, and they just alternate between different flavours of bad every 1-2 election cycles?

It's a bad status quo, but there's the great unknown of corporate rule that doesn't have a ton of upside to the consumer. At best, we're no worse for wear as GooglePlay points, Amazon points, etc. transition into Libra-backed transactions. At worst, our entire worth is now defined by four global entities who have a financial incentive to want to extract that worth from us.

In the current system, currency isn't controlled by one entity, it is a tug of war between nation states, corporations, consumers and alternate stores of value. There is enough competition between stores of value that people can define their net worth by a certain currency. By taking out the government from that equation, Libra reduces the number of players to basically corporations and consumers. This means that consumers no longer have power over their own wealth, since the entities who provide the goods and services both price those services and provide the means of payment.

Everyone who held power in the Libra Associations' members prior to Libra's founding will have an advantage in wealth that can never be approached again. The corporations have more control over their customers in this respect than Louis XIV.

If the corporations with unthinking, inhuman machines I think I'd be OK with this. A SkyNet, a Sibyl system, some AI overlord to oversee everything. The whole point of decentralized blockchain currency is that nobody can control the money supply. But Silicon Valley isn't that. It's a blend of a certain political cocktail with an unsaitiable lust for money, power and prestige. These are people who won't really stop at trying to change how we think; they'd program us if they could. And that could very well happen!

[Shuckle]

Originally Posted by Concept

How, exactly? What're the G7 going to do, implement a "Great Firewall" of our own if Facebook don't shut down their currency? Force these companies to break up into smaller units? "Oh sorry, we're actually registered in this country over here we just happen to also be available through the internet in your country". Forgive me if I'm being dense here - I'm hardly an expert - but it strikes me that even if the G7 decide to regulate or bad Libra it's not immediately obvious they're capable of enforcing it.

National governments remain the biggest players in global affairs for now as they have done for the past ~400 years, but increasingly their dominance is waning. I suspect that within our lifetime they'll become more a curiousity than anything else (in the same way that most people in the UK can't name their councillers, don't vote for them and care even less I reckon it's more likely than not the same will become true of Prime Ministers and Presidents within the next ~50 years). We have planes and the internet now. Globalisation isn't going back in its box. The central idea common to all right-wing populists in the West these days - that we can go back to the days of 19th century nation states divided primarily on cultural lines - is a delusion. More to the point it's a dangerous delusion because the longer we spend operating under it, the longer we spend not having any active part in the structure of the world of tomorrow whilst it's busy being built around us.

Realistically the ways forward are twofold. Firstly, supranational organisations/free trade zones/shared currencies become more important than ever. The EU is the flagship example, with the Eurozone. The Eurozone is a good advertisement for the perils of supranational currencies when so much fiscal policy is still decided at the national level though. Nations need to be more willing to pass this kind of policy-making authority onto the same level the currency works at. Secondly, we need to acknowledge that what we really fear here isn't the demise of the nation state, it's the loss of the democratic accountability we've spent so long forcing onto nation states. They didn't start with that. It's was forced on them afterwards by their citizens. The same can be true of companies from their customers.

I'm happy to embrace a global Euro, even with all the challenges it brings - I'm just not a huge fan of it being sponsored by Facebook. Can't we give the UN some teeth instead?

[Doppleganger]

During the hearing on Libra today, Facebook said The Libra Association it is not be subject to international monetary rules or privacy laws because managing Libra does not qualify as "banking".

That explains the reason Facebook wants a cryptocurrency, to claim that they don't control it and so can't be subject to regulations. While they control the amount of Libra in the world, because they aren't holding custody of it on behalf of others, they aren't "bankers".

[gooieka]

"There is a lot of material on the Cryptocurrency Blog on the issues of investing in cryptocurrency in the public domain. Which resource can you trust? 100% nothing.
The main problem of this market is the lack of control and clear criteria for evaluating a project or information on Blog.Switchere. It is very risky to build investment forecasts on all these misunderstandings."

It seems to me that the state does not want to allow crypto ownership by the hands of large influential corporations. Bitcoin is enough for a high game

[marlosmiles]

Completely agrees with you.