Money Stuff
June 19, 2019 12:12 AM   Subscribe

Facebook Will Make the Money Now - "Money is a technology. This is true, first of all, in a grand abstract sense: The human capacity to generate collective fictions is our most powerful and general technology, the thing that distinguishes us from other animals and enables long-term cooperation and complex societies, and money is one of the most important collective fictions."[1]
Humans were collectively able to decide that discs of shiny metal or sheets of engraved paper could be used as substitutes for all other goods and services, not because they were equivalents of those goods and services but just because we wanted them to be, and this decision created vast new possibilities for storing wealth and planning for the future and motivating human behavior and all the rest.

But most of us don’t walk around with a lot of gold coins or even all that much paper money, and the main actual technology of modern money is a bit more prosaic. It is the list. For most people who have money, most of their money consists of an entry in a list at a bank. Each bank has a list of its customers, and next to each customer there’s a number, and that number is the number of dollars that that customer has. It doesn’t, like, correspond to the number of dollars that the customer has; it is not a handy reminder that the bank has a box somewhere with a bunch of gold coins that belong to that customer. There’s no box. The dollars consist solely of the ledger entries at the bank.

This, too, is immensely powerful, especially combined with modern digital technology that lets the bank (and the customer) access the list from anywhere. But there is something too powerful, too easy, about it. The advantage of using gold as money is that it is hard to get a lot of gold: Once everyone agrees that gold is valuable, everyone will want gold, but not everyone will have much of it, so it will retain its value. Once everyone agrees that having a number on a list is valuable, I mean, it’s pretty easy to write a number on a list; right here on my computer I have Microsoft Excel, which allows me to write down long lists of large numbers and put dollar signs in front of them.

So the principal form of modern monetary technology is really legal and regulatory technology.[2,3] Sure the computer systems that keep the lists of numbers at banks are powerful and complicated, so they don’t mess up the lists, but the thing that keeps the system afloat is mostly a set of rules and norms about who gets to keep lists of numbers of dollars. If your bank says you have some dollars in your checking account, then you do. If I say you have some dollars in my Excel spreadsheet, then you don’t. There is a regulatory privileging of who gets to be a bank, of who gets to be involved in the creation of money. There are central banks that can create money from nothing, and there are regulated banks that can create money under the auspices (and regulation) of the central bank, and there are regulated entities that can transfer and store and otherwise minister to money.2 Money is just a bunch of computer entries, but it has to be scarce to be valuable, and the computer entries have to reflect a social consensus of who has how much money.3 And so the structuring and regulation of banking is about making sure that the money is scarce and is allocated in socially approved ways.[4,5]
Breaking the Zuck Buck:
-Zuckerberg: The man who would be monetary king
-Alphaville's Libra cheat sheet
-What exactly is Facebook's Libra Reserve?
-Facebook's Libra: blockchain, but without the blocks or chain
-Facebook's Libra will not help the unbanked

also btw...
posted by kliuless (57 comments total) 22 users marked this as a favorite
They're showing all the signs of becoming the Microsoft the 80s and 90s where all possible contenders, especially startups 1/1000th their size, are going to be roadrollered.
posted by hugbucket at 12:23 AM on June 19 [3 favorites]

I just realized the disaster that Libra is going to become. It's based on a platform of "low-volatility assets including bank deposits and government securities."

Which sounds fine, if you assume a stable and normal ongoing capitalist economy. But what happens if there's a major bank collapse. Or an Argentina style government debt default. To use Nicholas Taleb's theory, how much anti-fragility and redundancy is calculated into this non-FDIC regulated undertaking?

The next depression (2021-2025 or so) will be student loans and the gray wave of baby boomer home owners looking to simultaneously trade real property for hostel care. But now I now what the next great depression after that shall be. Libra shall be to the 2030s as Florida was to 1927-1928.
posted by LeRoienJaune at 12:33 AM on June 19 [7 favorites]

Or to phrase it another way, 'stablecoin' is the new Savings & Loan Association.

Also, Libra's "we keep the interest" model is basically demolishing traditional models of capital accumulation, which may be the point. We move away from an ownership based society, where deeds and resale provide a theoretical basis for upwards mobility, and to a purely rental society, where the wage slaves cannot even earn interest upon their savings accounts anymore. Diabolical. Malfean. My recognition of Zuckerburg's villainy has increased by an order of magnitude. Piketty would be apoplectic.
posted by LeRoienJaune at 12:42 AM on June 19 [29 favorites]

re: Microsoft of the 80s and 90s :P
-Tech and Antitrust
-Why Economics Must Go Digital
-What's in Your Wallet (and What Should the Law Do About It?)
-This Flip-Flop From the Antitrust Cops Isn't a Threat to Google*
-Four reasons why antitrust actions will likely fail to break up Big Tech
-As Justice Department prepares antitrust case, Facebook and Google face a billion-dollar question: What's your data worth?

*oh and speaking of one iranian-american to another!
Ex-Wall Street Lawyer Is Behind Plan to Have Post Office Compete With Banks - "Mehrsa Baradaran says financial crisis taught her that banking and government are inextricably linked."
Ms. Baradaran, 41 years old, left Iran with her family when she was a child after her mother was jailed for opposing the religious regime. Her father, a surgeon, won his wife’s freedom in part by operating on a high-ranking cleric. Soon after, Ms. Baradaran’s parents gave her and her two sisters three days to pack up and move.

She spent the next few years moving around the U.S., including California, Nevada and New York. She spent hours watching “Saved by the Bell,” a popular teen TV program, trying to learn how to fit into her new country. Having joined the Church of Jesus Christ of Latter-day Saints, she got her bachelor’s degree at Brigham Young University. She then went to law school at New York University on a scholarship, and started working at Davis Polk after graduating.

Ms. Baradaran quit the firm when she had her second child. During the baby’s naps and at night, with papers spread over the kitchen table, she wrote a research paper based on her work on bank charters. [IT'S TIME FOR POSTAL BANKING (pdf)] That led to a second career in academia.

In 2013, she published a paper on the history of postal banking, which existed in the U.S. from the early 20th century up until the 1960s. She proposed bringing it back as a solution to the problem of people who couldn’t afford checking accounts or qualify for credit cards, but needed better ways to store and borrow money than mattresses and payday lenders.
posted by kliuless at 12:56 AM on June 19 [6 favorites]

I remember being an exchange student in Germany back in the 80s (then West Germany), and being completely mystified about going to the post office to execute banking transactions. But that's what you did.

And they were super simple, too! Like, the equivalent of a modern online payment. You went and put three numbers on a piece of paper (your account number, their account number, the size of the transfer) and signed name, showed ID, and it was done. The entire length of the experience was merely waiting in line, which I don't remember ever being troublesome.

I'm a Yes Vote for Postal Banking, truly.

This Facebook move feels like supervillain territory to me especially given FB's proven and rumored track record over the past while. If this doesn't cause Congressional regulation to begin, I think nothing will, and then we all have a new doom to face, one I wasn't expecting really.

This dystopia is truly the gift that keeps on giving.
posted by hippybear at 1:04 AM on June 19 [15 favorites]

holy fucking shit this is a terrible fucking idea! if a government currency loses its value and wipes people out, there at least theoretically exists redress, assuming the government is a democracy. but what happens if you buy this libra nonsense (seriously, what's with the creepy neo-roman sounding Fallout New Vegas sci fi evil empire name??), but let's say all of a sudden investors (in the early to middle stages of its develpment) lose faith in the "central bank" administering it? even tho it is nominally pegged to normal securities, it could still crash right? and then what? who do you go complain to if your money is wiped out? governments would have to bail people out i assume?

or even worse, suppose it succeeds for a while and eventually Emperor Invictus Facelord III decides to unpeg it from national currencies, while billions of people are holding this asset? who's in charge then? who would be accountable for any monetary supply fuckups, and under what legal framework?
posted by wibari at 1:56 AM on June 19 [6 favorites]

Or to phrase it another way, 'stablecoin' is the new Savings & Loan Association.

Augean Stablecoin
posted by acb at 2:04 AM on June 19 [13 favorites]

“There's always more to it. This is what history consists of. It is the sum total of the things they aren't telling us.”
― Don DeLillo, Libra
posted by chavenet at 2:04 AM on June 19 [14 favorites]

I don't think I should have read this while watching A Scanner Darkly. Or maybe it is the perfect accompaniment... WTF brain?
posted by Nanukthedog at 2:06 AM on June 19

"They 'trust me'

Dumb fucks"
― Zuckerberg
posted by tenderly at 2:35 AM on June 19 [18 favorites]

seriously, what's with the creepy neo-roman sounding Fallout New Vegas sci fi evil empire name??

It's also Spanish for "pound", both weight and the GBP which could get confusing.

Mind you, with the way the British economy could be heading in the next few years, maybe the secret plan is just to replace "la libra esterlina" with "la libra facebookiana"..
posted by jontyjago at 2:40 AM on June 19 [1 favorite]

So, let’s say this gets off the ground, and other companies join in because, hey, why not strip even the paltry attempt to build savings that banking allows the not rich...

How long before companies involved stop accepting non-Libra payments? I mean, if, say, Apple, Google, and Amazon were to jump in (as seems to be Zucks hope), how long before you can’t spend dollars at Whole Foods?
posted by Ghidorah at 3:46 AM on June 19 [5 favorites]

Libra is the culmination of a year-long effort to devise an easy way for Facebook users to send and receive money through its messaging services.

In my naivety I wonder if this is like Paypal - very popular in the US and largely without purpose in the rest of the developed world. I can already easily send people money using their phone number (or another form of ID), with those people holding an account at any bank at all, instantly and for free. If I give you my phone number via messenger you can send me money, at no cost, and I can have it right now. Or I could set up another ID for just this purpose, to avoid giving you my phone number. It's that simple.* And it was developed by the banks.

*This, as far as I'm aware, tends be delineated on national boundaries at the moment. The last two countries I've lived in (Denmark and Australia) have systems that do this, but I can't send between them. The EU has a similar capabilities but at this stage is a little more cumbersome between countries and requires internet banking - however I did pay my rent in Denmark from an account in Ireland for free and online and there's no reason between country payments can't be made frictionless apart from regulation. We don't need facebook for this.

I mean, if, say, Apple, Google, and Amazon were to jump in (as seems to be Zucks hope), how long before you can’t spend dollars at Whole Foods?

In this country at least, I believe that would be rather illegal.
posted by deadwax at 3:52 AM on June 19 [2 favorites]

Oh hey, you want to be a bank. Neat. OK well here’s 10,000,000 pages of financial regulation including liquidity requirements and anti-money-laundering/know-your-customer laws. Just have your lawyers look that over and give the Fed a jingle when you’re done!
posted by overeducated_alligator at 4:20 AM on June 19 [9 favorites]

In this country at least, I believe that would be rather illegal.

The US dollar is legal for all debts. A merchant can dictate whatever currency they like for a purchase. That's why people have needed to petition their city governments when cashless stores like AmazonGo threaten to marginalize poor residents.
posted by explosion at 4:32 AM on June 19 [11 favorites]

Number of times I have thought "I wish I could send money to my friends over Messenger.": exactly zero.
posted by simra at 4:57 AM on June 19 [15 favorites]

It's as if someone asked the question "what company do you trust less than PayPal to manage financial transactions?"

"After verifying their identities with government documents, people will use their bank accounts and debit cards to purchase Libra tokens."

This is one of the reasons I rejected PayPal for anything other than simple purchases years ago. I refuse to provide PayPal with my banking information or any government ID, and there's no way in hell I'm giving Facebook access to this. I don't even have a Facebook* account anymore, and have been very happy with that decision, I have no interest in providing them with access to that level of personal information - even through an intermediary.

In the past two years or so I've started to feel a little like a Luddite crank because I keep having to tell people "no, I'm not on Facebook," "no, I don't and won't use Venmo to send you money - how about good, old fashioned, cash?" "oh, you've crippled your mobile site and require an app? Well, fuck you I'll stop using your site then" and so forth.

Given Facebook's size, as shitty as the company is and as sketchy as it is for anybody to trust them with their email address much less their banking info, this is almost sure to be a thing. Fuck.

* I have an Instagram account for various reasons, which is roughly 92% cat pictures, 4% pictures of myself and my partner shared for our friend circle, 3% concert photos, and 1% miscellaneous.
posted by jzb at 5:00 AM on June 19 [10 favorites]

The US dollar is legal for all debts.

Sure, but most of the world is not in the US. That's kind of what I'm getting at, I could see this taking off there because they/you seem to have a relatively unregulated and archaic personal banking system but facebook will have their work cut out elsewhere.
posted by deadwax at 5:08 AM on June 19 [1 favorite]

How long before companies involved stop accepting non-Libra payments? I mean, if, say, Apple, Google, and Amazon were to jump in (as seems to be Zucks hope), how long before you can’t spend dollars at Whole Foods?

When I start thinking "someone establishes a currency with a very wide reach and real material consequences for non-participants", I start thinking that they're establishing a state, or having a good bash at it. There are all kinds of practical reasons for Facebook not to do this, but a larger, strategic reason is simply that if Facebook has a really powerful currency in addition to its other stuff, it will be a contender for real, serious, government-style rule over these United States - the government's functions will attrite away, with Facebook as an overlapping "state" that does a lot of what the government used to do. In poorer, more corrupt areas, Facebook will be the state. The totally unelectable state, with Zuckerberg and his heirs as god-kings.

One hates to reference Snowcrash because it's such a racist, misogynist book, but it is premised on "big tech will make things as bad as possible for ordinary people" and it's been relatively accurate on that so far.
posted by Frowner at 5:24 AM on June 19 [14 favorites]

Openly stating the intent is "to shape a regulatory environment" rather than comply with the existing regulatory environment is a veiled assertion that Facebook is more powerful than the state, and that regulators should have to buckle to its will.
It's also unclear why the system technically needs a blockchain at all (though there is clearly PR and regulatory value in presenting the notion that because it's a blockchain system, it's decentralised and thus poses no antitrust issues).

Remember this when Facebook executives deny having know about any problematic issues. Libra is purposefully designed to circumvent financial law and policies.
posted by Foci for Analysis at 5:47 AM on June 19 [6 favorites]

Libra? They should've called it Cancer.
posted by get off of my cloud at 5:54 AM on June 19 [28 favorites]

seriously, what's with the creepy neo-roman sounding Fallout New Vegas sci fi evil empire name?

I think it's because it vaguely reminds people of liberty, and hence will appeal to the libertarian types who really go for cryptocurrency.

Honestly though, how is this different from Canadian Tire money?
posted by heatherlogan at 6:02 AM on June 19 [2 favorites]

Ah man I was hoping to make it through life never having to understand digital currency, bitcoin, etc.
posted by sallybrown at 6:03 AM on June 19 [5 favorites]

And zodiacwise, this feels way more Capricorn than Libra!
posted by sallybrown at 6:11 AM on June 19

I thought ‘Libra’ must somehow be short for ‘Liber Facies’ or some such.
posted by Segundus at 6:14 AM on June 19 [1 favorite]

When considering how Libra will be deployed and used, Facebook is an advertising company that has monetized social media technology that supports autocratic governments around the world, like the Philippines, Turkey, and the United States, and other far-right movements that Russia sponsors across the world.

Despite whatever false promises of good behavior, it should be taken as a given that Facebook will integrate Libra into its business model in such a way that: 1. Facebook will target ads at you more effectively, based on your purchase history. 2. Facebook will actively help autocratic governments track your purchases more effectively, for their own purposes.
posted by They sucked his brains out! at 6:21 AM on June 19 [7 favorites]

Bitcoin for slow learners.
posted by Damienmce at 6:34 AM on June 19 [2 favorites]

seriously, what's with the creepy neo-roman sounding Fallout New Vegas sci fi evil empire name??

The most entertaining theory I've read is that it's a jab at the Winklevoss twins' currency exchange Gemini.
posted by Foci for Analysis at 6:40 AM on June 19 [3 favorites]

"Libra is the only zodiac constellation in the sky represented by an inanimate object. The other eleven signs are represented either as an animal or mythological characters throughout history."
posted by clavdivs at 7:24 AM on June 19 long before you can’t spend dollars at Whole Foods?

Who knew that the Mark of the Beast was Facebook all along?

(*raises hand*)
posted by suetanvil at 7:35 AM on June 19 [8 favorites]

how long before you can’t spend dollars at Whole Foods?

If the quality of the produce keeps falling the way it has since the Amazon acquisition, I won’t be spending anything there *grumble grumble*
posted by sallybrown at 7:55 AM on June 19

and hence will appeal to the libertarian types who really go for cryptocurrency.

Oh no, the cryptocurrency enthusiasts hate it because it's explicitly not an "investment vehicle" (read: pyramid scheme they can get in on at the start).

The bitcoin enthusiasts will tell you:
1. This isn't a cryptocurrency
2. It will fail, which will be good for bitcoin
3. If it doesn't fail, that will also be good for bitcoin

(Part of being a bitcoin ethusiast is never ever publicly admitting that something might be bad for bitcoin)
posted by Pyry at 7:58 AM on June 19 [3 favorites]

Honestly though, how is this different from Canadian Tire money?

You can't use Libra as a bookmark.
posted by suetanvil at 8:03 AM on June 19 [6 favorites]

Ah, the next step in extraction and isolation of all wealth: Only We, Residents of Facebook Planetary Industries, May Earn Interest.

Of course, We'll still let you spend the script that we own and fully control! (Maybe later if you're good we'll let you generate it as well. Maybe.)
posted by pilot pirx at 8:20 AM on June 19

Bond: "You'll never steal the world's money supply, Zuckerfinger!"

Zuck: "Steal? Mr. Bond, they already gave it to me."
posted by FakeFreyja at 8:54 AM on June 19 [3 favorites]

Oh no, the cryptocurrency enthusiasts hate it because it's explicitly not an "investment vehicle" (read: pyramid scheme they can get in on at the start).

They've got it covered:
"Once that is covered, part of the remaining returns will go to pay dividends to early investors in the Libra Investment Token for their initial contributions. "

Where "early investor" will likely be vaguely-enough defined to maybe include you! If you hurry!
posted by ctmf at 9:13 AM on June 19 [1 favorite]

Look I don't know why everyone is so concerned with Facebook being able to pull a credit report on you as part of the setup of your Libra account... its explained here in plain English on the 13th page of the Japanese translation of their EULA...
posted by Nanukthedog at 9:15 AM on June 19 [2 favorites]

Furthermore, "returns for early investors will only materialize if the network is successful"

So hurry up and make it "successful"! Stop accepting anything else and lock out people with dollars - you want to get those "returns", don't you?

Jesus, you think bitcoin enthusiasts are zealous, just wait.
posted by ctmf at 9:16 AM on June 19 [2 favorites]

I really hate this for various reasons, but as I have zero control over it I figure I might as well look on the bright side -- maybe it'll help bring Facebook down. In what way, I don't know, but crypto seems like a disaster waiting to happen anyway so I'm just going to hope the disaster is indeed coming and Facebook has just unwittingly plopped itself in the middle of it.

Then again I did think the same thing about November 2016 being the first step in destroying the GOP, so...just gonna hope I'm witnessing some very, very slow trainwrecks.
posted by phatkitten at 11:56 AM on June 19 [1 favorite]

Facebook: it's a messaging app, AND a bank, AND a floor wax, AND a dessert topping!
posted by dnash at 12:14 PM on June 19 [2 favorites]

Facebook Plans Global Financial System Based on Cryptocurrency

The payment system would also help Facebook and other American companies compete for financial transactions in developing countries, where WeChat, developed by the Chinese company Tencent, already offers a highly profitable payments system built into its popular messaging product.

They need something to "choose us or them" the Africans and Asians with... Google got theirs. Next up, phones... refurbished iPhones already flooding into African markets cheaply.

To acquire Libra (a reference to the Roman measurement for a pound, once used to mint coins) through a new Facebook subsidiary, called Calibra, users are likely to have to show government identification like a driver’s license, which would make it unappealing for black market transactions like buying drugs.

I note the NYT hasn't ever visited an informal marketplace or a remoter corner of the world.

“It will take years,” Mr. Weil said. “But the goal is that this is a new currency that people can trust. And it has just as many use cases as money has.”

Y'all wouldn't know trust if it came and bit you in your unhashed password folders.
posted by hugbucket at 12:26 PM on June 19 [2 favorites]

Facebook/Google/Microsoft/etc. know antitrust though...
posted by nikoniko at 1:37 PM on June 19

Honestly though, how is this different from Canadian Tire money?

Closer to air miles in one sense: You are not limited to redeeming from the issuing organization.

I understand why people are talking about the worst possible outcome of this effort, just look at the past few years. However, basically everything can be shit if it is operated incompetently or with a hidden agenda or if the wrong people are put in charge.

It might be interesting to discuss the entire range of possibilities rather than confining ourselves to the most negative outcomes. If it were run competently and in a manner we would consider acceptable, if not ideal, what would that look like?
posted by wierdo at 1:50 PM on June 19 [1 favorite]

More from Matt Levine (today's follow up to the primary link):
Elsewhere in Libra, here is a Medium post titled “HyperDao to Hold Crowdfunding Campaign to Become Libra Validator Node,” and oh man is that a grim series of words. The idea is roughly that Libra will be run by a consortium of companies who invest at least $10 million and help administer the system, and $10 million isn’t that much money. It’s not the case that just anyone who puts in $10 million can get a seat at the table, but neither is it quite the case that it’s an invitation-only process where seats are given out at Mark Zuckerberg’s discretion. Libra wants to make claims to some of the openness and decentralization of cryptocurrency, so it doesn’t want membership to be arbitrary. So it published a list of criteria for membership in the association, and while the list is fuzzy and caveated enough to give them some wiggle room, there is always the risk of some weirdo showing up and saying “hey let me in I meet all the criteria” and embarrassing the whole project. If you can raise $10 million in a crowdfunding campaign, maybe that weirdo can be you.
Now I have this idea to take MetaFilter to the next level...
posted by RedOrGreen at 1:57 PM on June 19 [7 favorites]

However, basically everything can be shit if it is operated incompetently or with a hidden agenda or if the wrong people are put in charge.
If it were run competently and in a manner we would consider acceptable, if not ideal, what would that look like?

So not "the ethics of Uber, the censorship resistance of Paypal, and the centralization of Visa, all tied together under the proven privacy of Facebook", in other words?

Out of crooked timber, nothing straight is hewn, to paraphrase. Or, in other words, the assumptions and beliefs and worldviews which went into this make it vanishingly unlikely that what the creators/proponents would ever see as acceptable would align with my own.

Honestly, at this point I'd more rather look to Sarah Jamie Lewis, of OpenPrivacy (or someone of their mileau). From what I've seen, they're well-versed in both cryptography and cryptocurrency; and their goals in this space are more coherent than my own.
I'm probably better-versed than average in this space, for not being actively in it, and I know enough to know I don't know enough to offer useful tangible opinions. This is a space where lay opinions can be so disconnected as to be less-than-useful, so I defer to people with ethical goals I can respect who have the necessary expertise.
posted by CrystalDave at 2:00 PM on June 19 [6 favorites]

Facebook is pitching Libra as a solution for the world’s global “unbanked” — the estimated 1.7 billion around the world who don’t have access to a bank account. Calibra products will let them “send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost.” Those who can’t access a bank account will be able to save, pay bills, and more.

But companies already do this without blockchain.

This is the digital currency equivalent of this. And I'm speaking from over a decade of researching the unbanked market from the perspective of operating environment and user behaviour to inform business models and payment plans.
posted by hugbucket at 2:10 PM on June 19

Is it actually blockchain? My impression from reading some press about it is that it's more like a distributed database. It's permissioned and doesn't use mining at all. It's just a database where the Libra consortium keeps track of how many libras everyone owns.
posted by chrchr at 3:25 PM on June 19
posted by hugbucket at 4:10 PM on June 19 [1 favorite]

Ah, thank you for the link to the white paper. I am pleased to see that, in fidelity to crypto white paper tradition, it is full of impenetrable nonsense.

So, the white paper says it is a blockchain. It says so over and over again. Meanwhile, Financial Times, in the article linked above the fold, says it is "blockchain without block or chain."

Is it a blockchain? Depends what you think a blockchain is. The white paper makes it clear that it's "permissioned". I.e., changes are made by parties authorized by a central authority. It's not like Bitcoin, where there is no central authority and transactions can be added by anyone.
posted by chrchr at 4:32 PM on June 19 [1 favorite]

It's not like Bitcoin, where there is no central authority

It would be expensive, but Bitcoin's ledger or blockchain could be hacked by a non-theoretical 51% attack.

Any cryptoscrip that relies on everyone agreeing on the ledger in effect centralizes authority in whoever has control over it. Libra included: everyone in the Libra consortium has agreed on who gets that authority over Libra scrip.

If you trade real currency in for cryptoscrip (bitcoin, libra, whatever), you're putting your trust in whoever runs the ledger that your digital equivalent of baseball cards won't get shredded.
posted by They sucked his brains out! at 5:44 PM on June 19 [2 favorites]

Libra - I don't know how this is going to go down in Australia. The Libra you find rattling around at the bottom of your purse.
posted by unliteral at 8:09 PM on June 19

It might be interesting to discuss the entire range of possibilities rather than confining ourselves to the most negative outcomes. If it were run competently and in a manner we would consider acceptable, if not ideal, what would that look like?

Well, ignoring the fact that ideally the looms would be smashed....
For this to be functional this would have to be directly overseen by the CFPB. Both Elizabeth Warren and Bernie Sanders would back Libra as an appropriate governed currency... Which this plan as rolled out doesn't sound like they would. For hyperbole's sake, if this is even on their radar, a strong indication on how well received this should be is whether or not it protects people from predatory behavior - which as of yet - I see at least two revenue streams for Facebook. I do not see any customer protections or advantages. As such I see no impetus to participate in yet another 'standard' for shadow currency.
posted by Nanukthedog at 5:22 AM on June 20

Is it a blockchain?

"...combined with the lack of blocks, and the general enterprise nature of the project means it is at best a DLT not a blockchain or a cryptocurrency."

If it were run competently and in a manner we would consider acceptable, if not ideal, what would that look like?

Don't let Facebook capture the monetary system - "The road to Libra is paved with good intentions."
Strip away the buzzwords, and you notice two facts. What Facebook has actually proposed is much simpler than it claims. It simply offers a new technology to facilitate payments. At the same time, it hints at a future destination that is much more ambitious — mentioning credit, access to capital and smart contracts.

Start with how modest the actual product offering really is. The fundamental thing to note is that Libra as outlined is not a currency, crypto or otherwise. It is an accounting unit, defined as a weighted basket of real (but so far unspecified) currencies. The new technology Facebook and its partners are promising will just allow people to make payments denominated in units of this basket. The payment and transfer functionality itself is no different from what banks, credit card companies or PayPal do today; and the technology will not have the anonymity or decentralisation that attract some to actual cryptocurrencies such as bitcoin.

This does not mean there is no point to Libra. From a business point of view, the company would obviously like to butt into the payments industry; though there is no reason for society at large to care about Facebook’s commercial fortunes. On the contrary, Facebook’s record so far puts the burden of proof on the company to show it will not abuse the dominant position it could clearly achieve in payments.

Here we get to the crux of the matter from a social point of view. The payments and transfers industry does not function well enough at the moment. In poor countries, payment systems have until recently been horribly inefficient, though as Kenya and India show, it is possible to leapfrog to the frontier of mobile electronic payment technology. Cross-country payments remain exorbitantly costly and slow for retail users, even in the rich world. And there is still no widely used satisfactory digital wallet system that could make online micropayments safe and easy.

These are things current national and global payment systems, dominated by banks and credit card companies, have failed — or not wanted — to solve. One has to doubt Facebook’s ability to help, however, given the lampooning it has deservedly received for promises such as this: “In time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass”.

If Facebook’s Libra designers do not realise this is already do-able in most well-governed countries, one has to wonder what it can contribute; it they do, it starts to look more and more like a simple land grab.

Facebook has a gargantuan advantage on other payments providers. With more than 2bn users, there will be many, many potential customers who already access Facebook but do not currently have access to conventional payments or money transfers. Simply because Facebook will make it easier for them to adopt Libra than any rival service, many will. But that is a classic case of market power abuse; using dominance in one market to achieve dominance in another.

In countries with weak currencies, the ubiquity of Facebook could even tempt people to “dollarise” into Libras, ceasing to use the national currency for accounting and invoicing purposes. That would hugely complicate monetary policy and stability.

And size is far from the only problem. Even if what Facebook is proposing is not a currency but merely a payments and transfer network, the company displays a yawning naïveté about its own plans. It wants to bank the unbanked, but does not acknowledge that this involves deposit-taking, a highly regulated activity that is hard to do across national borders even inside the EU.

“Moving money around globally should be as easy and cost-effective as” sending a text message, says Facebook, “no matter where you live” (my emphasis). Does it not know governments have both legitimate reasons and the authority to limit or monitor the flow of money in and out of their economies?

Most worrying of all, something that starts out as a mere accounting unit or deposit token could quickly turn into a real currency. Normal money is created when a licensed bank issues a loan, in which case the money supply is no longer backed by valuable reserves unless regulators force the bank to do so. Facebook says it wants credit to be issued in Libra, but gives no sign of wanting to be regulated as a bank. Even if it were, how do you stop other entities from issuing loans in Libra if it has become the dominant unit of account?

Implicit in Facebook’s plans, therefore, is not just a capture of the banking industry, but a privatisation of monetary policy — a democratically abhorrent prospect in principle, and a power that there is absolutely no reason to think Facebook would discharge responsibly in practice.

The road to hell is paved with good intentions, and so it may be here. The best way to block that road off is for regulators and central banks to immediately address the real problems Facebook has identified. Central bank electronic currencies would quite easily do so. Governments have been remiss by dragging their feet on this — in part because of deference to the established banking industry; but they no longer have any excuse to do so. Between public service and Facebook service, the choice should not be hard.
like so!
-Supporting Fast Payments for All – and Economic Freedom

but maybe more like :P posted by kliuless at 6:11 PM on June 20 [5 favorites]

but a privatisation of monetary policy — a democratically abhorrent prospect in principle ... Governments have been remiss

Remiss? To me that implies some amount of simple neglect or unwittingness. This is a government that wants to privatize everything, with a healthy cut skimmed off for corrupt politicians as a feature, not a bug.
posted by ctmf at 6:56 PM on June 20

Facebook usage falling after privacy scandals, data suggests

The decline coincided with a series of data, privacy and hate speech scandals. In September the company discovered a breach affecting 50m accounts, in November it admitted that an executive hired a PR firm to attack the philanthropist George Soros, and it has been repeatedly criticised for allowing its platform to be used to fuel ethnic cleansing in Myanmar.
posted by hugbucket at 8:46 AM on June 21

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