I think we've reached an inflection point where working with Facebook presents too much of a risk. It feels like all of the issues around privacy, data security, content moderation, leadership and ultimately Democracy have boiled over. It makes sense that established financial institutions would want to distance themselves from that.
Not just threats from Facebook doing something wrong and getting dragged into it with them.
Also ... Facebook has proven it is willing to bully and lie to people doing business WITH Facebook.
If I'm Visa or Mastercard... do I want to get into this space and at the same time be at the mercy of Facebook?
If there is some other network / payment system would Facebook be ok with me getting into that too?
Generally if you read enough stories it is clear there's no consideration about "Hey should we do this?" at Facebook. It seems more than at most companies there are simply no rules.
Libra feels to me as a step towards big companies trying to break free from governments. If they control the money supply the long term effect would most likely be that they have the control of everything.
I think Libra is very frightening and I hope it fails. I have nothing against decentralized systems, but centralized ones that is controlled by a few companies is very scary.
I cannot read the article, since it's locked but you can get the gist of it and if companies are leaving the coalition it's probably for the best.
I would be glad to take an opportunity to insult facebook again, but actually I don't like this sentiment at all. It just happens so that facebook is among the least trustworthy companies at the time, but I wouldn't be more at ease if they had a good public image and its head would be a baby-kissing politician making donations left and right. Image is just that, an image, and if somebody manages to seem "good" for the public, it only makes them more dangerous and is more of the reason to be worried about them.
Perhaps the only good thing about facebook is the public distrust of it right now. I hated it much worse when people unironically called Google "the good company".
I wouldn't say so. Doesn't matter who, if there is one controlling entity that acts as a business/corporation, it doesn't matter which one. They are all corruptible.
Is that so much different from FED? In theory there is some dependency on US President, but that just a theory, practice shows that private banks owners are much more influential.
Not that I like or trust Facebook or its owner, but maybe Libra will introduce some competition. For instance Libra might not suffer from inflation (which is just a tax on people savings), this could be much better way to store savings than fiat currencies.
The Fed has very specific mandates, has several branches, and releases tons of really quality monetary information online.
There’s no stock they’re beholden too, or billionaire boy genius running the entire operation, and they certainly don’t hold vast troves of information on billions of people.
It’s a positive they’re divorced from politics, and they’ve done a pretty decent job keeping the USD a trusted currency for use nationally and around the globe with a track record approaching a hundred years.
Yes, the FED is a government organization. It's a government organization that creates money out of nothing and issues 6% dividends to its shareholders:
You forgot the part about being able to conjure money out of thin air, loaning the conjured money and then collecting interest on the loaned money.
Decentralized, open ledgers are the future and these folks are terrified their Golden Goose's days are numbered. And of course there's the implications the current system, and the push to get rid of cash, has on personal freedoms.
Libra is supposed to be backed by a basket of fiat currencies, all of which are subject to inflation. How could Libra possibly be exempt from inflation?
> Libra is supposed to be backed by a basket of fiat currencies, all of which are subject to inflation. How could Libra possibly be exempt from inflation?
By the backer continuously increasing the backing ratio at not less than the average rate of inflation of the backing currencies.
I mean that's technically plausible, but why would any commercial entity do this? Isn't it the equivalent of throwing money into a fire? Has Facebook made any indication they're going to do this?
How is offering high-interest savings the equivalent of throwing money into a fire? A bank offers higher interest than competitors to attract more deposits, which it lends out (with leverage) at a higher interest rate than what it pays to depositors.
yes, it is a step in the wrong direction. multinationals already have very little restrictions already as governments can only operate inside their jurisdiction. it's a bit like old tv shows where the bad guys get away by racing the cops across county line
The banks already broke free of the government. Facebook just wants to get in on that action. What other business gets to make money out of nothing through fractional reserve banking and gets trillion dollar bailouts at taxpayer expense when it regularly overextends itself with all that newly created money?
Lets make sure we're talking facts. The US Government made a profit off of the 2008 bailout[1]. I'm not an economist so I can't say much about the program but I'm lead to believe that had we not bailed out many banks the cost to tax payers would have been much, much higher.
Yes, their gamble of buying extremely risky assets paid off. Similar to how you can "bet all on red" and manage to win.
But that doesn't make it a good long-term plan. The incentives for banks are still unchanged: "heads I win, tails I get bailed-out". And of course even if they run the economy into the ground they still get their bonuses.
If the government's strategy was so risky, then why did it make money? The government wasn't gambling that there wouldn't be a crisis -- they intervened right in the middle of the crisis.
(I should have said became riskier, though. Of course the assets had some risk.)
They made money because the FED started buying the types of securities that they owned with electronically printed money. If this was China the whole thing wouldn't have even happened. The government would have just printed the money, recapitalized the banks and sold off their debts at a discount and punished (severely) anybody who violated banking regulation.
The whole fiction that the government has to lend money into existence from the FED and the FED can buy assets off banks from money created out of nothing is this complicated convoluted game is intended to make it hard to figure out what's going on and to make it look like actual productive economic activity is occurring here.
Banks aren't magic. If Facebook wanted to, they could start a bank. Anybody can start a bank. There are regulatory costs, but any business of reasonable size could comply with those costs.
And banks "make money out of nothing" because bank deposits substitute for hard currency. If a cryptocurrency became standard, then someone could create an institution that accepted cryptocurrency deposits, and it would function exactly like a bank.
Can you elaborate? How is it the banks are “free of the government” and Facebook is somehow beholden to the regulators? My experience leads me to the exact opposite conclusion. I don’t think Zuck is losing any sleep at night worrying about the FTC and the pennies they might decide to fine FB.
There are several things going on here -- Today, banking controls the monetary supply through creation of new dollars to be loaned. Being fully backed has less meaning in a continuously inflating fiat currency world.
Being backed by gold, by computation, by proof-of-stake -- these are all much stronger measures than JP Morgan Chase's core banking database.
Libra is control over monetary flows. Offend zuck, watch your public key added to the block list. Watch the balance drained from your account as the producers use 'admin' transaction powers to remove funds. Maybe the ledger maintainers simply block your transactions from being committed.
And then we have currency controls in places other than the US, like India and China. Suddenly 'stablecoin's are more useful than bank account backed dollar holdings (outside the US). This is a power grab for the future currency of developing nations. The endgame is control of planet Earth's M1 currency supply.
On that note though, I agree: I don't like it. I hate it in fact.
No checks and balances like you get with government-backed currency.
It brings to mind the Tom Clancy book, one of the Net Force ones I think with the online VR company that declared itself as its own nation state... didn't end well
To counter-balance what I read here: I left Facebook, but I find that Libra is a positive thing. It gave me a positive image of Facebook. I thought "Zuckerberg can actually have a positive impact when he decides to".
Personally, I would trust Facebook more than I trust the government, and this is not a joke. As far as Libra, from a technical perspective there is a decentralized blockchain (with a credible plan to further decentralize it in the future), and a well-thought out stability mechanism. From a corporate structuring perspective, there is the Libra Foundation. I feel people have really politicized this topic, and most of the anti-Libra sentiment is fueled by partisan politics and fake news (ie "Facebook will control the worldwide money supply!!!").
Those saying that the government is good while corporations are evil are very naive. Governments are more corrupt and dissimulative than any corporation will ever be. They are a bunch of arrogant people not being personally accountable for their lies and errors. Zuck has his net worth tied to FB. Corporations are no angel, but they are accountable, and as such they are more trustworthy. Moreover, when they screw up, they do not pass a law to force us to clean up their mess.
Governments are going crazy these days, citizens need to take back control of the their money, we need to get back our freedom to conduct transactions freely.
Facebook is in a unique position to pull that one off. It's unfortunate they totally screwed on the communication front, but hopefully they can fix that. Personally I am looking forward to the launch.
> Zuck has his net worth tied to FB. Corporations are no angel, but they are accountable, and as such they are more trustworthy.
There is no scenario where Zuckerberg's net worth is reduced to an amount that one person is capable of spending in a lifetime. In terms of acting as an accountability mechanism, what is the difference between $100M and $65B?
> Moreover, when they screw up, they do not pass a law to force us to clean up their mess.
What was the Emergency Economic Stabilization Act of 2008 about then? And did the CEOs of any of the banks that were bailed out by TARP end up suffering any material deprivation as a result?
Don't underestimate what one person can spend. If your reference point is a billionaire lifestyle with a giant yacht, half a dozen estates on multiple continents with staff to manage them, and a private jet capable of crossing oceans to ferry you between them, then with $65B all that is a drop in the bucket and you've got plenty left to spend on whatever political or philanthropic causes you wish, and with $100M you actually have to economize.
> In terms of acting as an accountability mechanism, what is the difference between $100M and $65B?
you or I would be overjoyed to be left with a mere $100M. if zucc were that type of person, he would have sold when fb was worth $100M. if there were a real risk that his net worth could drop that much, I'd bet he would be willing to do an awful lot to prevent it.
>There is no scenario where Zuckerberg's net worth is reduced to an amount that one person is capable of spending in a lifetime. In terms of acting as an accountability mechanism, what is the difference between $100M and $65B?
This is the problem of your own making when you want to decide for others the amount of money you can steal/take from them for whatever reason (don't really need that much, must be punished an arbitrary number because you think it's fair etc...). Whether it is this topic or another, the conclusion is that people will never be satisfied as long as the person is not homeless. Even if he is reduced to 1 million of net worth, you will say: "but he is still a millionaire while people from the millions of lives he has destroyed earn minimum wages"
As someone else said in this thread, with 50 billion you can invest (angel investment etc..) and live very differently than with 100 million. Most people cannot understand that but they do not need to, and shouldn't feel entitled to understand because this is not their life. The most important thing is that market dynamics truly keep a private entrepreneur/corporation accountable.
I am not saying regulations is never needed, I am strictly strictly speaking about the topic of keeping people in check in the context of this discussion. And net worth is a shortcut to say many other things: trust, reputation, ability to raise money for ventures etc... what I'm saying is that corporations face this type of pressure so there is a line they can't cross (unless the government granted them a monopoly, like in telecoms, but then this is the government's fault).
> What was the Emergency Economic Stabilization Act of 2008 about then? And did the CEOs of any of the banks that were bailed out by TARP end up suffering any material deprivation as a result?
I do not disagree but these systemic banks are largely extensions of the government, 99.99% of corporations are not banks.
And Facebook clearly isn't a bank. If Facebook collapsed, half of the world would cheer and bailing them out with - supposedly - taxpayers money would be political suicide. Even with Libra Facebook wouldn't be bailed out because people wouldn't lose their savings since Facebook is just a wallet.
With this regard, FB would even be safer than banks, it's like deposits are automatically insured, yet there is no limit to the amount being insured (no 100k cap). There more I think about it, the more I feel Facebook really screwed in terms of communication, they were really naive and there were much better ways to present this project.
How about "Governments are bad and Facebook is bad, let's find a solution that doesn't involve giving power to both". Facebook is not your fellow citizen.
This is a very long and opinionated propaganda piece that offers absolutely no good reason for your point of view. Congratulations on your ability to hide that you don't have good foundations for your opinions, but please don't try to use that to sway other people to your corporatist point of view. I'm sure you can still see what the problem with that sort of behaviour is.
And when Facebook decides you're too liberal/libertarian or otherwise politically incorrect and decides to boot you from the network? You can no longer access your Libre funds? The US Govt at least is restricted from doing this without courts.
What's happened to some in terms of being able to access funding, while mostly extremists is scary enough in terms of slippery slopes without volunteering all the access in question.
That's true, but you appear to imply that it's fundamentally bad.
I disagree with that strongly and it's a huge way the market functions - a new company comes in and reduces costs for consumers, while still making a profit. Old company loses (or changes), while the new company and consumers win. It's how most discount stores work, airlines. Heck we're seeing it lately in equity trading with trade fees dropping to 0. Sure, robinhood did it first to win market share and make more money, but it's still been good for consumers. It's how walmart and then amazon became so dominant (though they also reduced services).
This is in no way an endorsement of anything facebook is doing, btw, Libra scares the bejeesus out of me, but that doesn't mean the incumbents aren't robbing people blind.
That's true, but you appear to imply that it's fundamentally bad.
Not necessarily and a lot has been done to smooth the path - and lower the fees - for financial transactions. Mobile money in Africa (where you once, not that long ago, had to entrust an envelope with cash to a bus driver, hoping that it arrives at the intended destination) is a good example.
But I think that "helping the underbanked" is a smokescreen anyway.
Just like "Bringing internet to the poor", via internet.org, is a smokescreen for the underhanded tactic of smuggling zero routing into the very fabric of internet usage in poor countries and making Facebook (and their approved partners) == Internet.
There's never anything altruistic in whatever Facebook does. It's about accumulation of ever more power, money and data. And you just need to look at their short history for the proof in the pudding.
Yep, consumers win. In fact, Charles Schwab just dropped there trading fees yesterday and equity trading stocks completely tanked. Shares of Schwab fell 9.7%, TD Ameritrade plummeted 25.8%, and E-Trade shares cratered 16.4% due to it [0].
Yes, of course, it's good to take less of people's money.
I think the center of their critique was not that the current incumbents are good, but that the framing implied that this new system would be better in some fundamental way. That this was a system of a different order than the current one.
If you improve a situation, but you benefit from it, does that make it bad? There was a great article that came out years ago called the "coopenhagen interpretation of ethics" that describes this effect pretty well.
If Libra succeeds as a payments network and platform, then it’s possible that the only fee will be from fluctuations in exchange rates; this is in effect a zero remittance fee.
Libra itself can still make money by investing the float (money that doesn’t leave the system).
I have a feeling that they will end just launching something in developing countries with weak regulation and will be done with it. It's a way to get more data from people. It's becoming pretty clear that this will not fly in the US or EU.
Although I don't know all the aspects around the Libra protocol, I'm fairly sure that FB is only making the Calibra App. The (stablecoin) Libra should be able to be accessed through other wallets overtime (given it is a cryptocurrency).
Since it is a cryptocurrency, the whole point is to allow people to send money w/o censorship.
It's not a cryptocurrency though. It even says in their white paper that it's a permissioned system. Calling it a cryptocurrency is just marketing to ride on the hype train.
Obviously the point is to ride on the hype train by redefining the original meaning. It's similar to a "democracy with a dictator", it just doesn't make sense.
Yes, and Facebook hasn't lied to us before? They don't have an actual plan on how to accomplish this transition, which necessarily includes completely redefining the whole system Libra is based on.
It is not a good idea to take what Facebook says at face value. It is worth examining anything they say in an extra critical and sceptical way because of their (at this point) well-documented willingness to lie and bend the truth.
So in terms of large-ish economies/populations, maybe they have a chance in parts of Africa (I know some people working at chinese-owned companies hard at work on this market) and maybe parts of South America and SEA?
Maybe the will make it work in countries that are either corrupt or incompetently managed. I don't see why a reasonably competent or reasonably non-corrupt government would allow this.
They may find developing countries already have good alternatives. I’ve not personally used M-Pesa, for example, but that was a thing before bitcoin ever appeared.
They should probably kick it off this way from the beginning; stay quiet, do it in some 3rd world country, expand slowly from there to the least resistant countries; at some point it would fail or would be too big to stop by big countries
Because everything he does feels like it has another two-level deep plan behind it.
Kind of like:
Level 1 (Zuck's thinking):
I'll tell them "We're building Thing X to improve Y in the world!" and most will buy it like the gullible sheep they are.
Level 2:
Some will not buy it and think we're really building Thing X to track their online activities (just usual tracking for ads and stuff)
Level 3:
Except what we're really trying to do is collect data so we can match their ThingX profile to their supposedly-private medical records and DNA footprint. But no one will figure it out until it's too late - and we'll be a few billions of dollars richer by then (evil laughter in Zuck's mind).
There may even be a Level 4 for all we know. I'm not sure I'd underestimate Zuck on this sort of thing. It always seems to be worse than we thought it was.
Best case scenario is that companies like Facebook start looking at data security and privacy as assets that factor heavily into their competitiveness in their industry. If they aren't as secure or privacy-forward as their competitors, it will lose them business, and not just on the user side. Apple seems to have realized this earlier than most, hence their latest marketing campaign.
Losing huge business partners due to privacy concerns over the business model will hopefully be a big wake-up call.
> companies like Facebook start looking at data security and privacy as assets that factor heavily into their competitiveness in their industry.
Companies like Facebook have a business model problem with this, though. Their business model absolutely depends on violating people's privacy. It's hard to see how they can factor privacy into things without entirely changing how they make money.
They gather information about me and my use of my machines even though I don't use their services and haven't given consent. That's violating my privacy. In fact, I consider it straight-up spying (I define "spying" as gathering information about me without my informed consent).
I wonder though.. was just musing this morning about when Facebook might have its AOL- or MySpace- trajectory. Of course, they're a far healthier economic entity, a better managed and more internationally entrenched platform... but, as someone without a Facebook account anymore, I certainly hold a glimmer of hope that all of these platforms can dig their own graves, if they're not careful.
I think a key difference between AOL and Facebook is that Facebook actually respects the threat of new competitors. if they feel sufficiently threatened, they will just buy the company. so Facebook the product could certainly die, but the company probably has enough money at this point to keep buying competitors in its space and profiting from their products.
This would go against the culture of the company.
And going against the culture is SUCH a difficult thing that I would almost say it's impossible.
The culture of Facebook right now is a dumpster fire of making money out of ads at any cost and disregard anything else. The majority of their employees are in their mid twenties and are mainly and almost only motivated by money.
Even the VPs are cynical caricatures of an ultra capitalist world with no concern for anything ethical. Good luck on changing the culture to start worrying about security. It would require at least a complete overhaul of all the execs.
I agree completely. The only way they embrace change is when it impacts their bottom line. Visa and Mastercard are citing privacy and security as a reason they are not going to work with Facebook. That kind of thing will lose them money in the long run, and the only hope is that they realize the competitive advantage of prioritizing security.
There are many leadership decisions that seem unimaginable when taken but that are absolutely required for the survival of the company. One that comes to mind is Microsoft giving up on Internet Explorer’s engine, or Apple switching to Intel, or Adobe killing Flash.
Facebook will need to make this one: killing the Facebook brand, and a large part of the Facebook Feed product.
Sure, Facebook can survive without making this call, just as Yahoo! survived throughout Ms Mayer’s tenure.
Something that tells me they are currently unaware of that necesity is their 10K[0]:
> Certain of our past actions, such as the foregoing matter regarding developer misuse of data, have eroded confidence in our brands, and if we fail to successfully promote and maintain our brands or if we incur excessive expenses in this effort, our business and financial results may be adversely affected.
I don't have any great love for Facebook (except for the Oculus Quest VR product) but in general I like the idea of a digital currency backed by a Special Drawing rights kind of mixed bag of currency (I think Libra would be about 1/2 US dollars, and the other 50% split amount other currencies).
As a US citizen, I realize that we won't control the reserve currency forever so it seems wise to slowly ease into all international capable transactions to being done in a basket or currencies. As a US citizen, I would like the US dollar to be a fairly large percentage of the basket. I think this is really something that we need major cooperation between major economic power countries to make this transition as smooth and gentle as possible.
If there were multiple digital currencies backed by real currencies like like Libra, that would probably be for the best.
The goal is to reduce transaction fees and friction in international trade (and all trade).
Facebook denied it then too, but first intimations of prospective Libra members backing out due to regulatory heat came out in August: https://archive.is/5UsLx
Matters of compliance feel like an afterthought. How would Facebook make this work in jurisdictions requiring photo ID and screening to establish whether a user is politically exposed or involved in a criminal enterprise? How would they handle users who failed that in jurisdictions requiring closure of accounts? Surely they didn't think they could ignore that?
My understanding is that AirBnB were mainly flouting laws passed by local authorities which in a lot of places tend to be kind of toothless. If Facebook were to employ a similar strategy against laws designed to combat money laundering and terrorism I think the result would be very different. But I wouldn't be all that surprised if they tried.
My default reaction, you could call it almost Pavlovian, is that Facebook lies whenever some of their spokesdrones or management types opens their mouth.
Having had a chance to talk to the Libra Foundation folks (where development of the actual underlying technology is going on), they are themselves distancing their organization from Facebook in every way possible, and have been since the start.
To them, Libra is an open (to consortium membership) blockchain network, whereas the thing Facebook is bringing to it is just a wallet product (Calibra) for holding and transferring the Libra-native cryptocurrency. They speak of Calibra with not-just-a-little distaste, in the same sense that you might speak of a rich investor in your company that you never really wanted investing in you but were desperate. They don’t really offer any special support for, or primacy to, Calibra; to them, it’s an unseemly app by an unseemly company that’ll happen to boost usage of their network from “some unknown blockchain” to “a blockchain 80% of the world has access to through an app they already have on their phones” (so they can’t exactly just tell it to go fly a kite.)
It’s interesting that, from the perspective of other companies in this consortium (or perhaps just the news media’s interpretation of it), the Libra Foundation “is” Facebook. It’s no more Facebook than, say, WebKit.org “is” Apple, or any ASF Committee “is” one of its sponsoring partners.
In all of those cases, there are employees of the sponsoring company steering the project, sure, but not in their capacity as employees; rather, it’s something they’re doing for the Foundation, not even billed to their employer. (How do features get developed? The employees, as the employer, using billable hours, create and submit PRs “upstream” to the Foundation. Then, the employees, as members of the Foundation, along with other Foundation members, vote on the PRs.)
Importantly, if the sponsoring company decided to withdraw its support from any of the relevant projects, the Foundation would still exist, and those people who are employees and also members of the Foundation would still be members of the Foundation—because they are personally, themselves members, not members as delegates of the sponsoring company.
Importantly as well, the employees who happen to also be members of the Foundation almost always have an understanding with their employer that—because they would be kicked out of the Foundation’s steering committee if they showed any favouritism toward PRs made by their employer—they have to treat their employer’s suggestions just like anyone else’s. With most such projects, if you subscribe to the mailing lists, you wouldn’t be able to tell they had any sponsoring partners at all!
I just want to highlight this, because it seems like nobody really understands this until they work on at least one project run this way. (My own experience is with Apache CouchDB, whose main contributor is IBM Cloudant.)
>It’s interesting that, from the perspective of other companies in this consortium (or perhaps just the news media’s interpretation of it), the Libra Foundation “is” Facebook.
Isn't this how they decided to market themselves? The first news of it had Facebook plastered all over. Even their whitepaper says:
>Facebook teams played a key role in the creation of the Libra Association and the Libra Blockchain, working with the other Founding Members. While final decision-making authority rests with the association, Facebook is expected to maintain a leadership role through 2019. Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network.
Stating that "Facebook is expected to maintain a leadership role through 2019" would also lead me to believe that Libra Foundation "is" Facebook for most practical purposes.
“Facebook is expected to maintain a leadership role” in the Consortium, in the sense that—as the news article states—none of the other nominal Founding Member companies are bothering to do any steering of the Foundation. AFAIK Facebook wants to get away from the helm of the Libra Foundation ship and give it over to the rest of the Founding Members ASAP (because that’s better for Libra’s image!), but the Founding Members won’t take Libra seriously until it gains traction (which it won’t until Calibra launches.) Kind of a chicken-and-egg thing.
Genuine question: why do people keep upvoting content behind paywalls? Do people just read the title and upvote it? Hoe many of the comments in this thread have actually managed to read the article?
This is a problem with media backed crypto currencies. Someone is going to be a central authority.
We have a system that works fairly well in Bitcoin. The system is decentralized and uses proof of work. It works well for being money. I think the next innovations in the space are going to be incremental improvements around this system.
