David Marcus update [1] :<p>Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.<p>I would caution against reading the fate of Libra into this update. Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.<p>[1]<a href="https://twitter.com/davidmarcus/status/1182775728431087623" rel="nofollow">https://twitter.com/davidmarcus/status/1182775728431087623</a>
I hope this doesn't cause Facebook to give up on Libra.<p>I personally have no desire to own Libra. But traditional bank accounts kind of suck as a product and I would like to see more tech companies competing with them.<p>The problems with bank accounts:<p>1. They charge you fees for things<p>2. They try to upsell me stupid financial products<p>3. They are not easy to use in other countries<p>4. Typing in my credit card number sucks<p>5. Typing in my credit card number isn't secure<p>None of that has really gotten any better in the past ten years. It feels like banks have mostly given up on making their product better. Instead of improving their product, they just buy more expensive retail locations.<p>I would probably rather use a financial product produced by Google, Microsoft, or Amazon than a financial product produced by Facebook. I just don't want the rules to end up being, big tech companies are not permitted to compete with crappy banks.
> A Visa spokesperson told The Verge. “Visa has decided not to join the Libra Association at this time,” the spokesperson said. “We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association’s ability to fully satisfy all requisite regulatory expectations.”<p>I suspect the regulatory pushback was the least of the problem. These companies (and PayPal) have everything to lose and nothing to gain by helping to advance Libra. The entire business model is to capture value from financial system friction. Eliminating the friction eliminates their reason for being.<p>It's a classic innovator's dilemma: the action that will save these companies is building the thing that will destroy their business models. They can't do it because established companies are set up to eject people persisting with such notions. That leaves the field open for an out-of-left field solution that does away with the friction and the business models it spawned.<p>The source of the friction is regulatory. AML. KYC. All the laws that deputize financial institutions as extensions of law enforcement. It's quite expensive.<p>The only way to eliminate the friction is to eliminate the regulatory liability. And that's what has been happening with Bitcoin for some time.<p>What is surprising was that these companies ever lent their names to the project in the first place.
Call me cynical, but the whole idea of Libra would be disruptive to the existing international payment businesses, such as the ones that just exited. So the only reason for them to join in the first place would be to basically "know your enemy" - make certain you get the first-person intel on the project's vitals and to know what to expect. Now that a couple of governments made it clear that there would be roadblocks in deploying Libra according to the original roadmap, it is no longer seen as a threat, so anyone without a direct monetization interest (Facebook itself?) is going to leave.
I'd argue the outcome of this will be that Facebook will launch their own payments infrastructure on top of WhatsApp. There was no need for crypto or a Libra association to begin with.<p>According to the leaked Facebook all-hands audio, Facebook is already planning to launch payments in Mexico by end of 2019 (<a href="https://qz.com/1719731/zuckerberg-confirms-facebook-payment-tests-in-india-mexico-in-verge-leak/" rel="nofollow">https://qz.com/1719731/zuckerberg-confirms-facebook-payment-...</a>).<p>I wouldn't be surprised if this goes extremely well for Facebook and WhatsApp payments becomes WeChat Pay / AliPay for the rest of the world.
The centralisation of Libra made it easy to kill. Bitcoin can be hampered but not outright killed, at least not over night. A death by a thousand cuts is the most likely solution but by no means guarantees Victory.
I'm actually kind of bummed out about this. I may not like FB, but I like the idea of a digital currency backed by a floating basket of currencies.
I'm actually glad it's dead/dying. It was always going to be controlled by an elite group who answered to no one but themselves. They had the ability to monitor all of your transactions and if they didn't like you they could roll back or block your transactions.<p>People keep saying oh this is proof crypto can't ever work because government. This was never a true crypto currency. It was just a private ledger tracking where actual money went. It was a stable coin at best. Its centralization is what got it killed.
There was absolutely no reason for this to project to exist. The only feature of digital currencies that make <i></i>some<i></i> of them interesting is that they are fully distributed and based on absolutely zero trust of other users on the network. What Facebook was trying to do here was take something that could be implemented in a standard centralized database, stick some marketing on it, and try to ride a hype wave that has since (rightfully) died down.
It looks like a misstep followed by a hasty and ignominious retreat because thats exactly what happened - no one anticipated the reaction from lawmakers and rules agencies.<p>Its kind of hard to see this from the perspective of people who follow tech and HN, but Libra really may have been the first occasion that the possibility of crypto as anything other than an investment instrument - e.g. an actual usage as currency - penetrated the awareness of top national political leadership. Yes the ICO's got some attention but in many ways that attention seemed to suggest that crypto would be tolerated. And probably it will be, as long as it is simply another category of asset.<p>It will not be tolerated as currency, and governments will destroy any crypto that threatens to become one. For now, BTC is safe because its usage as a currency is minuscule and threatens no one. If it were to become successful, it will be destroyed. I've always known that was a possibility but now I'm sure of it.
I wonder what would have happened if Facebook had simply announced Libra and released it a week later. Would the legislative backlash have been stronger? Or would the quick release bring to light the (always preached about but not always demonstrable) advantages of cryptocurrencies.<p>I'm not (yet) doubting that Libra will eventually be released, but I can see it being shutdown before or sometime after release.
I have no interest in Libra, but the fact that government basically bullied these companies out of this initiative is alarming. If the regulators think that they should scrutinize these companies deeper, being involved in Libra should not matter. It's like saying, "withdraw from Libra and we'll continue to look the other way on your sketchy non-Libra activities".
I guess that why one of the first investor in Libra - famous Xavier Niel - published this editorial [1]<p>(small reminder for people who don't know him, he created the ISP french "Free" that kind of totally changed the telecom market in France (DSL and mobile), he also owns Scaleway (cloud), Kima Ventures (VC))<p>[1] <a href="https://www.theblockcrypto.com/linked/42886/libra-is-inevitable-better-to-embrace-it-says-its-investor-a-french-billionaire" rel="nofollow">https://www.theblockcrypto.com/linked/42886/libra-is-inevita...</a><p>[2] Original : <a href="https://www.lesechos.fr/idees-debats/cercle/europeens-libra-nous-de-choisir-1139165" rel="nofollow">https://www.lesechos.fr/idees-debats/cercle/europeens-libra-...</a>
I honestly don't see how to reconcile two desirable aspects of digital currency<p>- Frictionless, fee-less digital transfer of a medium of value. To be able to transfer money natively over the internet.<p>- To keep it <i>secure</i> for 7 billion people - reversible, auditable etc - the benefits we have of a curated financial system.<p>I am sure there are lots of reading on this available - but those two do seem incompatible
I'm puzzled by HN's attitude towards Libra. I can understand being wary of having Facebook run the world's money and how a metacurrency such as Libra could break world economics as we know it, but I can't help be excited about the prospect of widespread digital money usage and FB is one of the few companies that can drive that. Perhaps HN draws its animosity towards Libra from all the cryptocurrency shenanigans of the last few years, but given this community is comfortable with innovation and risk, I would expect HN to be imagining usecases and scenarios for digital money rather than dismiss the whole concept based on emotion related to Facebook and/or cryptocurrencies.<p>If the world does move ahead with central bank issued digital currencies - and it seems there's a lot of chatter in that area - then a metacurrency will no doubt pop up at some point anyway. Because that's what I expect hackers will find fascinating and because it will suddenly become possible. So we'll get Libra one way or another, but it may not be Facebook's.<p>A full fledged digital currency ecosystem will be incompatible with the status quo to a large degree, but that's no reason for dismissal. Doesn't all innovation challenge the status quo? Ultimately, the cat it out of the bag and the question is not if, but how digital scarcity, whether trustful or trustless (or a mix of the two), will impact our definition and use of money.<p>We'll have to ensure AML rules evolve to fit the new paradigm and that's fine. But we shouldn't look at existing AML frameworks and refuse innovation because our solutions for the past don't fit our possibilities for the future.<p>And regardless of the outcome of Libra, Facebook is making huge inroads in prompting conversations and ultimately regulating digital money, which in itself is a huge win. Given the negative govt and public reactions and their standing ground on the matter, they're doing it at their own expense and I'll give them kudos for that. I don't see any of the existing forces in the finance ecosystem do anything close to this.<p>Money and payments have stood still amidst the digital revolution. Imagine micropayments for consuming online content and how they could address some of the biggest issues prompted by the attention economy. The likes of visa and mastercard could've made this a real at any moment in the last 20 years or so.<p>I welcome anyone trying to do something bold. It's progress, regardless of the outcome of any specific project.
I don't like Facebook, but I do give them credit for being very smart. They managed to lock a billion eye-balls on their platform and that doesn't happen automatically.<p>That's what makes this whole Libra thing so shocking. I just can't believe Facebook would be so naive to just shout "digital cross-border currency" and then expect everyone to cheer them on. Bitcoin has been around for years, and controversies surrounding it are well known. PayPal has been around for decades and everyone understands the potential of electronic payments.<p>The fact that Facebook did not expect this ambivalence / skepticism and address it upfront is a pretty surprising misstep.
If Facebook wants a currency they should start a country. Given that they are an organizing platform for various insurgent groups... I could almost see the headline: "victorious insurgent group 'ZucLiberationFront' agrees to partner with Facebook to run their country's currency system using Libra. Reasons cited were gratitude for free Facebook advertising that helped them recruit rebel fighters"
Isn't it kind of pointless anyway: a large corporation with vast resources creating a cryptocurrency, why don't they just make their own bank?
I see this is starting to playing out as I'm thinking it should play out*. Now, I'm waiting for Facebook to stick to its gun. 2020 will be an interesting year.<p>x- <a href="https://news.ycombinator.com/item?id=21162607" rel="nofollow">https://news.ycombinator.com/item?id=21162607</a>
I think given enough time, Libra project can succeed. But it has to jump through many hurdles. It will require a lot more investment than Facebook anticipate.<p>I advocate for a new type of crypto: digital native and decentralized stablecoin. By adding a constant inflation rate, coin price can become somewhat stable. The tradeoff is worthy for permissionless, digital native and decentralization. I outline the benefits of this new type of cryptocurrency in this article:<p>The Next Big Thing in Crypto: Using Inflation to Create Stablecoin<p><a href="https://bitflate.org/post/2019/10/10/the-next-big-thing-in-crypto-using-inflation-to-create-stablecoin.html" rel="nofollow">https://bitflate.org/post/2019/10/10/the-next-big-thing-in-c...</a>
I don't like Libra but I wouldn't dismiss it just yet.<p>- Governments: We'll ban Libra.<p>- Facebook: Let us do Libra and we'll give you access to the financial transactions which otherwise would go dark with Bitcoin or Wechat.
I wonder if this was government pressure. I think it was only going to be 50% denominated in US dollar. Making it easy to effectively (partially) transact in other currencies must not have gone over well.<p>EDIT: I assumed that Libra would be for many, many small transactions so banking know your customer KYC regulations imposed on banks in all countries by the US and other governments would not really apply. Also, does something like Apple Pay also fit the need for people paying people in other countries small amounts of money?
I found it interesting that Visa and Mastercard were actually on board in the beginning. Might have been some fear of missing out on something novel and important (especially since competitors joined Libra also). Now that the initial dust and Libra is a bit better understood they are seemingly jointly pulling out.
I hope Facebook manages to launch Libra and that’ll be the final trigger for regulators to chime in, slap them on the wrist and break up all the giant corps. The degree to which they are invading our privacy and are greedy for power and control over people’s lives is beyond scary.
Other than eBay, guessing the reason why the payment cos are dropping out first is because they have the highest regulatory/compliance burden as is, and don’t need more scrutiny dealing with something they don’t even fully understand just so they can win some brownie points with FB.
Pegging Libra to just the Dollar could soothe regulators, a16z says<p><a href="https://techcrunch.com/2019/10/11/libra-denominated-in-dollars/" rel="nofollow">https://techcrunch.com/2019/10/11/libra-denominated-in-dolla...</a>
Notable that OP left Mercado Pago out of the headline, despite it being in the opening sentence. Mercado Pago is the largest payment provider in South America. In case you forgot, South America is the fourth largest continent and contains 12 countries.
Interesting to ee Nick Szabo actually answer David Marcus tweets.<p><a href="https://twitter.com/davidmarcus/status/1182775728431087623" rel="nofollow">https://twitter.com/davidmarcus/status/1182775728431087623</a>
“If you take this on,” the letters read, “you can expect a high level of scrutiny from regulators not only on Libra-related activities, but on all payment activities.”<p>I wonder who paid them to say this?
facebook would better service itself by help small businesses in timely transactions of cryptocurrencies. With the government debt project to go to $30 trillion within the decade there will be alot of people hedging against the dollar with cryptocurrency and whoever is able to help in transactions with mom and pop stores will make a fortunes. Also it does help you aren't _directly_ competing with the federal reserve. People have been killed for less.
damn shame with the dollar approaching a $30 trillion dollar deficit within the next decade[0], it would be very prudent to invest into a competitor.<p>[0]:<a href="https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-us-debt-hitting-30-trillion-2028" rel="nofollow">https://www.zerohedge.com/news/2018-02-12/trump-budget-sees-...</a>
I think FB should take a lesson from this - be less respectful. They have done everything not to tread on anyone's toes, but that is not what innovation is about. They have the userbase and the ability to give this a shot all on their own. Do it and make something great, then deal with the consequences.
The current financial system worldwide looks quite suspect right now, negative interest rates could soon become a new norm in the EU even officially in retail. Most importantly political leaders in the US(and EU) have scaled up their massive money-printing schemes designed to keep their banking-financial overlords in business.<p>With that in mind, the very last thing the EU and US authorities want is for the people who (mostly unwittingly) underpin the actual value to have an Exit from this type of controlled use of inflation into an alternative currency backed by say gold and other hard to inflate commodities, because allowing any significant amount of that.. (remember the true impact is inverse of the real fractional-reserve in play) would lead to a collapse in the power of the existing political-financial hegemony.