The Central Bank of Facebook

[BobK71]

Please see this for background.

No, Facebook's new cryptocurrency, Libra, is not a new 'world currency,' as The Economist proclaims, nor a way to supplant (or protect Facebook and users against) the world's fiat money, as Bill Blain seems to think.

It's not even a real cryptocurrency whose value (in theory) stands on its supply and demand.  Libra's value will be pegged to a basket of dollars, euro, etc. by the Central Bank of Facebook.

What it will be is a new colony of the Western empire.  A country can, these days, be a sphere of activity, not just a geographic area.  Libra may be transacted across borders, but it is no universal money if its value comes from activities on Facebook and is issued and backed only by the Central Bank of Facebook.  (The Central Bank of Facebook stands ready to redeem each coin for a basket of national currencies, at a fixed rate.)

Why 'colony?'  Because what Facebook will do is precisely what official colonies of Britain and unofficial ones of America have done for centuries: use the value of real products and services produced in the colony to help support the paper money issued by Britain or America.  (To protect itself against the monetary policies of the 'mother country,' a colony must sell exports to buy and store reserves of the paper currency of the 'mother country.'  But, yes, you guessed it, not gold or silver.)

In any real sense, Libra will never be 100% backed by reserves of 'real money,' (as The Economist calls national currencies.)  Where would the fun be for Mark or colonial or banana-republic elites?  Why would you bother issuing a money if not to create wealth out of thin air?

If Libra becomes a magnet drawing new paid activity and associated software systems to Facebook, its reserves of dollars and euro will have to grow as this new economy grows.  I.E., more demand for dollars while Mark and software developers are doing all the work.  If, surprise surprise, the Central Bank of Facebook issues too much Libra and confidence collapses, Mark will take all the blame.  If anything, the demand for dollars will only go up, as users scramble to sell Libra for dollars and/or Libra is officially devalued, so the same dollar buys more real work.  (We've seen this movie before -- it's called the 'developing world.')

Libra won't be a brave new world; it goes way back to the old and enduring world that the top elites, if not everyone else, know well.  It's as if either a new Japan or a new banana republic has arisen from the sea, ready to serve the West with its teeming millions.  My quick guess is that it's more banana republic than Japan, judging by the scandals that have already plagued the company.  But who knows.  Holders (HODLers?) of state-free assets need not worry.  Things like this happened time and again over the last century.  State-free assets have endured.

P.S. Sorry if you think the Central Bank of Facebook exists, reading the above.  No, officially it will be a 'consortium,' where the Facebook delegation will be 'totally separate' from Facebook itself.  Right.

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[Naida_BR]

Sorry but reading all the above text, the only think that I understood is that Facebook will be a digital Bank.
If their crypto is going to be reserved by dollars, euros etc. then this is the definition of Libra notion.

[mu_enrico]

It is a stable coin with a consortium of big companies as the validator. If Libra reserves genuinely backed by a 1:1 ratio, then I don't see any serious problem. However, If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

[Casdinyard]

It is a stable coin with a consortium of big companies as the validator. If Libra reserves genuinely backed by a 1:1 ratio, then I don't see any serious problem. However, If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

Do you think US government will just watch Libra coin taking down USD while inflation killing it?

Though really, there's some investors that switching their investment and getting ready to invest on it and leaving some alts dumped.

If their crypto is going to be reserved by dollars, euros etc. then this is the definition of Libra notion.

I hope they can prove it that they're really backed by it or it will be just another issue tho.

[FanEagle]

Any time I see these companies making a new thing that would affect the whole world I remember fight club. In fight club there was a scene where the narrator (edward norton) talks about how in the future when we have space exploration it would not be colonies of nations or governments but it would be more like planet starbucks or something like that where basically he says space will be conquered by corporations.

Facebook has already tried to send a 200 million dollar something into space with spacex, now they are making their own currency as well, Libra will be the facebook currency, what stops facebook from having their own nation in the future? They could literally bribe their way into some island and buy it and basically run it, they even have their own national currency with Libra.

[LeGaulois]

It is a stable coin with a consortium of big companies as the validator. If Libra reserves genuinely backed by a 1:1 ratio, then I don't see any serious problem. However, If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

Rather, we should be concerned about which companies are part of the consortium. It might also give a good idea for the future and explain what the OP wants to mean. I can guess already these companies. The same Zionist enterprises interested to rule the world on behalf of a few people.
A type of company like Facebook isn't designed for finance activity, it's my opinion. And I doubt it will be a success, FB has lost his credibility long ago

[fiulpro]

I do think this is actually a good idea you know .

To have a digital asset , a cryptocurrency that too backed up by major companies so that we can entrust it actually with some money and it won't go too low as we expect it be .

Therefore I don't know why this is not something that is a good thing .

We could avoid the bearish market and it may be beneficial for us in a long haul, I do think it might work out just fine.

We should experiment , we shouldn't just copy , if they would have just made a cryptocurrency like Bitcoin then it would still be lumped in the thousands other altcoins that we already have.

[iv4n]

I like the headline, it`s says everything we need to know about future of facebook company and their transformation from social network to a central bank.
This is actually a great article, people should pay attention and read this. In the end of the article you can read this "Facebook claimed that its mission was to “empower billions of people”. Making money or strengthening its market power are, apparently, a sideshow." Let`s just add here their desire for control.
Well I don`t doubt they will have many supporters, just I`m not going to be one of them, and I will advise everyone else to stay away from it.

[Jating]

It is a stable coin with a consortium of big companies as the validator. If Libra reserves genuinely backed by a 1:1 ratio, then I don't see any serious problem. However, If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

I think they will run on fractional reserves.

Yes, this is a great article to exposed what's the truth behind this Libra coin. And I think the US government knows a thing or two about it that's why they decided to go against it at the initial creation of the coin. Facebook coin might have open the pandoras box here, and now government around the world will be critical of any crypto that is going to open, and will used any excuses in the book to curb it out and cite this Libra coin as an example.

[magneto]

It's not even a real cryptocurrency whose value (in theory) stands on its supply and demand.  Libra's value will be pegged to a basket of dollars, euro, etc. by the Central Bank of Facebook.

In any real sense, Libra will never be 100% backed by reserves of 'real money,' (as The Economist calls national currencies.)  Where would the fun be for Mark or colonial or banana-republic elites?  Why would you bother issuing a money if not to create wealth out of thin air?

These are reasons enough to steer clear of this so called "cryptocurrency".

Just because something may utilise the underlying technology of blockchains, doesn't mean that it's free from manipulation or centralisation. I think people are blindly putting way too much trust in projects like these, where a centralised entity is able to essentially manipulate both sides of the market, as well as the fundamentals of their own currency.

The fact that it's pegged to a basket of fiats also raises alarm bells, as in the long run, it's guaranteed to lose intrinsic value.

Even holding the actual cash or insured bank deposits of these currencies yourself will be better, and you're ridding yourself one more counterparty risk in the form of FB's potentially fractional reserve, or creating these coins out of thin air.

[Pipdips]

So every crypto-currency exchange is basically just a bank and now Facebook wants to be a bank.

Most banks begin with good reputations but Facebook has a terrible reputation that nobody trusts.

[timerland]

No, Facebook's new cryptocurrency, Libra, is not a new 'world currency,' as The Economist proclaims, nor a way to supplant (or protect Facebook and users against) the world's fiat money, as Bill Blain seems to think.

I'm not sure why Blain would think this way.

The fact that Libra bases its value off of the fiat currencies that it has in its basket means that it's acknowledging that fiat currency will still be the underlying asset used by the financial system, and that it would never replace fiat.

I think that Libra's main objective here is to create a centralized alternative to bitcoin, but I'm not sure how effective that will be given that most bitcoin users know exactly what's going on.

Besides, there is absolutely no reason to believe that regulators will not act as they will see Libra as a threat, much the same way that they see BTC as a threat, as it takes away from their control over the economic system. As Chris Hughes said:

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

[avikz]

Facebook simply can't bear the risk of having same delegation for Libra as of Facebook. It's not that simple really! Why do you think Facebook has taken time till 2020?? As we are talking about Libra now, Facebook's highly paid executive's team has already started reaching to various governments of the big world economy and trying to get an official license for using Libra in their economy! I am sure some technically advanced economies like Japan or Germany will go ahead with this idea. However, majority of the Asian countries will be very skeptical to allow it in such a big scale!

As the article rightly pointed out, Libra will be controlled by a consortium of big IT and Fintech companies in an endeavor to take their business penetration to the next level. Yes, common users will be benefited because a lot of new technologies will be brought into this field to make money transactions simpler and cost-effective, but can we call it a cryptocurrency really?? What common features Libra will have to a crypto??

[dothebeats]

It is a stable coin with a consortium of big companies as the validator. If Libra reserves genuinely backed by a 1:1 ratio, then I don't see any serious problem. However, If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

I think they will run on fractional reserves.

Which just makes it scary knowing that Facebook is the one who operates it, and I'm sure as hell that that company lost its credibility and public trust already due to the number of data breaches it found itself into over the course of a few years. They can easily do a 1:1 backing on Libra and clear doubts on people but even then, I don't think many will still trust Facebook's own crypto.

But we all know that people can still make a fool of themselves just for the profit.

I do think this is actually a good idea you know .

To have a digital asset , a cryptocurrency that too backed up by major companies so that we can entrust it actually with some money and it won't go too low as we expect it be .

Therefore I don't know why this is not something that is a good thing .

We could avoid the bearish market and it may be beneficial for us in a long haul, I do think it might work out just fine.

We should experiment , we shouldn't just copy , if they would have just made a cryptocurrency like Bitcoin then it would still be lumped in the thousands other altcoins that we already have.

So are we really willing to make a poor and a losing compromise in exchange for profits? Yup, I was right about that all along. Facebook is just one of those giant corporations trying to make money in the expense of others, and Libra, too, is a clear indication of that.

[bitgolden]

Please see this for background.

No, Facebook's new cryptocurrency, Libra, is not a new 'world currency,' as The Economist proclaims, nor a way to supplant (or protect Facebook and users against) the world's fiat money, as Bill Blain seems to think.

It's not even a real cryptocurrency whose value (in theory) stands on its supply and demand.  Libra's value will be pegged to a basket of dollars, euro, etc. by the Central Bank of Facebook.

What it will be is a new colony of the Western empire.  A country can, these days, be a sphere of activity, not just a geographic area.  Libra may be transacted across borders, but it is no universal money if its value comes from activities on Facebook and is issued and backed only by the Central Bank of Facebook.  (The Central Bank of Facebook stands ready to redeem each coin for a basket of national currencies, at a fixed rate.)

Why 'colony?'  Because what Facebook will do is precisely what official colonies of Britain and unofficial ones of America have done for centuries: use the value of real products and services produced in the colony to help support the paper money issued by Britain or America.  (To protect itself against the monetary policies of the 'mother country,' a colony must sell exports to buy and store reserves of the paper currency of the 'mother country.'  But, yes, you guessed it, not gold or silver.)

In any real sense, Libra will never be 100% backed by reserves of 'real money,' (as The Economist calls national currencies.)  Where would the fun be for Mark or colonial or banana-republic elites?  Why would you bother issuing a money if not to create wealth out of thin air?

If Libra becomes a magnet drawing new paid activity and associated software systems to Facebook, its reserves of dollars and euro will have to grow as this new economy grows.  I.E., more demand for dollars while Mark and software developers are doing all the work.  If, surprise surprise, the Central Bank of Facebook issues too much Libra and confidence collapses, Mark will take all the blame.  If anything, the demand for dollars will only go up, as users scramble to sell Libra for dollars and/or Libra is officially devalued, so the same dollar buys more real work.  (We've seen this movie before -- it's called the 'developing world.')

Libra won't be a brave new world; it goes way back to the old and enduring world that the top elites, if not everyone else, know well.  It's as if either a new Japan or a new banana republic has arisen from the sea, ready to serve the West with its teeming millions.  My quick guess is that it's more banana republic than Japan, judging by the scandals that have already plagued the company.  But who knows.  Holders (HODLers?) of state-free assets need not worry.  Things like this happened time and again over the last century.  State-free assets have endured.

P.S. Sorry if you think the Central Bank of Facebook exists, reading the above.  No, officially it will be a 'consortium,' where the Facebook delegation will be 'totally separate' from Facebook itself.  Right.

Facebook is too smart to do anything that will jeopardize his relationship one more time with government, Facebook is already blacklisted by the congress, especially on the issue of user’s privacy, this is why I am having a feeling that whatever they intend the coin to be for would surely be in favor of fiat, especially Dollars and Euro.

Facebook had studied the issue the government is having with Bitcoin, being a decentralized coin, the best way for them to redeem their image with them would be for them to create a global digital currency that will be pegged to dollar and would be fully centralized for it to be useful to government, lets watch and see that Libra coin will get the full backup of government overtime.

[jseverson]

To have a digital asset , a cryptocurrency that too backed up by major companies so that we can entrust it actually with some money and it won't go too low as we expect it be .

Therefore I don't know why this is not something that is a good thing .

People aren't very fond of it because they don't trust Facebook's ethics, and they see this as an attack to privacy. People are coming up with worst case scenarios, but most of these won't even come close to being realized if Libra doesn't achieve worldwide success -- something which I don't see happening, considering its limited use cases.

[guoyu78]

Any time I see these companies making a new thing that would affect the whole world I remember fight club. In fight club there was a scene where the narrator (edward norton) talks about how in the future when we have space exploration it would not be colonies of nations or governments but it would be more like planet starbucks or something like that where basically he says space will be conquered by corporations.

Facebook has already tried to send a 200 million dollar something into space with spacex, now they are making their own currency as well, Libra will be the facebook currency, what stops facebook from having their own nation in the future? They could literally bribe their way into some island and buy it and basically run it, they even have their own national currency with Libra.

Everyone all have their hidden agenda, which they will gradually be working on underground and releasing it one after the other for such agenda to fully manifest, don’t be surprise that you are already talking about what is going on within the Facebook group already.

I am sure they have all the plans you stated here, in fact, studying their past and recent moves, from trying to have monopoly of the social media, to sending money out to space and now creating their own coin, I guess they really have their plan to own a nation, although it wouldn’t be a bad idea because Mark is really a good man and a great leader who has the interest of people at heart.

[Kakmakr]

The main thing to realize is the "centralized" decision making powers of such a consortium and how that can be manipulated and exploited to further the agenda and interest of the people that would determine it's value. This is where Bitcoin is standing high above any other centralized token or Blockchain based technology, because no centralized authority are making those decisions and the price is determined by the market through supply and demand for bitcoins.  

It is open for discussion on how rich individuals <whales> can manipulate open market prices too, but at least no centralized authority are calling all the shots and making the big decisions about Bitcoin's future.  

[Cnut237]

I think one of FBs primary aims with this is so they can open up a new sphere to their relentless data mining. This new coin will give them access to huge swathes of purchasing data, which they will bolt onto the data they already have about us, and use it to improve the accuracy of their behavioural modelling, so that they can then sell the final product - more or less accurate digital models of each of us - to marketers and other nefarious third parties. This has always been Facebook's business model. This "free" product is only free in the dollar sense; we pay for it by surrendering our personal data.

They'll have other aims too of course, FB is nothing if not ambitious. Presumably they are going after WeChat and also eventually the US dollar. But we can't overlook the history of their motivations in extracting and monetising personal data.

[BobK71]

... If they use the fractional reserve, I'm afraid inflation will speed up rapidly and take down the global economy (assumed Libra would become mainstream). Perhaps this situation is good for Bitcoin. People will realize that Bitcoin is the only non-debased currency.

We have to think this through carefully.

Say, the 'consortium' issues too much Libra.  By definition, this means the supply of Libra goes up, but its fiat reserves don't go up by the same degree.  There is too much Libra chasing goods and services, but not dollars or euro.  Inflation would happen within Facebook only.  At some point, confidence in Libra will falter, but this problem will be limited to the exchange rate between Libra and fiat.  (When Libra holders fear this problem, they will sell Libra for dollars or euro.)

The only scenario where the problem of confidence in Libra becomes a problem for fiat money as well is when central banks decide Libra is 'too big to fail' and bail it out.  I don't think that is likely.  The Western elites are not stupid.  The collapse of Libra will hurt a lot of people, but when the problem can be blamed on Facebook alone, why risk the reputation of fiat currencies to save Facebook?

Can Libra become so big that it really is 'systemically important' and really requires a bail-out by today's Western tradition of keeping voters happy?  That is always possible, but I think the Western elites will (correctly) sound the alarm on Libra before that bubble becomes too big, so the bubble can burst and the pain will be limited.

Libra will be a plus for the Western elites, most likely, in the short to medium term.