Facebook is working on a crypto coin for WhatsApp

#1

Originally published at: https://boingboing.net/2019/02/28/facebook-is-working-on-a-crypt.html

Facebook is said to be developing a ‘stablecoin,’ which is a kind of digital currency pegged to the U.S. dollar.

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#2

These seem to be a bit late to the game. The altcoin gold rush hit its peak a couple of years ago. These are also-rans in a crowded marketplace.

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#3

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#4

…pegged against the United States dollar…

Doesn’t this defeat the whole purpose? It’s going to make the Libertarians furious!

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#5

So if the point is to allow moving money in your apps why not just use actual dollars and use blockchain to secure the trail of transactions?

A new coin pegged to the dollar is a fifth wheel in the workflow that so much can go wrong with.

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#6

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#7

Oh, for fuck’s sake, Facebook.

It’s like you’re just trying to be dumb and evil, now.

Yeah, how does this make any sense? I mean, it must have made sense to someone at Facebook, but it just seems like every part of it is nonsense. Beyond the usual nonsense of cryptocoins (which aren’t good for buying things to begin with).

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#8

Actual dollars are made of paper. A blockchain securing the trail of transactions of “dollars” vs “stablecoins” is functionally indistinguishable. Regardless of what it’s called, it’s not actually a dollar. But if people will accept it as payment in lieu of dollars at a 1:1 ratio, or if people will reliably give you paper dollars in exchange for it, then who really cares?

#9

But they aren’t though. Or at least, only 8% are. The rest are already electronic. So why add the bullshit of a cryptocoin into the process?

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#10

Stablecoins were tried during the most recent cryptocurrency bubble, and were in part responsible for the crazy valuations.

Problem was, the stablecoin issuers were basically fraudsters: they issued more “dollar coins” than they actually had dollars. The scheme fell apart when they couldn’t face audits, and people realized that their stable coin wasn’t actually guaranteed to be redeemable for $1.

I wonder what this looks like, though, when an already very well established and insanely capitalized corporate behemoth backs a stablecoin. The trust looks very different, as do the motivations. While the previous crop just wanted to make a quick buck, Facebook is presumably playing a long game of trying to become a player in the financial industry. This makes their coin a lot more trustworthy.

So the cryptocurrency might actually not suck, but the larger implications are even more worrying than Another Shitty Crypto.

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#11

The FB cryptocoin will be innovative in that it will be the opposite of anonymised cryptocoins – Zuckerberg will know the details of every hand it passes through, and every purchase made with it.

Seriously, why would anyone concerned with privacy use such a thing?

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#12

Yeah, maybe it’s too simplistic to say actual dollars are made of paper. Point is, the electronic dollars we’re talking about are just numbers on a ledger, which is also what a cryptocurrency is. So when you ask

I’m not sure what you see as the alternative approach. Is the idea that Facebook would keep a centralized ledger of everyone’s funds, like Paypal does? I suppose they could, but to be honest it’s a lot of unnecessary overhead if you’re just trying to let people do peer-to-peer transactions - Paypal is effectively running a major consumer bank. It’s pretty possible that a cryptocurrency is the best tool for what Facebook is trying to accomplish with Whatsapp.

I know we’ve settled on a popular consensus that “cryptocurrency is bullshit”, and that’s probably the best reflex to have in general. But it won’t always be the case, and I think we should keep this in mind. The world where Facebook creates a successful currency is actually pretty nightmarish and worth worrying about rather than writing off as impossible.

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#13

Irrelevant. We’re talking about Facebook victims. They are not concerned with privacy.

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#14

Exactly! Without a known amount of assets to back up the coin or controls on how much currency you can issue tied to hard assets it’s so much more likely become a mess. It shouldn’t be tied to “the dollar”, it should be tied to “their dollars.”

But you’re also right that it starts to centralize things a lot more. And if the only time coins can be generated is when they are purchased. It’s a real-world asset token.

That would be more stable to shadow the actual asset with the coin but then who holds the pot of money casting those shadows and what they are allowed to do with it is the big issue.

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#15

But cryptocurrency isn’t just numbers on a ledger - there’s the whole “mining” thing, which is where the problems arise (unnecessary energy use, a system that’s actually fairly hostile to making financial transactions, etc.).

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#16

Does it make any sense to think that only FB will mine the coins, but everyone else will only be able to use them for exchange purposes?

Your average everyday joe schmo (or crypto miner in china) will not be allowed to mine them.

There are probably regulations today that prevent FB from sending :moneybag: anywhere in the world, but if converted to FBcoins, then converted back on the other end to :moneybag:, this may somehow subvert regulations or taxes?

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#17

I forget who said that when marketers highlight a certain feature of a product, it is specifically because that feature is what the product is bad at. If they say “our detergent won’t dry out your skin”, it’s because detergent dries out your skin.

So that’s something to bear in mind when a company with a history of chaotic mass experimentation on the mechanics of society announces a new type of currency with “stable” in the name.

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#18

That was my thought. This will make international money transfers easier and cheaper by evading some regulations. Probably only for a short time until the law changes but by then people will be used to using face money. And also every time you get money you can get ads for things to spend it on

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#19

Because tokens allow you to hide the cost of things, prompting people to spend more and more often.

Cause seriously how is a currency pegged to the US dollar you can only use in their app any different than buy 20 Gems for $50 in a FTP game?

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#20

There’s no financial advantage to Facebook – whether they use cryptocurrency or a Western Union type setup, they will have to comply with a bunch of regulation everywhere they operate.

For users, the difference is that it will be easier to violate local laws (including inadvertently). In most cases you are free to transfer as much cash between countries as you want, though you usually have to report transactions over a certain amount, and some countries (e.g. China) do have other restrictions. In any case, the rules apply just the same whether you’re transferring paper dollars, electronic euros, BitCoins or whatever. If you do it through your bank, they will automatically report it, whereas with a cryptocurrency transfer it’s up to you to comply with the law. Taxes don’t enter into it per se; that’s a matter of why you received money, not how. Though, again, it is easier to evade taxes when the government can’t see your money.

It is very hard to think of a good reason for this cryptocurrency. There are a few plausible bad reasons:

  • it reassures users that Facebook can’t see who they’re paying; except that you’re still taking Facebook’s word for that since it’s their app
  • it reassures users that the government can’t see that info, but see above, plus, this is an inherently dubious thing to want
  • if your local currency collapses, you have ready access to fungible dollar-denominated currency to buy food. Also: you are now dependent on Facebook to be able to buy food
  • it has the meaningless, mystical cachet of being cryptocurrency, which is a ridiculous thing to say, but then you hear about, like, ice cream companies doubling their stock price by putting “crypto” in their name and I can’t even

In short, this sounds like a shitshow and I wish they just wouldn’t

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