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Facebook's currency: Implications for Banking

bruncher
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Facebook's currency: Implications for Banking

#231658

Postby bruncher » June 24th, 2019, 10:04 am

Regarding Facebook's Libra cryptocurrency.

A few years ago, I said to a friend: "what happens if one morning Amazon, Google and Apple all announce that from today they only accept bitcoin for purchases?"

It looks like we are moving towards an enforced global currency. The likely stages: (1) Facebook introduces Libra, makes it as convenient as possible to use; (2) online merchants offer payment by Libra as an alternative to paying with government money; (3) discounts are offered 'if you pay by Libra'; (4) government money becomes more expensive and more of a hassle to use; (5) gradually paying by government currencies is discontinued.

"Facebook is ... reportedly in talks with a number of online merchants to accept the currency as payment in return for lower transaction fees." reports the BBC. In other words it will be more expensive to deal with Facebook if you don't use their currency.

Time to ditch bank shares, unless your bank is a collaborator with FB?

JohnB
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Re: Facebook's currency: Implications for Banking

#231679

Postby JohnB » June 24th, 2019, 11:19 am

I've never bought anything through Facebook, and can't see why I would. Their IT systems seem dreadful, I'd not trust them to run a currency.

The same does not apply to Amazon, so they'd be the ones to watch. Google seem too gung-ho with their software, and Apple-pay does not seem to be gaining much traction.

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Re: Facebook's currency: Implications for Banking

#231681

Postby bruncher » June 24th, 2019, 11:24 am

Facebook has a dominant position in online advertising.

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Re: Facebook's currency: Implications for Banking

#231689

Postby Dod101 » June 24th, 2019, 11:46 am

I have not really followed this but is the Libra to be linked to any recognised currency or is it going to set its own level based presumably on supply and demand (like the Bitcoin?) If so how is its supply to be controlled?

Dod

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Re: Facebook's currency: Implications for Banking

#231697

Postby Urbandreamer » June 24th, 2019, 12:16 pm

JohnB wrote:Google seem too gung-ho with their software, and Apple-pay does not seem to be gaining much traction.


I don't have an apple phone, however it seems that almost everywhere that I can use my contactless credit card also accepts Apple-pay. Certainly most supermarkets do.

However there are VERY important distinctions between the likes of Apple-pay, google and even M-Pesa with respect to crypto currencies or indeed LET's and Facebooks new currency.

The first are methods of using an existing state currencies.

The latter are curencies not backed by the state.
LET's are a local exchange currency supported by local traders.
Crypto currencies are supported* by their users/investors.
Libra is backed by Facebook.

*Actually there are some crypto currencies that claim to be a method of exchanging gold without transporting it, hence in theory a hard currency rather than fiat.

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Re: Facebook's currency: Implications for Banking

#231698

Postby johnhemming » June 24th, 2019, 12:22 pm

The issue, of course, is one as to transactional costs. When you have a currency risk that needs to be factored into the transactional costs. Traditional state currencies can operate with a managed currency risk. Things like Bitcoin are all over the place.

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Re: Facebook's currency: Implications for Banking

#231702

Postby GoSeigen » June 24th, 2019, 12:49 pm

bruncher wrote:Time to ditch bank shares, unless your bank is a collaborator with FB?


According to the Grauniad bitcoin smashed through £8,594 ($11,000) today. The banks are toast. Sell sell sell!


GS
P.S. Don't tell anyone LLOY is distributing close to 10% of market cap this year. How much in dividends and interest is bitcoin paying again?

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Re: Facebook's currency: Implications for Banking

#231716

Postby scrumpyjack » June 24th, 2019, 1:30 pm

It will be excellent if people can use an independent reliable and practical currency and not one open to state manipulation and depreciation. It will take a lot of power away from incompetent governments, which will be excellent.

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Re: Facebook's currency: Implications for Banking

#231724

Postby supremetwo » June 24th, 2019, 2:08 pm

scrumpyjack wrote:It will be excellent if people can use an independent reliable and practical currency and not one open to state manipulation and depreciation. It will take a lot of power away from incompetent governments, which will be excellent.

And if someone hacks the computer(s) and makes off with more millions, how will you get your 'currency' back?
https://coinsutra.com/biggest-bitcoin-hacks/

https://www.fscs.org.uk/
FSCS protects you when financial firms fail
We’ve helped millions of people and paid billions of pounds in compensation since 2001.

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Re: Facebook's currency: Implications for Banking

#231727

Postby Dod101 » June 24th, 2019, 2:15 pm

Urbandreamer wrote:The latter are curencies not backed by the state.
LET's are a local exchange currency supported by local traders.
Crypto currencies are supported* by their users/investors.
Libra is backed by Facebook..


That was part of my reason for asking because I do not think that the Libra is going to be 'backed by Facebook', and even if it were what does that mean? The Facebook paper introducing Libra says that it will be backed by a basket of foreign currencies and government bonds. To that extent it is not going to be a reliable and practical currency and not open to state manipulation so I think scrumpjack may be disappointed.

I think it is fair to say that LIbra will be promoted by Facebook but not that it is being backed by Facebook, in other words it does not I think depend on the financial strength of Facebook. I do not think that on the face of it it should have too many implications for mainstream banks.

Dod

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Re: Facebook's currency: Implications for Banking

#231733

Postby scrumpyjack » June 24th, 2019, 2:26 pm

As I understand it, it is initially going to be 'backed' by at least 100 substantial organisations, none of which will have more than a 1% share in it, and will be established as an independent entity in Switzerland. It will hold a wide variety of recognised assets to back its value and consequently its value will be fairly stable (unlike Bitcoin).

To me that could well become far less risky than the British pound controlled by a Marxist government. To the citizens of many many countries it will be overwhelmingly attractive and I'm not surprised the French finance minister does not like the idea!

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Re: Facebook's currency: Implications for Banking

#231736

Postby Stonge » June 24th, 2019, 2:37 pm

Now we know where Mark's going next...

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Re: Facebook's currency: Implications for Banking

#231743

Postby 88V8 » June 24th, 2019, 2:49 pm

New geeky payment method of uncertain value....

I'll wager most people don't even use Paypal. How long has that been around?

Unsuccessful attempt to prop up Facebook. Doubt the banks have anything to worry about...

I do use Paypal, don't use FB.

V8

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Re: Facebook's currency: Implications for Banking

#237166

Postby runnygum » July 17th, 2019, 4:29 am

Libra is basically a cash swap for a token.

I suspect if governments ever feel threatened making Libra or any other crypto illegal is a pen stroke away.

There are some good youtube discussions on Libra as well as a good Ars Technica article.

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Re: Facebook's currency: Implications for Banking

#238062

Postby TheMotorcycleBoy » July 20th, 2019, 3:49 pm

Dod101 wrote:I have not really followed this but is the Libra to be linked to any recognised currency or is it going to set its own level based presumably on supply and demand (like the Bitcoin?) If so how is its supply to be controlled?

Dod

I heard that it would be pegged to a basket of other currencies.

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Re: Facebook's currency: Implications for Banking

#238066

Postby TheMotorcycleBoy » July 20th, 2019, 4:00 pm

I'm quite interested in the facebook/libra possibilities.

My impression is that it will introduce banking to millions in the developing world, who may have access to a smart phone, but poor access to fair banking.

I'm getting the impression that lots of big players e.g.

https://markets.businessinsider.com/cur ... 1028355680

are pretty worried about it's possibilities, and not from an entirely altrustic position.

Matt

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Re: Facebook's currency: Implications for Banking

#238255

Postby TheMotorcycleBoy » July 21st, 2019, 5:06 pm

Am quite interested in libra. I googled "does libra threaten currency exchanges"

found a couple of hits, not entirely strengthening my angle:

https://www.marketwatch.com/story/faceb ... 2019-07-15
https://www.forbes.com/sites/francescop ... 74f89d1dc5

however, it looks as if many worldwide are concerned that they'll lose a chunk of cake, if libra comes to being.

Matt

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Re: Facebook's currency: Implications for Banking

#239143

Postby bruncher » July 25th, 2019, 10:47 am

runnygum wrote:
I suspect if governments ever feel threatened making Libra or any other crypto illegal is a pen stroke away.



A pen stroke way?

No government seems able to deal with cyberspace e.g. defining jurisdiction and enforcing applicable law, as we see with the difficulties of collecting taxes on internet commerce.

Facebook, Google, Amazon, Apple etc are running rings round national governments.

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Re: Facebook's currency: Implications for Banking

#239171

Postby Watis » July 25th, 2019, 11:48 am

Africa - and Kenya in particular - have the M-Pesa system, which uses dumb phones to transfer money. It relies on the SIM card and text messages.

Here are a couple of sites explaining the system in detail:

https://www.investopedia.com/terms/m/mpesa.asp

https://www.economist.com/the-economist ... bile-money

This scheme has been running for over ten years. Facebook may have an uphill task attempting to replace it.

Watis

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Re: Facebook's currency: Implications for Banking

#239185

Postby TheMotorcycleBoy » July 25th, 2019, 12:19 pm

Watis wrote:Africa - and Kenya in particular - have the M-Pesa system, which uses dumb phones to transfer money. It relies on the SIM card and text messages.

Here are a couple of sites explaining the system in detail:

https://www.investopedia.com/terms/m/mpesa.asp

https://www.economist.com/the-economist ... bile-money

This scheme has been running for over ten years. Facebook may have an uphill task attempting to replace it.

Watis

Sure. But what about the costs? I have to admit I'm not privy to that information - just guessing that FB will have to win on price and convenience perhaps?


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