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Comment by greggman2 | Hacker News Reader

I don't know what Libra's plans are but couldn't Facebook make their own Paypal? What would really be the difference?

I can hold a balance at Paypal. I can pay others and others can pay me. The "crypto" part seems like an implementation detail but otherwise irrelevant.

Note: I'm not saying Facebook should be allowed to make their own Paypal. I'm just curious other than "Facebook scary because big" what other reason would prevent Facebook from making a Paypal clone.

Google has Google Pay, Apple has Apple Pay, why can't Facebook have Facebook Pay. What would really be the difference? Just the part about currency conversion to their own units and back? Is that different from certain game virtual currencies?

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Apple and Google are still dealing with merchant fees. So is PayPal for many transactions.

A PayPal style system might work, but it is only low-cost low-friction (the main appeal for crypto) for the transactions that occur completely within it's own ecosystem. And they don't call it a currency, so they dodge some issues there. Paypal also dodges issues of "being a bank" because funds equivalent to customer balances are actually held in real-world banks, so it's not in any way an independent currency. It doesn't "float" against anything. Libra's basket-of-currencies approach may be very stable, but automatically puts it in a very different class of financial instruments. They could abandon that and really stick to the paypal model though.

Even then, there are still many regulations for this that must be followed: It falls in a business class of "money transmitter" which requires a separate license in every state, as well as registration with the federal government. They also must follow laws like filing a CTR for transactions above $10,000, and SARs for suspicious activity. There's simply no getting around major regulations if you're providing any sort of financial services.

> Paypal also dodges issues of "being a bank" (...)

AFAIK Paypal is a bank in the EU.

Oh, that's right. They got a banking license in one of the EU countries, which allows it to operate as such throughout the EU. If that move was necessary to operate as they do withing the EU, i.e., if they cannot simply be money stores without being a bank even if they're not using fractional reserve, then Facebook too would need to register as such.

Yes. Fully licensed Bank in Luxembourg. No branches though.

Crypto seems like it's (at the moment) neither low cost nor low friction; did I misunderstand you?

Nope, no misunderstanding, you're right! But the promise of crypto is cheap frictionless transactions. We're a long way off.

Understood. Yes, it will probably get there eventually.

Trasferring or requesting lumens on keybase is incredibly easy and very cheap. Turning the lumens into fiat and vice versa isn't so easy at present.

Actually, it's obvious to me that this is the future - we want to share money in the same way and with the same ease we share thoughts and images ie inside chat systems and on social media. You don't need crypto to do this, but it's the best way of making a system anyone can join and trust.

Libra is going to be big unless it's artificially stopped, and that's my view, even as someone who would much rather see one of the current cryptocurrency systems win rather than a new Facebook invented thing.

If we hadn't ceded chat and social media to walled Gardens we would have solved this years ago.

So, what stops Facebook from trying to push Libra everywhere and then bowing out in the countries it doesn't take hold in? I doubt that many developing countries would be able to shut the door on them. It might even be a boon for those developing countries, because it could enable trade between them without some heavy fees in converting currency.

Any developing country can do the same as the US: prohibit their own banks from processing transaction to/from Libra. If the US decided not to make such a move, then users in those other countries could probably find work arounds, but it would increase the barriers of entry & probably adoption rates. And the larger adoption rates became, the easier it would be to shutdown major on-ramps & off-ramps from the currency.

As US company deliberately violating financial laws of another country might still come under tremendous scrutiny from US regulators.

Regardless, it wouldn't be perfect, and hopefully would still provide an (albeit difficult) option to avoid massively unstable local currency fluctuations. It would, however, exacerbate those instabilities which may be a net harm for all involved. I don't know though, these are systems complex enough that no single human can hold all of it, and consequences of various actions, in their head.

https://news.ycombinator.com/item?id=21161233

Nothing prevents them from building PayPal, except the regulatory regime they don't want to ascribe to. Also, the currency conversion to their own units and back relates to the taxability of said currency and the inability to use WoW gold to buy Starbucks. It is a matter of degrees - Facebook could seriously destabilize monetary policy for certain countries and subvert currency controls.

Well, they would have to do what PayPal did, which is build 1. A system that is acceptable by the regulations of any possible country they want to operate in. 2. Implemented by as many merchants as PayPal is.

This is feasible but not trivial.

Now, if you add in the "defy governments" part, it's clear that most merchants would not use it, which means users have a negative incentive to use libra over PayPal or whatever.

Even Amazon and Google failed to "just build a PayPal", and I don't see why Facebook would succeed easily.

> The "crypto" part seems like an implementation detail but otherwise irrelevant.

Nail on the head.

The innovation with cryptocurrencies is decentralized byzantine fault tolerance, using unknown actors. Libra is based on BFT where all parties are known, which has been a solved problem way before Bitcoin. The "crypto" part is irrelevant.

Yeah, there's no reason they need crypto to offer some type of scrip that is backed by a basket of currencies in the same way... what does crypto really add to this situation? Blockchain transparency? Frankly I don't want all of my transactions transparently available.

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