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Comment by HashThis | Hacker News Reader

This ignores the big problems in Facebook's Libra:

1) It charges ECONOMIC RENTS. The ethical asset backed and currency backed stable coin needs to pass profits from revenue generating assets to the currency holder. The member companies should only take a tiny slice of the profits. This is the MASSIVE problem.

2) Libra is designed that ECONOMIC RENTS will be sharecropped and sent to the member companies. This will be the economic incentives for them to force it on their customer base and create incredibly fast adoption. This is a good thing, except it turns evil by the economic rents from #1.

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I'm no fan of FB or Libra, but I don't get it, how is that any worse than existing system? Banks charge huge interest rents and pass only a tiny (or zero) on to customers, credit cards charge even bigger interest rates in addition to fees that make all our products more expensive, ...

Interest rates are lower than at almost any time in history. They're usually strongly linked to default risk, which is why mortgages are about 2% but credit cards in the 10-20% range. But none of that is applicable to cryptocurrency, which doesn't really have a credit infrastructure at all and instead is trying to replicate something closer to negotiable bearer instruments.

Transaction fees are a real thing, but essentially that covers keeping fraud out of the system. In cryptocurrency that's your problem, and many of the "solutions" are riskier and in the end more expensive.

> in addition to fees that make all our products more expensive

There's a decent argument to be had that they make products cheaper.

What, you didn't think it was free to handle cash, did you? It takes time and effort to do that. So much time and effort that a lot of smaller places are going card-only here in the UK so they don't have to deal with cash.

Economic rents is an issue, but how else would you incentivize member companies to join into Libra in the first place?

The proven business models are "evil" to some population: 1. Charge fees (like paypal, stripe, bank ach / wires), 2. Collect interest via economic rents, or 3. Capture and monetize user data ala Facebook.

Can you think of a better way to jumpstart a new monetary network?

Laws and regulations in Europe have managed to make wire transfers and card payments cheap and efficient for both consumers and businesses.

It's not that cheap:

https://en.wikipedia.org/wiki/Electronic_cash#Costs

You may think 0.3% isn't much, but with razor-thin profit margins (e.g. groceries) it does make a difference.

Handling cash isn't necessarily cheap either.

Yes, but we're not comparing cash, we're comparing one digital solution to another digital solution. Libra does have the potential to further reduce fees.

Also, in order to use EC, you need a bank account, so it doesn't help the unbanked, which do exist even in Europe.

There's no problem here at all. Financial transactions are already providing "rent" to the established players.

In particular, you should consider the ludicrous fees that the unbanked are paying for basic services.

More competition is only going to drive that rent down further towards marginal cost.

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