Facebook's Libra is a terrorist's best friend, thunders US Treasury: Crypto-coins dubbed 'national security risk' The US Treasury Secretary today put a big dent into Facebook's Libra cryptocurrency plans, by claiming it would be a "national security risk," as well as a likely source of money laundering for – among others – terrorists. Steven Mnuchin held a press conference to make sure his attack got wide coverage. In it, he criticized …
He did condemn cryptocurrencies as a whole before singling out Libra. Though I suspect they don't care so much about unspecified terrorists using it as they dislike the idea of a massive corporation creating its own currency. Though the idea of Facebook using it to pay their employees in what would be company scrip is rather amusing...
The US Treasury Secretary today put a big dent into Facebook's Libra cryptocurrency plans, by claiming it would be a "national security risk," as well as a likely source of money laundering for – among others –.terroriststhe current President and his immediate family
There, FTFY. After all, now that Deutsche Bank is no longer available to perform that task, what's an emolument-loving, corrupt money-laundering, dictator wannabee going to do?
Bitcoin, for example, is not really useful for any type of transaction that isn't at least grey market. The fees per transaction and time to completion makes use impractical from a small retail standpoint, and for large retail, your block chain encrypted "private" transaction suddenly becomes very public as the results of the deal flow into the traditional banking system - say you buy a car or a house from someone who wants to say, pay their auto company back for the car, or roll the sale of the house into a new house, that bitcoin has to be converted into currency. And as soon as possible I imagine, to reduce exposure to negative currency fluctuations risk. Therefore the only types of transactions that are logical are those where both buyer and seller are willing to assume a lot of risk and price things accordingly with the understanding that the results of the transaction are to be kept "off the books". Then the seller of goods or services must find someone interested in "currency conversion" to make openly fungible their electronic currency, usually as long as possible after the original transaction.
It's pretty ridiculous to blame one cryptocurrency for a money laundering risk. Crypto can be used for that, but money laundering has been pretty easy for a number of criminals. Terrorists rarely need crypto because they can run bank accounts and get donations from various supporters as long as they make a token effort to hide who it is. Theoretically, everything with value, from gold to cash to securities to those pointless online game accounts, can be used for money laundering. The solution isn't banning whatever we've decided is being used, but either making that thing harder to launder or finding the people laundering with it and dealing with them using the tools of the criminal justice system.
This idea of Facebook's is terrifying because Facebook has proven themselves to have a trustworthiness score somewhere below -100%, but it's almost certainly not going to be problematic because terrorists or someone else will use it to hide. It will be problematic because Facebook will attempt to monitor and control users' and nonusers' financial activity. Hate it for the right reason.
It is here if you are interested
https://libra.org/en-US/white-paper/
I'd say a decent amount of provisions have been made, like the establishment of an independent subsidiary Calibra.
KYC of all users is required, so I'd say the national security risk excuse is bunk. Could it destabilise established currencies in the future? Possibly, but it is supposed to be a stable coin.
The backing of the currency with assets is something that should help with the coin confidence. https://libra.org/en-US/about-currency-reserve/#the_reserve
To be honest, I understand the concern about anything associated with Facebook being bad news, but if you think about why they would want this to exist, it's just a really great way of removing the barrier to entry for so many commercial platforms. They could effectively wipe away any currency conversion costs that currently cost them money and hassle. No doubt that they could probably drive analytics on your purchase patterns etc. which will be another revenue stream, but the fact that Visa and Mastercard are already on the Libra consortium suggests this isn't going to be something new to them.
Independent, my butt. I'll believe it if they insert a clause in their charter barring anyone working in, with, or having less than two degrees of separation from Facebook for at least five years after they sever ties. Otherwise, it's just a pseudo-independent firm being pulled by invisible strings.
It's not new for the credit card people to be tracking purchases, but they haven't had the kind of history Facebook has with massive privacy violations. I wouldn't mind having extra choices for credit card provider either, for privacy reasons as well, but there's no comparison between Facebook and the established companies for privacy.
It's always nice to have an independent third party, but in order to establish its independence, I'll need to verify some things. It was started by Facebook, and they're the ones I'm afraid will hold too much influence. So I'll have to ask some questions. Are Facebook employees in this organization? Do Facebook have any control mechanisms over this organization? Is Facebook running the technical parts of the system? Let's check ... the answers are yes, yes, and yes. Let's ask a few more questions. Is there a method of throwing out Facebook? Is there some type of channel whereby the other people in this organization can override Facebook's decisions, including technical ones? Is there a method for end users to control the actions of this group? I'll check on those too ... no, no, and no.
"It's not new for the credit card people to be tracking purchases, but they haven't had the kind of history Facebook has with massive privacy violations."
That probably has something to do with banking regulations, something that doesn't really apply to cryptocurrencies.
It will if they try to go mainstream. How else will people buy into cryptocurrency without other currency with which to trade? It's not like the average Joe will be able to dedicate their computing time to mine for cryptocurrency (the pros will be on that the instant it goes legit, maybe even before). Coinbase (which trades in Bitcoin) opens their books to the Feds for this reason.
...Facebook will need to collect vast amounts of transaction data and other financial information.
They don't want to intrude into people's lives, you understand, but they want to do the right thing.
And if that treasure trove of private information just happens to accidentally get sold by Facebook, then that's something that they couldn't possibly have foreseen.
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Facebook don't sell data, just the access to that data (think Cambridge Analytica). And if the third party spends half an hour working out the API so they manage to get a bit more than they should, well that's terrible of them (nudge, wink). It was expressly forbidden by the contract so it's not Facebook's fault for making a sieve-like API.
America is already not leading in the digital currency and payments area. Paypal was created because America is a 3rd-world country when it comes to payment convenience. I read about all the initiatives that regularly crop up to make cash transfers easier and I always think "this will never take off in Europe".
Why ? Because I have a six-digit pin contactless Visa card that I can use anywhere in the world, and when I use it online I have a token generator that gives a six-digit number that I have to input to have the transaction authorized by my bank. I have online banking (also protected by a password and the token generator) where I can wire money to anyone I have the IBAN of. In short, I can manage and transfer my money as I please and very easily.
Then you have cryptocurrency, and yes I do believe that criminals are in charge of that. Either they are criminally incompetent exchange managers, or just outright criminals who stay in the game only long enough to have a nice bag of loot to leave with. I am not surprised that FaceBook wants in on that, it's right in The Zuck's mental ballpark. But I will no more deal with any cryptocurrency than I will willingly give FaceBook access to my private life.
If you're allergic to extreme pedantry, skip the rest of the rest of this comment.
"because America is a 3rd-world country"
This isn't true by definition. The "first world" consists of NATO bloc nations. The "second world" consists of Communist bloc nations. The "third world" consists of nations that are not aligned with either. The term "third world nation", despite common misuse, is not a descriptor of anything other than political alignment.
I'm sorry, but this has been a pet peeve of mine for decades so I had to be that annoying guy.
I'd like to petition the prescriptivist society to change the definition. My full petition is as follows:
Yes, your pedantry is correct, but I think we should fix that. The second world, as previously defined, ceased to exist three decades ago, as the block referred to by that name was directed by the Soviet Union. The existence of nominally communist nations does not mean there's a "second world", and that term no longer gets used. Meanwhile, many countries have been assigned to "first world" status despite not being NATO members and not necessarily having had an adversarial relationship with the "second world", including Japan, Australia, and New Zealand. Therefore, we, calling ourselves the descriptivists, would suggest that we revoke the previously-established definitions of first, second, and third worlds and reassign them to mean what everyone else has been using them for for a while.
Yes, that argument is not without validity (which is why I made sure to acknowledge that I was being excruciatingly pedantic).
However, I personally would prefer that we just stop using the "third world" as a shorthand for "poor/underdeveloped/whatever" and instead actually say poor/underdeveloped/whatever. But then, I'm a pedant.
Suppose, just suppose Trumpo the Magnificent wants to fill his boots.
Now he could --- although his strict Presbyterian ethics prevent him actually doing anything shady, of course --- hoard Bitcoin and all the little coins through proxies;
use his Bully Pulpit to denounce cryptocurrencies;
await for the Democrats and Never-Trumpers to lose their tiny collective minds again, and in a reflex spasm of 'Orange Man Bad' embrace Bitcoin and invest all they can, just to show him;
Dump his holdings
.
.
https://upload.wikimedia.org/wikipedia/commons/d/d4/Bubble.folly.jpg
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