libra works as a digital currency. you give it cash. libra then takes that cash and purchases a govt issued bond of similar currency. so it is essentially scalable since they will issue more libra as demand picks up. and will be pretty stable, since they are backed by bonds which is backed by govt entities taxing power.
libra is owned by a conglomerate of 28 founding partners who invest min 10m a piece(soon to be 100 at launch). Each member will have a voting power of 1 to prevent control by 1 major corporation.
it’s goal is essentially to create a globalized currency free from transfer of payments (v and ma for instance are worth 800b in terms of enterprise value). in addition, its annonnymity will prevent govts from tracking the flow of money (chinese trying to flee with their money to more fair countries like the us). they claim it will bring financial power to the 1.7b unbanked (lol, since they prolly dont even have a phone).
the cost to a person is that they give up the right to the interest from the cash they use. a pro or a con is that you are giving up the stability of your currency and shifting it to a more diversified bond fund that is contrlled by the people who own libra.
This is not a new idea in crypto-land. The obvious problem is one of the central pillars that holds up cryptocurrency as an absolute disassociation from fiat in all forms. In that respect, crypto = gold. That’s very appealing.
Crypto back by Central Banks, but still anonymous is interesting because it’ll be more stable, in theory, but now you’re just getting a derivative currency backed by government fiat that people were trying to avoid in the first place.
The only area of crypto I can see this working out is for some kind of stable cryptocurrency. That’s also not a new idea. Tying crypto to the dollar (Dai, for example…though it’s backed by ether and btc) would be huge for the crypto-loan market.
yes but the argument to wipe out transfer of payments is huge. credit card fees for instance usually cost around 3% in fees. xfering money to otehr countries cost 6% in fees.
also libra will not be dependent on 1 currency, but a basket of currencies that are invested in bonds. though the usd is still the world’s reserve, it is slowly losing relevancy as the us has been in relative decline and its competitors have reduced its dependency on it. so imo, taking a basket approach is prolly better than just dependency on usd.
anyways you should always avoid fiat currency since it is only used for the short term. holding currency has always been a stupid idea since most currencies are usually debased as economic capacity expands. charging interest tries to negate that debasement.
bitcoin on the other hand is completely retarded. its value is derived supple and demand. limited supply is what gives its price, coupled with increased demand as more people adopt it. over time, the cost to power the transaction will not be enough eventually and demand if it drops will kill it.
Exact same thing can be said about gold. Except the last part. It’s hung around as a currency (or store of value, if you prefer) for about 5,000 years.
actually gold is actually not the most used store of currency. its actually seashells believe it or not. about 10k years ago till about bronze age.
heres some interesting stats on gold. ~200k metric tons of gold mines. people hold ~30k metric tons in reserve. they mine about 3k/year. of this new gold, 70% is used for jewelry or electronics. 20% is added to reserves. 10% for other stuff. to this day, people are still buying gold to store value. many billionaires are actually piling up on it.
stats on bitcoin. only 21m bitcoin can exist. 17b are in circulation. about 650k of bitcoin is mined per year. at that rate we will hit the limit in 6 years. but the amount of newly minted bitcoin will reduce every year, it is currently estimated to last 125 years. these new bitcoins are awarded to people who process transactions. the rising price creates an incentive to power these transactions. but imagine if price drops, or the cost to process the transactions rise, or the amount of bitcoin you are awarded declines. therein lies the reason why in the long run, this is no good. anyways right now it costs around 5k and 16 months to mine 1 bitcoin. current price of bitcoin is 9k, but it was at 3k during 2018 lows.
nothing is backing this currency. it has no taxing power to support it. you are just xfering your cash to someone else.
libra isn’t really a crypto, it is more of a security representing the world’s basket of currencies. when you own a libra, you will own a proportion of each of the world’s currencies.
libra could useful as a medium of exchange for international trade. it could bring greater currency stability for emerging market exporters who export to companies with various currencies. also could lower the risk management activities necessary by these exporters who typically have to manage receivables and payables in multiple currencies.
also could be useful for those in places like venezuela as the transaction costs are likely much lower than current cryptos and everyone has or can have FB so maintaining purchasing power should be cheaper, easier and more effective. the ease of transferring crap currency for libra could further accelerate hyperinflation in those countries though.
the previous stanza describe the inherent value in gold. most of it has industrial uses. primarily as jewelry.
fiat cash is shit. but can be used to buy domestic bonds that earn interest. backed by 1 govt. if govt is good then u good.
bitcoin however is just shit. primary use is for transactions, with increasing cost. backed by nothing.
libra, backed by bonds. backed by multiple govts. so a more diversified form of currency. better for the shithole countries with shithole currencies cuz itd be more stable. and better for rich people who are trying to hide money.
breakdown of how 200k tons of gold is used btw. pretty interesting.
actually for countries experiencing higher inflation. the smart thing to do with your paycheck. is to xfer it right away to a more stable currency that is widely accepted like the usd! but in future, i think libra will be a much smarter way to go about it! and usd as a foreign reserve will decline.
really funny what is going on in venezuela. a nice economic experiment of a commodity dependent country experiencing a price shock!
also i will say this. gold is by far one of the shittiest investments if you look at it from a really long time period. its so shitty, it hardly beats inflation. youd have to be autistic