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Facebook's currency: Implications for Banking
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- Lemon Quarter
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Facebook's currency: Implications for Banking
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?
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?
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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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.
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
Facebook has a dominant position in online advertising.
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- The full Lemon
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Re: Facebook's currency: Implications for Banking
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
Dod
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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- The full Lemon
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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!
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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- Lemon Half
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Re: Facebook's currency: Implications for Banking
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
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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- Lemon Pip
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Re: Facebook's currency: Implications for Banking
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.
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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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- Lemon Quarter
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Re: Facebook's currency: Implications for Banking
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
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
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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