Bitcoin Q&A: Facebook’s Libra Blockchain

“Hey Andreas. It is official: Facebook
will give us GlobalCoin early next year.” “Please put our concerns to rest and remind us why this
will only compete against central bank fiat currency, and not be a threat to Bitcoin. Thanks!” Unfortunately, I can’t put your concerns to rest.
In fact, I have sold all of my bitcoin to buy GlobalCoin. No, I am just kidding! What Facebook, or companies like Facebook,
are proposing is not a cryptocurrency. It doesn’t have any of the fundamental
characteristics of cryptocurrencies. It does not stand on the five pillars of open blockchains.
In fact, it [stands on] none of those [five pillars]. What are the five pillars that we talked about before?
You have probably [heard me say this] a few times. A cryptocurrency is open, public, neutral,
borderless, and censorship resistant. All of these characteristics stem
from decentralization of control. Anything created by a centralized organisation that
can be identified and exists in a specific jurisdiction, subject only to its laws,
cannot achieve any of these five pillars. They cannot achieve it because
the law prevents them from doing so. First of all, they can’t be censorship-resistant.
Let’s start with the [last characteristic in the list]. They can’t be censorship-resistant because they are
legally required to prevent the transmission of funds… to certain entities, including [those within] sanctioned
countries like Iran, North Korea, and Venezuela. Companies and people on the OFAC list,
run by the U.S. Department of Treasury. You can’t send money [to them]. You can find the
search engine, type in a name, and it will tell you… if that name is on the OFAC list.
Just for fun, type “Pablo.” The first name that will come up is Pablo Escobar.
It is a felony to send money to Pablo Escobar. The OFAC list is long. How long? Nobody really knows. If you are a regulated entity, you are required to check
[names] against before transmitting payments. So [Facebook’s coin] won’t be censorship resistant, because you are required by law
to censor certain transactions. The OFAC list is becoming longer and longer.
If [Facebook’s coin] can’t be censorship-resistant, it also can’t be borderless. If you are prohibited from sending money to
certain countries, you must be able to identify… who is receiving the money and where they are. In order to identify who and where they are, you must
follow ‘Know-Your-Customer,’ ‘Anti-Money Laundering,’ and counter-terrorism financing regulations.
Essentially, [they] would start behaving like a bank. Anybody who implements a centralized payment system
must follow the rules of a money transmitter or bank. At that point, you are no longer neutral.
The protocol itself cannot be neutral. “Neutrality” means any sender,
recipient, or value regardless. The protocol should not care where you are, who
you are, what you are doing with the money, or why. A regulated entity cannot [refuse to] care about
these questions. They must check all of those things. “Who are you?” “Where are you?” “What are you doing
with this money?” “Where did the money come from?” You may notice, those are very specific questions.
Your bank has probably asked you these questions. The exchanges you deal with have
probably asked you these questions. “What is your income?” “Show us identification.”
“Which country are you in?” “Are you an American?” This applies across the world.
Every jurisdiction has different rules. Facebook acts as a borderless company
in many aspects of its operation, but… money is not an area in which it can do that. It can do that with content [to some extent]
because of various protections under the law. Even that results in Facebook being blocked
and banned in a number of authoritarian countries. If they tried to follow payment regulations, for two
billion customers across 194 countries, is a morass. It would have the same problems that PayPal has.
Why is PayPal not a global company that… serves 194 countries equally? They can only [fully] serve about twenty to thirty
countries, [and dozens more to a limited extent]. And even there, they must [comply with a lot
of restrictions], because they became a bank. They are not censorship-resistant, borderless, or neutral. They can’t make this information publicly available,
because that would violate various laws. They hold a lot of private identity
information about owners of money. They can’t create public APIs, transparency reports,
due to laws around secrecy of financial information. Most importantly, they cannot be open.
They cannot give access [to anyone]. You can’t send or receive outside of their platform.
They won’t allow you to take [coins] off their platform. They won’t allow you to sell them to someone else
unless they are an intermediary in the middle, and control every transaction. They are not open, public, neutral, borderless, or
censorship resistant. It is not a cryptocurrency. They are a bank just like PayPal and JPMorgan Chase. They will be a large, multi-national, powerful bank with
a lot of users. [Traditional] banks should be very scared. When technology companies start playing in banking,
with all of these users and experience with technology, that will be a real challenge for [traditional] banks. Even though Facebook’s coin cannot be as open,
borderless, neutral, or censorship resistant [as bitcoin], they could certainly be more open and
reach more countries than JPMorgan Chase. They will start with more users. That should be scary
for all of the existing financial services companies. It should also be scary for some authoritarian
regimes that will try and fail to block Facebook. They may try legal shenanigans and
probably fail, or face an army of lawyers. This does affect central banks as well,
especially in countries that have problems. It does affect fiat currencies.
It will force banks to modernise. All of the legal restrictions will be challenged,
of course, which may make the banking system… more open, and that would be a good thing.
But [GlobalCoin] can never be a cryptocurrency. It can never be as open as Bitcoin, or any of the open, borderless, public, neutral,
and censorship resistant cryptocurrencies. I will hold what I have. To me, this is
not about convenience of payments. This is not about access to a 2 billion userbase.
This is about being free, being able to hold my money, [where] no one else can just freeze it, censor it,
tell me who I can and cannot transact with, when, how, or what I can transact for. That freedom is at the core of cryptocurrency.
You won’t have that freedom with GlobalCoin.

100 thoughts on “Bitcoin Q&A: Facebook’s Libra Blockchain”

  1. What do you think about the recent FAFT regulations being drafted for G20. It is trying to make VASPs as banks now. And will transacting outside their purview be considered illegal?

  2. "Never Interfere With an Enemy While He’s in the Process of Destroying Himself" … FB will likely wasting millions building what will be nothing but another bank. This will cost them billions if it ever sees the light of day. FB coin will get banned as soon as it's launched and when governments realize they can't ban it, they'll just ban FB.

  3. Hi Andreas Really enjoy your work. Would really like to know your thoughts about the FATF travel rule and how it will affect bitcoin. Thanks 🙂

  4. Globalcoin aka globalshitstablecoin. Hey if it helps adoption and we can comvert it between other crypto and fiat then im all for it.

  5. Dont promote GLOBALCOIN. If you do, you're a moron. It's just another way for Facebook to control people. They want to control free speech, now they want to control

  6. It's easy to fool people, rather than enlightening them about they are being fooled. Do Facebook coin a real crypto DEFINITELY Not, will it be gonna be in so called top coin list may be YES.

  7. fb coin will open the doors to people to "trust" crypto currencies. They will then learn that fb coins in NOT a cryptocurrency and be ope to a REAL crypto currency that is better, safer and has more advantages to everyone on the planet….enter bitcoin….So…..thank you fb.

  8. Could act as a good Tether replacement….but can we trust it? It has to be audited since it is not a true Blockchain. Facebook coin is basically a Rubber Currency which claims to be pegged and they can make the numbers up at will!

  9. I look at it differently. Since the GlobalCoin will be tied to fiat-currencies such as USD, EUR and YEN, this is essentially a government-issued coin disguised as a cryptocurrency trying to compete against Bitcoin and other cryptocurrencies. Thus, the governments and banks wants this and are probably collaborating with Facebook as it is a win-win situation for both parties (FB earn money and the Government utilize FBs gigantic network to hold on to their "customers"/sheep). The government won't give up their ponzi-scheme that easily. In the future I believe GlobalCoin will be supported almost everywhere globally, while Bitcoin and other cryptocurrencies will be heavily restricted. I also think blacklisting and whitelisting of BTC/crypto-addresses are on the agenda.

  10. Thanks for all you do for Bitcoin and cryptos in general. It is because of you that I got into Bitcoin back in 2014.

  11. This will be the new PayPal. All payment providers will have pay by credit card, PayPal or Facebook. I agree it is not crypto but will be popular

  12. This video is proof that Andreas is from the future! He has somehow provided a detailed analysis of GlobalCoin, including its regulatory and compliance framework, before any of these details have been released. He's even managed to predict that Facebook will become a bank, even though there is a clear definition of a bank (fractional reserve, capital adequacy, Basel, etc) vs an Electronic Money Issuer (100% backed by escrow), and everything so far released suggests that FB is planning the latter, not the former.
    I did find the positioning vs Bitcoin to be most helpful. In summary, if you want to send value to Pablo Escobar or N. Korea, use Bitcoin. If you want convenience, liquidity and critical mass adoption, then use GlobalCoin.

  13. What say you on Congress critter Sherman's bill on banning all Crypto Currency? –

  14. Thanks for clearing this up for people.. This should be obvious tho. Who really wants a crypto backed and controlled by FB??

  15. Someone 👏🏻 Buy 👏🏻 Andreas 👏🏻 A 👏🏻 Better 👏🏻 Microphone👏🏻😂. My phone speaker is literally vibrating (not in the normal way).

  16. If you play the James Bond Spectre theme when James gets discovered by Blofeld at that secret meeting while watching this video and close your eyes, it feels like you are sitting at that secret meeting in the Spectre movie

  17. To think fb is going against big banks is ignorant. They are just pushing the agenda of the elite. It’s just another marketing ploy.

  18. Who would trust Zuck with their money? You would post a non PC comment on zerohedge and all of a sudden your account would be frozen. They are way too SJW, snooping, and generally dishonest to trust.

  19. Decentralization of control doesn’t exist. I don’t know how a genius like Antonopolous doesn’t see that all blockhain consesnsus mechanisms are centralizing mechanisms, that eventually lead to people being able to control a network.

  20. I wonder will all banks be gone in ten years from now? I think they will find a way because they wont allow (govrmnts included) Bitcoin to prevail in financial industry? What are your thoughts?

  21. You already have US wanting to regulate fb and now you have KYC involve would force ppl off fb with a private coin

  22. Beginning of the end for fb. Opens up other decentralized social media platforms especially if these social media coins would be paired with BTC for value. Fb would have to rethink Stablecoin backing

  23. So this must be good for gbtc shares am I right? Does anybody else think the Facebook is going to basically be a Bank like Mark Zuckerberg is basically going to become one of these powerful bankers and then Bitcoin can become a legitimate currency?

  24. Thank you once again for a good response, Andreas.

    And we all know there will never be another one like Bitcoin, ever

  25. It's amazing how people love bitcoin and the decentralized nature of it (which is fully understandable) however, when you mention that capitalism and every(99.99%) corporation is centralized they either turn a blind eye or they say "money is good to be decentralized but not companies). WTF????

  26. Love your video You are the Yoda of Bitcoin and Cryptocurrency philosophy. Unfortunately, I think most will think Libra is a cryptocurrency because they don't follow or listen to you. Libra will probably be a gamechanger in global finance. Libra was never meant to be a cryptocurrency but the media is pushing it as a crypto. The ignorant will always follow the lies of their masters. Sad but True. Thank You for all you do in this space Andreas. Be Well. 🙂

  27. Dude you nailed it. It does have a positive aspect and that is that people can transition into the crypto world very easily.👍

  28. I respect Andreas but he is wrong. Libra will be decentralized — it is the level of decentralization that is in question. Libra will be backed by 100 or so organizations. Unlike BTC Libra will have a stable value. It is impossible to have commerce on BTC because of wild value fluctuations. Libra will be true p2p cash. BTC today is mostly a speculative asset, very few actually use it for commerce. FB already has Fb app installed at 2B+ devices, they will simply integrate into the FB app and you can build your own wallets. Libra is a real threat to BTC and ETH — not only will you be able to use Libra as digital cash but also build apps on top.. ETH is screwed. BTC is not even a good store of value. Store of value must be stable, BTC is not.. Most on boarding ramps to BTC are already regulated via exchanges so a wash there as well. Libra will simply take over BTC as a form of payment because it will be easy, stable, decentralized and global. Has all the properties of blockchain. What most people dont get is that Libra is not Fb coin but a coin governed by a consortium of companies.. This is better then being governed by a consortium of centralized mining operations with wild value fluctuations.. Nobody will price their service in BTC because it is not stable.. So you can yap all you want about BTC but reality is BTC adotion is not growing (excluding speculation)..

  29. I will never Trust that 🤖😂💯. I trust code, not multi billion dollar corporations, not governments. Esp not corporations backed by governments currency. It's a worse Ripple.

  30. Sure, but at least you can sell it as a cryptocurrency like Ripple did. That's good for the entire cryptospace, beacuse it makes the market bullish.

  31. This Libra private 'not-for-profit' consortium process is exactly how US Federal Reserve was created. Zuckerberg is trying to create a global central bank. Here is the link to watch this sociopathic oligarch Zuckerberg several years ago lying his ass off, making similar claims that he was going to bring internet freedom to everyone on Earth with ''.. He did exactly the opposite.. Fool me once, shame on you. Fool me twice, shame on me..

  32. Andreas for some reason you blocked my Twitter @cryptologiccat idk why 🙁 please unblock I love your content

  33. Andreas – Great explanation as to why Facebook is not a true cryptocurrency nor threat to Bitcoin. You are totally awesome!! Peace.

  34. Are you ready to relinquish your USA Citizenship? See how that work$? It is not as easy as it sounds. But Bitcoin doesn't give a fuck. It just does it daily. So yeah enjoy that profit but never cash out as it is that important to protect yourself.

  35. About the 5 pillars Censorship Resistent, Neutral, Public, Open (permissionless), Decentralized – is the following summary correct?

    1.) Consorship Resistent: Nobody can prevent anyone from sending any amount to anyone else, and it does not matter where the money once came from that I am spending now (the latter is fungibility). Funds cannot be locked or confiscated and rolling back transactions in retrospect is hardly possible.
    2.) Neutral: The protocol does not care about the amount transferred (tx fee is not function of amount sent). The other aspects that one might associate with "neutral" are already included in 1.)
    3.) Public: Everybody can fully access the database ("public" blockchain) in the same way and verify the transactions by themself independently.
    4.) Open (permissionless): Everybody can view the source code ("open" source) of the protocol and contribute code or compatible applications. This ensures that there are no backdoors or limitations to the first 3 pillars and that the ecosystem can evolve freely and unhindered. Moreover, anybody (human or machine) can participate openly without any need for authorization/permission or proof of identity or nationality.
    5.) Decentralized: This is a precondition for all the other pillars. By being decentralized it is ensured that the other pillars cannot be simply removed or weakend by decision of a central authority at some point in time. So the other pillars are worthless without decentralization. So Decentralization is the main pillar on level 1 that the other pillars are built upon on level 2. Bitcoin is decentralized in terms of the protocol (provable by pillar 4) but also in terms of organization of the project (developer community).

    Checking these 5 pillars, each by itself, for Libra coin we see: It fails for all 5 pillars.

    PS: 5b.) Borderless: Bitcoins are not located anywhere, but everywhere, they are information and not physical. You cannot bring them into a country, they are already there. They are everywhere, like laws of physics are.

  36. Thank you for explaining it so well. A free people properly informed should give this centralized "socialist" media currency little respect and useage. Unfortunately the illinformed brainwashed masses will fall in love with it's convenience and we are one step closer to a one world currency and cashless society

  37. Have asked this question on multiple platforms no answer. If ledger nano can give me a backup for a device i have lost,and my same crypto information is restored to a new nano device. How can they claim you private keys never leave the original nano

  38. I dream of a revolution every day … when we all take care of our finances and we can finally have peace … forget what wars for oil and petrol dollar have been!

  39. The masses don't care for the ideology of "true" cryptocurrencies. Nothing of what you said means that Facebook Coin is not a threat to Bitcoin and other cryptos. When Facebook is the one that will catapult crypto into the long awaited mass adoption, then with the blink of an eye 99.9% of all other cryptos become irrelevant. Mark my words.

  40. Many ppl think that Libra will be an on-ramp to bitcoin but if it can’t be withdrawn from their system, how would that be the case? Plus, why would they want ppl leaving their coin and buying into bitcoin ?

  41. If they give out loan, banks should be worried. For now they are paypal with a potentially large user base.

  42. very good, but the information regarding OFAC is flawed in various respects. You can download the entire lists of sanctioned companies and individuals; and of course Pablo Escobar has been dead for a long time now, and will not show up on any current search list in OFAC

  43. Andreas doesn't even have to try to bash libra coin and does a better job then all other youtubers out there actually trying. Great thorough run down. Love it. And now I'm more at peace with this libra crap. Thank you

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