Facebook's cryptocurrency: If bitcoin is bullshit, is Libra also bullshit? (I... don't know!)

As you may recall, I wrote a long series about the fact that bitcoin is bullshit. Here is the wrap-up post, with links to each individual post in the series. I still think it holds up rather well, as one of the better bitcoin take-downs around.

The gist of it, in shorter form, is as follows. Functioning governments will never take tax payments in currencies other than their own to avoid Greece redux.* That adds transaction costs to every legal transaction conducted in bitcoin, making it intrinsically irrational to use bitcoin as a currency. Add to that the volatility that comes from people treating it as a speculative investment, and you have a violation of the basic principle of what a currency requires-- it needs to be a stable store of value. So, instead of being used as currency, because it would be irrational for people to use it as such given the volatility and transaction costs, it is just a venue for speculation, making it pretty much just a Ponzi scheme. If you buy bitcoin, you could make a lot of money. The people who aren't at the bottom level of a Ponzi scheme do. It's just hard to tell who's going to be left holding the bag of nothin'.

So, yes, bitcoin is bullshit. And even when it goes up in value, my response is that any increase shows a lack of stability, making it useless as currency, further demonstrating my point. It is a speculative asset with no end use. A currency that can't be used as currency because it is unstable in value is just... bullshit. You wanna try your luck? Go for it. You might get lucky. Or lose a shitload. Stupid schemes.

Now, though, Facebook is getting in on this with "Libra." Is Libra bullshit?

It is basically a cryptocurrency, so you expect me to say, yes, it's bullshit, right? Remember dogecoin?

Here's the thing, though. With Libra... I don't know. They are actually taking the practical issues of currency seriously. It's like they... thought about this, or something, and didn't just do the "let's create a cryptocurrency 'cuz we can" thing.

I'll preface this by saying that I do not have a Facebook account. Yes, I'm that guy. I bite my thumb at you, Mark Zuckerberg, I am not on your platform.

Someone thought seriously about this, though. They're taking active steps to reduce the transaction costs of conversion, and stabilize the value.

The US government still isn't going to take tax payments in Libra, but if the cost of converting Libra and dollars back and forth is sufficiently low, both in monetary value and time, the transaction cost argument against its viability diminishes, and if they can actually stabilize the value by pegging it to the dollar, they don't have to worry about the "stable store of value" issue, keeping in mind that this would also mean you can't really make money by "investing" in Libra the same way you can by speculating on bitcoin.

That also means that it can't displace anything. Except maybe paypal. And whatever Apple's attempt at a digital payment system is/was. (Does that thing still exist?)

Can Facebook pull this off? I don't know.

That means... I don't know if Libra is bullshit or not. I need to think more about this, and read more about the details of their plans.

But I'm going to be really pissed if paying for shit online requires me to get a fucking Facebook account.

* The state of Ohio has moved towards some nonsense about letting people pay state taxes with bitcoin, but since the state of Ohio doesn't control the dollar either, this particular act of stupidity is moving from accepting tax payments in one currency it doesn't control to another. This is a country-level matter.