Bitcoin is the cryptocurrency that has made headlines in the past few years, but recently Libra has taken the spotlight. Facebook is planning to launch Libra next year, but there are hurdles for the “cryptocurrency,” including congressional hearings. There are many questions that need to be asked about Libra, the first of which is “Can Libra be considered a cryptocurrency?” Let’s take a look at Bitcoin and Libra and highlight the differences.
Some people don’t believe that Libra can be defined as a cryptocurrency. “Cryptocurrencies are defined by their lack of reliance on trusted intermediaries,” Peter Van Valkenburgh, director of research at Coin Center, said recently in a blog post, “We believe that Libra is not a cryptocurrency because of its use of a permissioned ledger and its reliance on a trusted issuer to hold and manage a fund of assets that back the currency.”
A better definition of Libra might be a “stablecoin.” Libra will be trying to have a stable value that is tied to world currencies. Facebook executive David Marcus said recently that the goal for Libra will be to work “more like a traditional currency” than a cryptocurrency.
Bitcoin vs. Libra
The biggest difference between Bitcoin and Libra is control. No government or single authority controls Bitcoin. On the other side, Libra will be controlled by Facebook and their partners. It is this fact, above all, that sets Bitcoin apart from Libra and why many people will prefer to use Bitcoin if indeed it becomes a competition. Facebook has already come under attack for privacy issues and there are many people that have concerns about trusting Facebook with a currency.
Value
One thing we have seen with Bitcoin is wild price fluctuations. This is a good news/bad news scenario for investors. Bitcoin does not have any currency like the dollar or Euro backing it up, so the value goes up and down constantly. That will not be the case with Libra, as it will be backed by Facebook and their partners and the value will be tied into world currencies.
Somewhat related to value is the supply issue. Bitcoin has 21 million coins in existence and that number will never change. That means there will not be inflation with Bitcoin. That is not the case with Libra, as Facebook and their partners will control the Libra supply.
Mining
Bitcoin is based on blockchain and miners can start mining at any time. That is not the case with Libra. Miners will need permission to start mining Libra and that means another level of control for Facebook. Anyone with the hardware and technology can start mining Bitcoin, but Libra will be keeping mining under control. Bitcoin transactions are recorded on a public ledger which is known as a blockchain, but Libra’s blockchain will be permissioned and not public.
“Libra will create a centralized structure governed by an unelected ‘association’ composed exclusively of large institutions who have purchased their voting rights,” said Ido Sadeh Man, founder and president of the Saga Foundation to the media.
The question that will be answered in the near future is whether or not Libra will overcome the regulation issues. If Libra does manage to navigate the government it could have a big impact in terms of global currency. CryptoCompare’s Hayter said to the media that Libra could have a huge impact on the economy. The currency “will undoubtedly have an enormous impact on the global economy — possibly eclipsing that of bitcoin.”
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