How is Libra different from Bitcoin?
Globally the largest social networking platform, Facebook, announced that they are introducing their own cryptocurrency named Libra on June 18, 2019. But is Libra the same as other crypto coins, or would it be different from the other existing crypto coins? Also, when issuing crypto companies, what mind of an impact would it create between sovereign countries and private companies.
Digital coins such as Bitcoin do not have any authoritative or governing body and are neither controlled by anyone. But in the case of Libra currency, it is different from the existing cryptocurrency mechanism. An individual body consisting of several different organizations have been created, and together they are called the Libra Association. In this organization, there are corporate giants like Facebook, Mastercard, Vodafone, Visa and Uber. Libra will directly be under these companies. The operations of Libra will be conducted in a different environment than any other cryptocurrency. It will be controlled by creating a restricted environment, and also it won’t run in the blockchain.
The verification of the transactions will also be handled by some computer nodes controlled by some trusted companies. On the other hand, bitcoin is free for all where anyone can verify the transactions. The drastic change in the governing method can drastically change the perception of Libra in our society today.
Growth of Libra
Scalability is a fundamental issue for crypto coins. Visa can issue up to 65000 transactions every second, but if we look at bitcoin, it has a limit of processing a few hundred thousand transactions each day. Although the technology is available to upgrade the system of bitcoin, due to lack of governance, the attempt to increase the scalability of bitcoin has ended up in ruin. The difference in perception among people has also given birth to offspring coins such as BitcoinCash and BitcoinGold.
Libra can easily overcome these technical challenges whenever any adaptation or change in the system is required because it has a swift governing body available to make quick decisions. And all of the implementations can be conducted in an organized manner.
But we will also have to see the other side of the coin. It is highly likely that this association comprised of corporate giants will put their own interests first rather than looking after their consumers. Also, recent consumer data breaches can obviously raise questions among people if they can really trust the founding members of this currency because all of their financial transactions will directly go to the companies who are handling the Libra association.
In the existing financial system, laws and regulations secure people’s privacy and access to financial information and systems. Laws are implemented in a democratic process, and banks cannot impose a ban on people from basic financial services, which everyone needs nowadays.
But the same cannot be said about private companies who are issuing their own currency for their benefit. Facebook can impose a ban on you for critically commenting on something and cannot let you access your Libra. The option to seek justice through law would be limited. But without a governing body, Bitcoin has an advantage here. No one can touch your money.
Libra is coming with both advantages and disadvantages. It would be better to go through all the options before jumping to a conclusion.