Its level of decentralization is limited compared to Bitcoin or Ethereum, but higher compared to PayPal and Alipay. The blockchain he uses can support 1000 transactions per second. And among the key principles is security. Analogies and differences between Libra and other cryptocurrencies such as Bitcoin or Ethereum.
Libra from Facebook is a cryptocurrency. But there are currently at least 2,238 cryptocurrencies in the world. What are the peculiarities of the digital currency that will be issued from 2020 by Mark Zuckerberg’s social network?
What is Libra, the Facebook Cryptocurrency
On June 18, Mark Zuckerberg announced to the world the currency of Facebook, Libra. A project that is not limited to creating a cryptocurrency but involves the introduction of an entire ecosystem designed to create a global financial infrastructure, accessible to billions of people.
How Libra Works
The Libra project has three key elements: the association of actors that governs it, the blockchain on which it is based and the cryptocurrency with which it is used. First of all, the project is governed by the Libra Association, a non-profit based in Geneva, which includes 28 members including companies, non-profit and multilateral organizations, academic institutions from all over the world.
These organizations join the association by actively participating in the Libra network, executing a validation node on the network and serving in governance in exchange for rewards generated by transaction fees, commissions on conversions and interest on deposits.
What Makes Libra different from the other cryptocurrencies
Going to consider the degree of decentralization, in the case of the Libra project this is limited if it is compared to permission less and open-source infrastructures such as Bitcoin and Ethereum with miners or nodes of the order of thousands, and in fact the minimum requirements imposed by the association they are very restrictive (eg minimum $ 10 million investment ) and can only be met by a few organizations in the world.
However, compared to companies like PayPal / Alipay, the degree of decentralization is higher, also considering that each member has the same voting power (1%), including Facebook.
As for the blockchain used, Facebook first acquired the entire team of the ChainSpace startup, to develop a blockchain capable of supporting 1000 transactions per second and creating a new programming language known as “Move” to develop on it. Security is one of the key principles on which this language is developed, with which it will be possible to create new assets, logic and applications of decentralized finance on Libra.
As far as the Libra cryptocurrency is concerned, it is guaranteed by a basket of legal currencies (for now Euro, USD, GBP, Yen) which will allow a stable value over time and allow consumers and merchants to overcome the risks of volatility that today they undermine cryptocurrencies as a means of payment. There will be no monetary policy, it is possible to generate new Libra by depositing legal money and vice versa it is possible to burn Libra by withdrawing legal money.
Libra and the Rise of cryptocurrencies: What it means for banks
Along with all the necessary documentation, Facebook has released through its subsidiary “Calibra” the first Official Wallet through which it will be possible to use the cryptocurrency on the Whatsapp or Facebook platforms. For the world of cryptocurrencies, this event represents a great opportunity for the on-boarding of new users, adoption and a push towards governments and regulatory bodies to implement a global regulation on crypto assets. For banks around the world it probably represents a threat if, as has been the case up until now, a regulation that is both global and permissive is not issued.