With the June unveiling of their proprietary coin, Libra, the social media powerhouse has established 2020 as a targeted start date to go after cryptocurrencies like Bitcoin, Ripple, and Etherium for digital currency market share. But what exactly makes this “latest and greatest” coin any different from all the other cryptos already floating around out there?
Well, a few things set Facebook’s Libra apart.
Libra’s Blockchain Is Structured DIfferently
Libra will be a permissioned blockchain.
Think of it this way:
Bitcoin (BTC), as an example, is accessible to anyone around the world who wishes to engage with its network (meaning it’s “decentralized”). Libra, on the other hand, will have a network of powerful institutions in charge of granting access to users around the world.
So—yes—that means there’s NO GUARANTEE you’ll be able to transact in Libra whenever you wish to do so.
Powerful Institutions Are Involved
Libra has a network of 28 “partners” who comprise its founding members of the “Libra Association” (LA). These are the gate-keepers who will each run their own “node” within the blockchain to determine user access and confirm transactions.
Perhaps the most noteworthy part about the LA, is the whos-who list of companies founding it including Mastercard, Paypal, eBay, Uber, Andreessen Horowitz—and many more.
Facebook itself is a member as well (through its subsidiary, Calibra)—though they hold no more power at the voting table than any other member.
Libra Is Designed to Be a Stablecoin
Libra will be backed by REAL currencies and securities.
That’s right—Facebook wants no part of the wild-west, digital-only, volatile marketplace that governs the constantly moving price of existing, decentralized cryptocurrencies. They want a “stable coin.”
So Libra is going to have traditional monetary units as a source to redeem Libra currency units—thus allowing the LA to create and retire units as desired (offering a better opportunity for stability, in theory).
It remains to be seen just how much the marketplace wants to help Libra get legs underneath it—but the power of Facebook and the members of the LA network certainly give it legitimacy right away.
The US government, however, seems to be a little less than excited about Libra.