When it comes to cryptocurrencies, you would be forgiven for not knowing everything about them, simply because it seems like a new one pops up every few seconds. To make matters even more complicated, Facebook has decided to get in on the game by releasing its own cryptocurrency called Libra. Now, even though Libra has been out for some time now, it’s still causing a bit of confusion, especially among those which are looking to make their first cryptocurrency purchases.
And there are plenty of those still because the global blockchain market size is expected to reach as much as $57 million by 2025. Speaking of blockchain, the one Libra is built on is similar to that of Bitcoin in at least one way. They are both open-source, which means that users will be able to make their own additions. Also, Libra is a pseudo cryptocurrency just like Bitcoin, which means that users’ identity will remain anonymous should they make a purchase. But, since Facebook intends to practice KYC, users will be required to provide a government ID. And the differences don’t end there. Here are ways in which Libra differs from Bitcoin:
One of the things that define Bitcoin is its decentralization. In other words, Bitcoin isn’t controlled or governed by any company, institution, or individual. It is only controlled by the people who choose to buy or mine it. Libra, on the other hand, is controlled by Facebook and the Libra Association. The latter also seems to provide large or selected entities more control over Libra. In fact, Libra itself is owned by the Libra Association, which is located in Switzerland and is made up of 27 members, including such tech giants like Uber and Spotify, as well as numerous venture capital firms.
As mentioned before, you will be required to provide some kind of government ID should you decide to purchase Libra. This seems like a big disadvantage, especially when compared to Bitcoin. You are likely to have two choices when using Libra. According to financial advisers at Bestessay.com, which is a professional writer service that provides assignment help in Brisbane, you will either use a custodial exchange or wallet, which is similar to a bank, or an unhosted wallet, which will come with built-in KYC and AML mechanisms.
This is probably the biggest difference of them all between the two cryptocurrencies. Since Libra hasn’t been officially released yet, you can actually use it. Bitcoin, on the other hand, has been in circulation for a long time now and can be used by pretty much anyone, regardless of their location or identity. And you can make a trade on exchanges or direct trade websites. Even if it does get released eventually, Libra will be limited, since it’s a cryptocurrency designed to be used for purchases and trades on properties owned by Facebook, including Whatsapp, Messenger, as well as Facebook itself.
Bitcoin’s biggest appeal is the fact that it’s not tied to any kind of global currency or asset. Its value is held up by its trading activity. However, its volatility is also its biggest disadvantage, since its value can fluctuate multiple times throughout the day, which makes it harder to buy goods with. Libra, by comparison, is a stablecoin, which in this case means that its value or backed by bonds and a variety of global currencies. Since those assets are much less likely to undergo dramatic changes in value, Libra’s value will be more stable as well.
Bitcoin supply has been set at 21 million, and the only way you can create Bitcoins is through mining. So far, over 18 million of those have been mined. Libra coins do not rely on mining for their creation. Instead, they are created when authorized resellers buy them from the Libra Association while providing fiat assets to back the purchased coins. The only way to destroy Libra coins is to exchange them for assets that are backing them, such as bonds or currency.
Bitcoin’s core code was done in C++ and relies on the Proof-of-Work consensus protocol in order to validate data. Libra wasn’t developed using any of the popular programming languages. Instead, it uses Move, which is a new programming language that was developed specifically for Libra and its blockchain. This was one done in order to implement additional capabilities, such as custom transactions and smart contracts. Move itself was designed to minimize the risk of unintentional bugs, which could lead to security breaches. In order to reach consensus among nodes, the Libra blockchain relies on the LibraBFT consensus protocol, which sports higher throughput, lower latency, and better energy efficiency than Proof-of-Work, for example.
It could be argued that a Bitcoin network is possible to hack, and it has pretty much remained untouchable in over a decade. The most vulnerable parts are digital wallets, as well as private keys that are kept on hardware wallets. Libra is more susceptible to DDoS attacks, as well as ID hacks because it has centralized nodes.
As you can see, while Libra and Bitcoin share some similarities, they are two very different animals. They are created and valued differently, and one is fully decentralized while the other one is governed. Still, we have yet to witness how Libra cryptocurrency will perform, once it gets released to the world.
Isabell Gaylord is a professional journalist and a manager for a number of dissertation writing services. When she is not in the office, she enjoys traveling and writing.
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