Bitcoin seeks to remove, while Libra looks to build
[ Kim Moon-soo’s Token Biz ] Facebook’s proposed cryptocurrency, Libra, has been in the headlines recently. In fact, even U.S. President Donald Trump tweeted about it. However, Libra is vastly different from the original cryptocurrency, Bitcoin, and the differences are clearly outlined in the so-called “white papers” of the two cryptocurrencies, which spell out the intentions behind their creations. Their differences speak volumes to the investors that might be interested in taking stakes. 1. Direct finance without a financial authority vs. A financial organization that transcends borders While bitcoin is trying to achieve a financial system based on individuals without intervention from a financial authority, Libra seeks to become a financial group that goes beyond all borders. 2. Financial organizations increase costs vs. Making financial services easier and more affordable Bitcoin believes that the existence of financial organizations themselves leads to increased costs in the system. Libra is attempting to provide an easier and cheaper financial service. 3. Removal of governance vs. Establishing governance Bitcoin wants to put an end to the role of governance in a financial system, while Libra wants to establish an organized system of management. The Libra Association Paper, a 10-page document, includes a thorough explanation of a system that includes a council, board, executive team and managing director for the cryptocurrency system. 4. The significance of the “open” concept In the Bitcoin white paper, the word “open” is used only once to say that the decentralized system will not allow arbitrary changes by an attacker. Libra’s document emphasizes the word “open” strongly, with the word appearing 20 times. 5. One white paper vs. A standard white paper and affiliated documents Bitcoin’s white paper consists of one simple document that thoroughly explains the cryptocurrency. Libra’s paper is supplemented by other documents on the Libra Blockchain, the Libra Reserve and the Libra Association. Bitcoin’s creator, under the pseudonym Satoshi Nakamoto, developed the bitcoin ecosystem and sought to create a “god protocol,” an ideal trustworthy system. Libra has argued that it will target decentralization through its document “Moving Toward Permissionless Consensus,” however, its concept of decentralization is debatable. It has yet to clarify whether it means decentralization by the participation of the public or one led by the Libra Association. It is unclear whether U.S. President Trump’s tweets on cryptocurrency were motivated by the influence of Bitcoin or the newness of Libra. What is certain is the growing influence of cryptocurrency. Bitcoin influenced Libra and, in turn, Facebook’s cryptocurrency and its “white paper” has influenced numerous central banks, including China’s, in their formation of digital currencies. This is leading to wider-reaching influences on U.S. policy to maintain the dollar as a global reserve currency.