Is establishing Libra a liberal act? – Alex Ha


Will the new first of its kind crypto that supported by Corporate further disrupt the financial industry?

Last week, Facebook (FB) released its plan for “Libra crypto”. The company unveiled a consortium to create an open-source digital currency called Libra, set to launch in the first half of next year, which would allow consumers to send money around the world easily and for free.

So far there are over 28 partners, including payment networks like Visa and Mastercard; Fintech firms like PayPal, Coinbase and Stripe; Venture Capitals like Thrive and Andreessen Horowitz; Software services like eBay, Lyft, Uber, and Spotify. The unprecedented new financial infrastructure is looking forward to establishing an ecosystem with corporates who shared a common vision.

The advent of Bitcoin — the first and the largest cryptocurrency has attracted public attention. After the crypto crash of bitcoin, a lot of virtual currencies are developed with features distinct itself with bitcoin. Comparing Libra to Bitcoin, there are huge differences among functionality, availability, and opportunities.

1. Data Structure

What some people really like about Bitcoin — but hated by most governmental sectors — is the anonymous nature of the transactions, and the potential for moving money between people and between nations with complete secrecy. In most of the cryptocurrency networks, most transactions are represented by an address with 26–35 alphanumeric character in the open-sourced network under the “hash trees” system where the verification work was carried by a data service provider (Miner). Therefore the entire transaction would only involve two stakeholders who are the receiver and the sender.

Libra is different. The Libra Blockchain is running under “single tree” data structure, where transactions can only occur with the central authorized nodes, and with a permanent record being generated at all times. This defeats one of the biggest advantages of cryptocurrency — the nature of anonymous. Therefore it adds risk to individuals who carry Libra because transactions can be easily tracked by a central node.

2. Availability

Bitcoin has a capacity of 21 million where the Libra has no limit within its capacity. Which made those two coins become completely different, Bitcoin’s value heavily relies on trading volume and its scarcity whereas Libra’s purpose was to stabilize its value as the same as 1 US Dollar. To do this, Facebook is looking forward to peg the dollar with major international currencies, for instance, the United States Dollar, Yen, and Euros.

The nature of Bitcoin and Libra has yet diff to a great extent because Bitcoin is perceived as a high-risk investment with great default risk and Libra is aiming to replace national currencies we made. As a result, they complete in a different space in the financial market, for Libra instead of completing with bitcoins, Facebook would have to execute the biggest problems with marketing — to gain trust from the general public and market themselves as a better place for savings than traditional banks.

Competitive Advantage

Adopting blockchain technology under a name of one of the most influential companies has enabled them to bridge with general public easier by integrating the financial ecosystem into their social system and create a more inclusive trusted financial system:

  • It is built on a secure, scalable, and reliable blockchain;
  • It is backed by a reserve of securities designed to give it intrinsic value.
  • It is governed by the independent Libra Association tasked with evolving the ecosystem.

Being able to resolve one of the most concerned factors about safety and fluctuation, Libra has envisioned to bring Venmo-like features into a higher level where the monetary transaction can be carried with extraordinary mobility and convenience without being provisioned by the government

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