When Facebook announced its cryptocurrency, Libra, the crypto world was set on fire. It seems that everyone is talking about it, making predictions about the future of this new cryptocurrency and the effect it will have.
One question that often surfaces is: What’s the difference between the most popular cryptocurrency ever – bitcoin, and the cryptocurrency that aims to overcome popularity and usage of bitcoin? Are they the same? Or there is something different? Is Libra the new bitcoin?
In this article, we’ll talk about the main differences between bitcoin and Libra. Here they are:
Difference #1: Bitcoin is decentralized, while Libra has a strong central authority
Bitcoin is decentralized from its very beginnings, which means that no entity, organization, or government can control it. On the other side, the cryptocurrency Libra is far more centralized since it’s controlled by Libra Association. Members of Libra Association are well-known names in the tech and financial world, and they include companies such as:
And more. As members of Libra Association, these companies have the power to control Libra’s network, which is impossible when it comes to bitcoin.
Difference #2: Libra is a stablecoin, bitcoin is not.
As said above, Libra is a stablecoin. What does that mean? A stablecoin is a cryptocurrency that is tied to national fiat currencies and assets such as the dollar, euro, and yen. These fiat currencies affect Libra’s value and determine its price.
According to its whitepaper, “Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value. The Libra Reserve will be administered with the objective of preserving the value of Libra over time.”
In contrast, bitcoin’s price is fluctuating and isn’t stable. You can buy bitcoin today for $20 and tomorrow the selling price can decrease or increase, ranging from $0.05 to $20.000.
Difference #3: In contrast to Libra, bitcoin has a limited money supply.
Bitcoin is deflationary, which means that there are only 21 million bitcoins in existence. And that’s pretty simple. However, since Libra is controlled by Libra Association, its money supply is subject to supply and demand. In a way, this means that users of Libra will depend on Libra Association.
Difference #4: Bitcoin is built on permissionless, and Libra on permissioned blockchain.
As stated above, bitcoin is built on permisssionless blockchain. This means that with the right mining equipment, anyone can start mining bitcoin at their discretion.
On the other hand, Libra is built on permissioned blockchain, which means that miners must ask for permission before starting to mine. Unlike with bitcoin, not everyone can be a part of the Libra network.
Difference #5: Unlike Libra, bitcoin can’t be censored.
Most cryptocurrencies, just like bitcoin, are all about privacy and lack of censorship. That’s why bitcoin is so hard to regulate. Bitcoin can’t be censored, and your account can’t be closed or frozen, so you lose control over your funds.
But that’s not the case with Libra, which is mainly controlled by the members of Libra Association. This means that the association also controls your funds, transactions, and accounts. Plus, contrary to bitcoin, Libra doesn’t operate in secrecy.
As you can see from the examples above, bitcoin and Libra are quite different. They are created with different purposes in mind and on different types of blockchain. The real question is: Can bitcoin and Libra coexist or not?