Ever since Facebook has revealed the whitepaper of its ambitious crypto, Libra, the internet is flooded with speculations and questions. The whole crypto community wants to know the likely impact of Facebook’s coin on other cryptocurrencies – Will it kill Bitcoin? Or Maybe it will be the catalyst to much-awaited mass adoption? Today, we are gonna put things in perspective with the help of right comparisons.
Comparing Libra to Ethereum and Smart Contract Platforms
If we take a look behind the development teams like Ethereum Foundation, Litecoin Foundation, and Stellar Organization, then we will find that they are similar to Libra association. The aim of the Libra association is to implement and release updates and changes to the blockchain.
Libra blockchain also uses a new programming language called Move which is made for making financial applications. Such a structure is similar to Ethereum with its programming language Solidity. Smart contracts are programs that run on these blockchains. Hence, the vision of Facebook is to include the same utility as Ethereum, Tron, and EOS.
Technical Analysis of Libra and Ethereum
|Use||A stable medium of exchange that can be used as a means of payment.||Same as Libra. Additionally, can be used as an investment and for decentralized apps.|
|Volatility||Low, it is a stablecoin.||High. Prone to price swings.|
|Blockchain||Libra Network. Permissioned.||Ethereum. Public and permissionless.|
|Throughput||1,000 TPS (claimed)||15-20 TPS|
|Latency||10 seconds (claimed)||15 seconds (average)|
|Consensus Algorithm||BFT (Byzantine Fault Tolerance).||PoW (Proof of Work)|
|Programming Language||Move – created by Facebook||Solidity.|
Source: Libra.org, Ethereum.org, Reddit, and others.
Libra vs XRP
Blockchain-based ledgers can be classified into two categories based on their validator. Bitcoin or Ethereum have permissionless validating nodes. Coins like XRP and JPM coin are permissioned. In a permissionless blockchain ledger, anyone can inspect, mine, stake, or develop smart contracts on it. However, in a permissioned protocol, permission from the validator node is required.
Facebook Libra is a permissioned blockchain. As of now, VISA, MasterCard, and PayPal have joined the consortium.
A technical comparison.
|Use||A stable medium of exchange that can be used as a means of payment.||Same as Libra. Additionally, can be used as an investment. Primarily made to make global transactions faster. Connected to financial institutions.|
|Volatility||Low. Stablecoin.||High. Prone to price swings.|
|Blockchain||Libra Network. Permissioned.||RippleNet. Semi-permissioned.|
|Throughput||1,000 TPS (claimed)||1,000 TPS|
|Latency||10 seconds (claimed)||3.5 seconds (average)|
|Consensus Algorithm||BFT (Byzantine Fault Tolerance).||RPCA (Ripple protocol consensus algorithm)|
|Programming Language||Move – created by Facebook||C++|
Source: Various websites: ripple.com, Libra.org,
Comparing Libra with Stablecoins
The biggest concern with using cryptocurrencies has been the volatility. One of the prominent reasons for banning crypto in some countries – considering crypto as a Ponzi or lottery scheme. Libra wants to create a global currency that everyone can use in their daily lives, that’s why it is a stablecoin. Its value is pegged to a basket of fiat currencies and assets to make the price stable.
This is something one of its kind because the market has only seen coins pegged to USD, or any other fiat currency, or another crypto. As Peter Schiff considers all FIAT currencies will eventually be doomed, Facebook pegged Libra to a variety of assets as well (government bonds and stable currencies). Now, here we can see Libra with respect to other stablecoins.
Is Libra the Bitcoin killer?
Here comes the king of cryptocurrencies, Bitcoin. Libra aims to transform the entire financial industry. WIth Libra, Facebook wants to make its cryptocurrency serve as a medium of exchange which people can use in their daily lives. Moreover, one of the primary target audience is the 1 billion people who have smartphone access but devoid of any bank account -banking the unbanked.
David Marcus recently gave a statement on Bitcoin vs. Libra, he suggests that there is no comparison between the two, they are totally different. In his words,
Many Wants to pit Libra vs. Bitcoin. In my mind these two are not in the same category. BTC is decorrelated (investment) asset. Libra is designed to be a stable medium-of-exchange. I have been,and remain a fan of BTC, but for very different purpose.
Nevertheless, we can still compare the technical details.
|Use||A stable medium of exchange that can be used as a means of payment.||Same as Libra but can be used as an investment as well.|
|Volatility||Low or negligible. It is a stablecoin.||High. Prone to price swings.|
|Blockchain||Libra Network. Permissioned network that costs $10 million to serve as a node.||Bitcoin. Public and Permissionless network so anybody can do anything on the network.|
|Transaction Speed||1,000 TPS (claimed)||3.87 TPS (All time high, as of Feb 2019)|
|Latency||10 seconds (claimed)||8 minutes (average)|
|Consensus Algorithm||Modified BFT (Byzantine Fault Tolerance).||PoW – Proof of Work.
|Programming Language||Move – created by Facebook||C++|
Source: Various websites including Libra.org, Bitcoin.org, Blockchain.com and Reddit.
With all the data, we can observe that the Facebook coin has a little edge over some coins in some respect i.e. throughput, latency etc. Every coin is different and has a specific use case. We cannot say whether one is better or not, but yes we can definitely compare the specific aspects of the coins.