Keypoint

Libra and bitcoin are different in a lot of ways:

• the technology behind them, and
• the way they’re used.

What are the differences?

Different technology

Similarities: both Bitcoin and Libra use distributed ledger technology known as blockchain.

Differences:

• With bitcoin: it’s essentially a database maintained by a network of computers, on which transactions are secured and virtually impossible to tamper with.
• Libra’s blockchain is permissioned – meaning that transactions can only be added to it by a group of trusted parties.

That’s where the Libra Association, a Switzerland-based consortium of companies including Visa and Uber, comes in. “Libra will create a centralized structure governed by an unelected ‘association’ composed exclusively of large institutions who have purchased their voting rights,” said Ido Sadeh Man.

Different use cases

Purpose

• Bitcoin is described as a peer-to-peer payment system, allowing people to exchange money without going through a bank. It’s frequently been referred to as “digital gold”.
• Libra’s primary purpose is to be used in cross-border payments and money transfers. The currency is tied to a basket of government-backed currencies and other assets, to avoid the volatile swings often seen in cryptocurrencies.

Supply and demand effect

• Bitcoin has a fixed supply. The total number of bitcoins that will ever be minted is “hard-capped” at 21 million, making it impossible to react to the market’s demand.
• Facebook can adjust the supply to match a quantity of other assets held in reserve, effectively maintaining a stable price even when demand changes.

Different regulatory questions

• Bitcoin rules out the need for financial intermediaries.
• Libra has taken the spotlight in regulating cryptocurrencies. But some worry the blockchain project could be lumped in with other digital assets by regulators.

Looking beyond

• If Facebook and its partners do manage to overcome the regulatory hurdles that have accompanied Libra, the currency “will undoubtedly have an enormous impact on the global economy — possibly eclipsing that of bitcoin,” CryptoCompare’s Hayter said.
• For Andy Bryant, COO of cryptocurrency exchange bitFlyer’s European business, Libra could start to convince people there are “other ways” of storing value than using fiat currencies.

Content source: Browne. G. (2019). Bitcoin vs Libra: Here are the key differences between the two cryptocurrencies. CNBC. Available from: https://www.cnbc.com/2019/07/19/bitcoin-vs-libra-how-facebooks-cryptocurrency-is-different.html [Accessed 19 July 2019]