Before we begin, let's make one thing clear, Facebook's cryptocurrency is not a new Bitcoin, in fact, far from it. Libra is more like Disney Dollars for an online ecosystem where users will be able to make purchases on Facebook and on other websites online.
Facebook has sought out and continues to seek funding from companies to help develop the already year-long project, these members also known as the 'Libra Association' have already been joined by major platforms like Booking.com, MercadoLibre, Uber, Visa, Mastercard and PayPal and, as we all know, these are all gigantic players in the online industry.
So what is the actual difference between Bitcoin and Libra? Well, for one, it comes down to the one being a centralised cryptocurrency and the other being decentralised. Bitcoin is decentralised, with not just one entity able to take control over its blockchain or the transactions that take place on it, whereas Libra is centralised. Another major difference is that Libra does not require users to have a bank account or credit card in order to own any Libra crypto, users will be allowed to exchange a currency called 'Fiat' to buy and sell Libra to use in online transactions.
So what makes Libra what it is? The main functions are those of the 'Libra Association' and the Libra Reserve. The Libra Association is responsible for running the Validator nodes which makes checks on transactions proving them verified or unverified. The Libra Reserve is a pool of money provided by founding members with the prospect of a return on their investments via dividends from the low-yield investment of the reserves assets.
How is Facebook involved? Libra is Facebook's creation, literally. Facebook developed most of the codebase for Libra, however, the company insists that it will serve as a regular Libra Association member, without being accorded any special authority or privilege. Essentially, Facebook vows it will only get one vote, like every other member. Whether Facebook will have an equal share in the Validator nodes, though, is unclear, but since Facebook likely has the greatest computing power of any of the partners, it would most likely host the most Validator nodes.
The first half of Libra is said to be launched in 2020, however, congressional democrats have demanded Facebook halt its rollout until they weigh in on the implementation; The house financial service committee wrote in a letter to Facebook's CEO, Mark Zuckerberg, “Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” the lawmakers wrote in the letter. “During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to fail.”
So far, a Libra hearing on July 16th will be a help where Zuckerberg is expected to testify.
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