Facebook officially unveiled their cryptocurrency, Libra, on June 18, and there’s a lot to talk about.
Before the whitepaper was released, we did a brief coverage of whether Project Libra will lead to mass adoption of blockchain. Yet there has been some scepticism and encouragement from the general audience.
The Libra blockchain will be permissioned and use a ‘proof of stake’ system.
What does this mean? Well, Bitcoin, for example, is a permissionless system. It uses proof of work. This means large amounts of anonymous people verify that the transactions are correct.
Libra is permissioned and utilises proof of stake. Proof of stake puts the monopoly in the hands of a few stakeholders, as opposed to many different individuals.
Blockchain technology is meant to encourage trust, but the move towards proof of stake has many critics second-guessing. So, what exactly does Project Libra mean for blockchain technology, and the blockchain community as a whole?
The goal of widespread cryptocurrency
The primary goal, according to Facebook, is for their blockchain to be accessible to those developing countries.
However, the reality of this is it that it might not be as easy as it seems. Using blockchain in developing countries is certainly not a new idea, and it has been implemented to some extent in recycling programs and supply chain tracking.
There are a few bumps in the road for Libra in developing countries.
For instance: To access it, the person must have access to a smartphone.
In addition, Libra requires a form of ID to verify that you are legitimate. On the other hand, the whitepaper reads: “We believe that decentralized and portable digital identity is a prerequisite to financial inclusion and competition.” This is the hidden, but rather monumental, part of Project Libra: a decentralized and accessible identity for all.
Many people in developing countries do not hold a form of identity document. This could change this for them.
What does it mean for blockchain?
CoinDesk suggested recently that Libra is the ‘nail in the coffin for the blockchain, not Bitcoin’ argument. The truth of this statement can only be revealed in time. However, the blockchain, not Bitcoin argument is about the tendency to believe that blockchain and Bitcoin are the same thing.
They’re not: Bitcoin can only trade monetary value. Blockchain can streamline, well, a lot of things, including tracking (such as fuel or supply chains), secure data management, and even voting. It is the foundation that Bitcoin is built upon.
Project Libra is pushing the boundaries of blockchain-backed finances. Instead of merely creating a currency that’s tradeable, they’re expanding their blockchain to include digital identities, too, and bringing crypto exchange into the real world. This is a significant, and distinguishing, difference from Bitcoin.
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