Bitcoin vs Libra: Here are the key differences between the two cryptocurrencies
By: Ryan Browne, CNBC
Facebook has made headlines of late with its plans to create a cryptocurrency. The social media company has been forced to defend the project on Capitol Hill, amid regulatory concerns around data privacy and potential illegal usage, while the G-7 has warned it poses “serious” legal risks.
It’s an experiment in monetary systems for the digital age, and has inevitably been compared to popular cryptocurrencies like bitcoin. However, many experts question whether Libra can even be called a cryptocurrency.
Other than the fact that they both come with a white paper and are referred to as cryptocurrencies, Libra and bitcoin are actually very different. Here’s a rundown of the key differences between the two.
One of the biggest differences lies in the underlying technology behind both currencies.
With bitcoin, transactions are recorded anonymously on a public ledger known as the blockchain. It’s essentially a database maintained by a network of computers, on which transactions are secured in such a way that makes it virtually impossible to tamper with.
Libra also uses a form of blockchain, or distributed ledger technology. But unlike bitcoin, Libra’s blockchain is permissioned — at least for now — 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. Each of the nonprofit organization’s members have invested a minimum of $10 million into the project.
“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, founder and president of the Saga Foundation, a cryptocurrency firm that counts J.P. Morgan Chairman Jacob Frenkel as an advisor.