Libra v/s Celo — permissioned and permissionless blockchain targeting financial inclusion
People who have little bit of interest in blockchain are well aware that Facebook has plans to launch its own digital currency as well as blockchain called ‘Libra’. For the social media giant, the journey so far has been no bed of roses rather it had been one full of thorns. From governments across the world making statements of banning Libra currency to its digital wallet being sued for trademark infringement and President Trump coming out in the open opposing its launch — it had all been a bad roller coaster.
Know more about Libra’s journey and its latest changes here — https://akeo.tech/blog/facebook-course-corrects-libra-blockchain-to-appeal-regulators/
To counter Facebook’s Libra, China — a forerunner when it comes to blockchain adoption also started exploring possibilities of converting its own currency ‘Yuan’ into a digital one. The United States of America isn’t far behind in the race; news has been doing rounds that Dollar is also boarding the digital train. Not far behind is ‘Celo’ which is going to be a mobile-first blockchain. The non-profit foundation has an ambitious aim of developing an ecosystem of entrepreneurs who come together to complete the ultimate vision of prosperity for everyone.
The commonalities and differences between Libra and Celo
Celo and Libra, when launched, would offer the possibility of sending stablecoins to people’s phone numbers than complicated crypto wallet addresses. However, unlike Libra, Celo is not scaring regulators with its aim to build a flexible network of applications using blockchain.
Celo’s aim is to empower anyone with a smartphone anywhere in the world to have access to financial services, send money to phone numbers, and pay merchants — on a decentralized platform that is operated by a community of users.
Celo’s mainnet went live in the month of May whereas Facebook revised its plans for Libra in order to appease the regulators. Libra and Celo have many similarities and both have incorporated elements from permissionless blockchain Ethereum. Just like Ethereum, Celo is going to a permissionless blockchain which will be open-source and allow its users to build Dapps on it. Facebook’s plan was to launch Libra as permissioned blockchain and later also launch a permissionless version of it. However, the regulators didn’t agree to it and Facebook decided to stick to the enterprise/permissioned version of Libra.
Libra and Celo’s Currencies and their wallets
As we know Facebook has named both its blockchain and cryptocurrency as ‘Libra’ and the wallet in which one can store the currency as ‘Novi’. Libra will be launched as both single-currency as well as multicurrency. The single-currency will function like existing currencies such as LibraUSD, LibraEuro etc. and will be backed by cash and short-term government securities of the respective countries. The multicurrency will be backed by basket of currencies
Celo is going to offer a native token christened as ‘Celo Gold’, and a stablecoin ‘cUSD’ as well as a decentralized exchange. The cUSD is going to be issued via the over-collateralization of Celo Golds. The oracle will catch in the real-time value of the cUSD and Celo Gold off-chain and its feedback on the decentralized exchange. Celo Wallet is already available on both Google and Apple’s application store.
Libra Association and Alliance for Prosperity
Alliance for Prosperity which is the name of the non-profit foundation of Celo now has over 75 members, including a number of organizations that have also been part of Libra, such as Coinbase and US venture capital firm, Andreessen Horowitz. The Alliance For Prosperity includes Andreessen Horowitz (which funded Celo), Coinbase (Ventures), Bison Trails, Anchorage, and Mercy Corps — all of which are also Libra Association members. That could potentially create a conflict of interest regarding which cryptocurrency and developer platform they promote to their portfolio companies, integrate into their products, or focus on for delivering financial services to the needy.
Is the ultimate war between Libra and Celo or is it between Stablecoins and CBDCs?
Libra and Celo are both stablecoins which are working to accomplish similar aims i.e. remittance payments, or in the bigger vision financial inclusion. However, the digital payment world is changing and internally, the catalysts to it maybe these new entrants in the market. Banks like JP Morgan have planned to change their own digital currencies aka Central Bank Digital Currencies (CBDCs).
Unlike CBDCs, stablecoins will have to satisfy regulatory concerns which may slow down their launch. In turn, this will give time to central banks digital currencies to catch up and probably be in the market at the same point of time. Banks who might still be on the lookout for a technology partner to develop their own digital currencies might tie-up with Libra as it has gone centralized whereas Celo blockchain is still a decentralized one.
As a whole, the market is ready to be wooed by these technological innovations. Celo is targeting the African market where payments are still more cash-based and even 4G has limited penetration. Facebook has broader plans and is going to utilize its customer base of two billion people who are already on its social media platform as well as messaging application ‘WhatApp’.