As we recently wrote, Facebook finally released a whitepaper encompassing the details of its much talked about stablecoin, Libra. The social media giant isn’t just going to launch a stablecoin rather it aims to launch a:
· new blockchain: Libra blockchain;
· reserve: Libra Association
· wallet to store the cryptocurrency: Calibra;
· new blockchain programming language: Move
The permissioned vs permissionless blockchain
Ethereum being a decentralized, permissionless blockchain is not controlled by a person, organization or entity. The blockchain is being run voluntarily by thousands of computers across the globe and as a result has no central point of failure. This means that Ethereum can never go offline.
Libra on the other hand is currently a permissioned blockchain. As permissionless blockchains are not said to be scalable and stable enough to support billions of transactions, Facebook choose permissioned blockchain system for Libra. However, the social media giant aims to turn Libra into a permissionless blockchain in the future. One of the Libra Association member is going to work with the community to research and turn the permissioned Libra blockchain ecosystem to permissionless. This is slated to happen within five years of the public launch of the Libra blockchain and its ecosystem.
Stablecoin vs. Cryptocurrency
Facebook is developing Libra coin as a stablecoin. The coin is going to be backed by a basket of currencies as well as assets, including USD to avoid price fluctuation. Libra coin will not be an open and independent currency. According to the whitepaper, new Libra coins will be minted, and the excess will be burnt. This calculation will depend on the amount of money the Libra Association members wish to store in the reserve. The value of the Libra coin is likely to be bound with the condition of the global economy.
Ether, on the other hand, is a speculative asset which is fully open and independent. The value of ether is not tied to any FIAT currency. As the value of the network increases, the price of ETH also increases. However, the volatility of the cryptocurrency markets affects the price of ETH; the ETH price seems to increase/decrease according to the value of bitcoin.
The currency of Ethereum blockchain is ETH whereas, Libra blockchain is going to introduce Libra Coin. For Ethereum blockchain, the currency is built into the blockchain itself. The currency is intrinsically bound to the system. The virtual machine of the blockchain has special instructions to deal with the transfer of its currency, ETH.
In the case of Libra coin, the currency of rather than being intrinsically bound to the system is implemented as a smart contract. The developers have created a special genesis transaction, which creates the system smart contracts. What this does is, it helps the design to be much more generic and also creates the possibilities of developing other coins, which are likely to operate as Libra coin. Also, there is another coin in the system– the Libra Investment Token. This coin represents the validator’s stake in the Libra Association.
The simplest way to store ether is by using a third-party wallet, e.g., the wallets offered by exchanges. As ether is not used in exchange for commodities, instead used to buy tokens or exchanged for other cryptos, by keeping this cryptocurrency on an exchange wallet will speed up the trading process. Also, the Ethereum platform offers you to create a personal wallet for yourself and keep the funds there.
To manage the Libra coin, Facebook has introduced Calibra wallet. The wallet is going to be managed by a subsidiary of Facebook, called as Calibra. There will be no public or private key management involved with the Calibra wallet. As a result, there would be no loss of the coins.
Libra coin will also be obtained by the Calibra wallet. One needs to submit a government-issued ID as KYC document to create a wallet on the Calibra platform. Once the identity is established, it will be quite easy to bind the person’s identity to the keys and they can use it to recover funds.
Ethereum Casper is going to run on Proof of Stake (PoS) consensus algorithm. PoS works like Proof of Work algorithm; however, the participating nodes in the consensus-building process are available to parties who have a legitimate stake in the blockchain. The hash calculation in PoS is replaced by a digital signature, which proves the ownership of stake. As a result, there is a reduction in the distribution of information to nodes who have no legitimate stake in the blockchain.
On the other hand, Libra blockchain, when launched, will use a robust and smooth machine replication system called as Libra Byzantine Fault Tolerance consensus protocol (LibraBFT). The LibraBFT is one amongst the classical BFT consensus algorithms. The base of the LibraBFT consensus algorithm is HotStuff. LibraBFT is going to improve the HotStuff mechanism with detailed specification as well as the implementation of Pacemaker mechanism. Moreover, the blockchain will come with a liveness analysis, which consists of concrete bounds to transaction commitments.