Libra vs Ethereum: Should ETH holders worry about it?

On June 18, 2019, the newly established Libra Association published the Libra White Paper [1], which consists of a number of financial and technology companies that will act as verifiers for the Libra blockchain network: the association was originally Facebook leads and has 27 corporate organizations including Uber and PayPal.
The Libra Association believes that the cryptocurrency they create will be superior to existing cryptocurrencies such as Ethereum , and the reasons they give are:

  • Libra is a low volatility cryptocurrency
  • This stable currency has a "real asset" reserve support
  • Libra blockchain will use a programming language called Move to implement smart contract functionality

The goal of the Libra blockchain is to start in a semi-centralized state, similar to EOS's DPoS (Certificate of Attribution) consensus mechanism (currently EOS has 21 verification nodes). However, unlike EOS, the Libra Association plans to increase the number of verification nodes in the Libra blockchain to 100 by 2020, and then achieve a license-free (decentralized) state within 5 years (then thousands of nodes) .

In the early stages, Facebook will play a leading role and plan to reduce its influence to a level comparable to any other node on the network in the future.

However, with the launch of Libra's Calibra Wallet [2] (Calibra is a Facebook subsidiary), Facebook will play a key role in the broader ecosystem .

But despite this, the Libra blockchain itself is indeed open source, opening up space for competitors in the Calibra wallet on the market. Although competing with it can be challenging, the Calibra wallet will be integrated into Facebook's closed source platforms such as WhatsApp, Instagram and Messenger.

The goal of Mark Zuckerberg (Facebook founder and CEO) is ambitious. The company not only creates a cryptocurrency and interface “from scratch”, but the Libra Association will also be tasked with managing the legal currency reserves of the stable currency, and will face global regulatory barriers at any time. But these challenges may be well handled. Facebook has far more resources than any other blockchain platform, which brings us to how Libra will impact Ethereum, the world's largest smart contract platform .

Libra vs Ethereum

Many mainstream media refer to Libra as a “bitcoin killer,” a misconception of Libra's role in the ecosystem . Libra is a stable currency (which makes it non-speculative), it is currently centralized, there is no security guarantee around its code base, and there is no 10-year record against attacks. In addition, Libra is supported by a basket of "real assets," which sounds great for mainstream users, but it's a bug, not a featurereal-world assets require real-world people to be real Audit of the world .

More simply, "real assets" are like a series of security holes. Bitcoin is the native asset of its public blockchain, and anyone in the world can do it at a very low cost (if you are willing to believe that any of the thousands of nodes that have performed these audits, you don't need any cost at all) Conduct an audit. Ethereum is similar to Bitcoin in this respect, so Libra does not pose a short-term threat to Ethereum .


Libra's situation

However, in the long run, the situation is not so clear . Libra is developing a smart contract platform using a custom programming language called Move. The goal of this new language is similar to Ethereum's Vyper language [3], because Move also tries to ensure the security of writing contracts through its own design. It's likely that developers will be able to build DeFi apps on the Libra blockchain, which will probably work the same way as the current decentralized apps on Ethereum.

There may also be a token standard like the ERC-20 of Ethereum or a cryptocurrency collection like ERC-721 on the Libra blockchain . In this regard, the biggest difference between the two parties is the user base: developers on the Libra blockchain will have instant access to potentially billions of live users, while Ethereum has only a few hundred thousand. This is a big attraction, especially for those who want to create profitable dApp developers in a mainstream audience.

The biggest problem here is (you may have noticed it), and from the current stage, these are just possibilities . Libra's goal is 1,000 transactions per second (about half of Visa), which requires (according to current research) the centralization of the Libra platform . Because nodes want to agree on such a large volume of transactions per second, they will need to use proprietary software that ordinary users cannot access.

Nick Johnson, the core developer of Ethereum, also found a problem in Libra's technical white paper.

“Libra promises that the app can 'read any data from any point in time and use a unified framework to verify the integrity of the data'. For a node, this would be a nightmare: each node must actually be an archive node This means that it will require a lot of storage capacity."
If each node stores the entire history of the blockchain, the storage capacity of these nodes will quickly become very large . The Libra blockchain's license-free status of 1,000 transactions per second remains to be realized, and Libra has not yet made it clear how they will solve these problems.

The situation of Ethereum

The recent Ethereum 2.0 implementer conference call was announced [4], and the Genesis block of Ethereum 2.0 will be born on January 3, 2020 . This will initiate phase 0 of the Ethereum 2.0 blockchain (also known as the beacon chain phase), and the new Ethereum 2.0 chain will improve the security, scalability and decentralization of the network, allowing the chain to be divided into many "Shards" to increase the amount of transactions that the network can process per second (in addition to many other changes). Most notably, Ethereum 2.0 will introduce a new consensus mechanism, Proof of Interest (PoS) , which will allow the verifier to obtain the corresponding interest income by depositing the ETH pledge into a deposit contract.

While the nodes on the Libra blockchain are also expected to receive interest on the currency reserves of the stable currency, Ethereum's staking rewards will be open to everyone in the world, and staking pools will enable the entire staking process. It's even simpler . This openness of Ethereum is likely to attract a large number of verifiers, thereby increasing the decentralization level of the entire network.

In addition, ETH is a speculative asset. As the value of the Ethereum network grows, so does the value of ETH . This has a strong influence on those who "participate in the game." Developers with ETH will receive indirect rewards for their contributions to the network. In addition, users with ETH assets will effectively become the marketing tool for the Ethereum blockchain, making Ethereum more and more attractive.

Considering the lack of investment value of Libra Stabilizer, especially if it will flow without friction between assets, it is hard to imagine anyone with Libra tokens paying special attention to Libra's success . Not only that, but Libra will also find that its corporate image is difficult to shake, leading to further ambivalence. In contrast, Ethereum's vision is even more compelling, and for those involved, it has a potentially huge upside advantage (investment value) , which Libra does not.

Microsoft and Google don't have any news

Microsoft, Amazon, Google, and Apple are clearly excluded from the Libra Association membership list. These companies may see Facebook's projects as a threat, but so far they have no interest in developing interest in similar cryptocurrencies or future plans. In the next 10 years, we may see a global currency supported by multiple companies like Libra, but it is equally likely that the technology and developer base already established by Ethereum will be seen as Libra. A higher answer . In particular, Google and Microsoft have made significant contributions to the Ethereum ecosystem and are likely to turn their attention to Ethereum, an open, resistant, and transparent blockchain platform as a response to Libra's entry into the mainstream. .




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Author | Nick

Compile | Jhonny

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