How Facebook’s Libra stacks up against Bitcoin and Paypal – The Wall Street Journal

The aim of Facebook has always been to be a disrupter. It led the way in the wave to connect the world and now it wants to disrupt the fintech world and the way we bank and use money with its Libra cryptocurrency. And in the social media world that Facebook helped to create; reaction to the currency was swift and brutal as social media was swamped by politicians wanting to be heard and every Tom, Dick and Harry, can I add Rachel, Emily and Lindiwe took to social media saying, "We don't trust Facebook with our privacy, now they think we will trust them with our money. Reaction from the business community was more measured as some pundits commented that the disenfranchised will welcome Zuckerberg's dive into cryptocurrencies, while the Financial Times has misgivings on whether Libra can even be called a cryptocurrency. The FT says it is a myth that Libra needs blockchain or that the unbanked will be helped and reckons Facebook uses the words cryptocurrency and blockchain for PR value. Martin Wolf even warned that it could lead to a world dominated by a monobank. The Wall Street Journal has added its voice to the debate saying Libra's new payment system "is a lot closer to traditional web-commerce systems than you might think." – Linda van Tilburg.By Kurt Wilberding.(The Wall Street Journal) – Facebook Inc. last week unveiled plans to launch Libra, a payment system it describes as a new "global currency." It's based on blockchain, the same technology that powers bitcoin, and is backed by real assets and pegged to stable government securities. Over two dozen corporate partners are on board, including financial companies MasterCard Inc., Visa Inc., PayPal Holdings Inc. and Coinbase. Partners contribute a membership fee of $10 million each. Facebook's goal is to line up a total of 100 corporate partners and $1bn in assets..___STEADY_PAYWALL___.In many ways, Libra appears to operate more like existing web-payment systems, such as PayPal, than bitcoin. Here's how Facebook's new system compares:.Libra.Facebook's base of 2.4 billion active users gives Libra immense global reach. But the social-media company will need to assure its users that Libra's convenience doesn't come with the cost of compromising privacy..Libra's blockchain will be fundamentally different from bitcoin's. With bitcoin, the process of validating transactions is decentralized among all the participants of the system. Libra, on the other hand, will have a centralized governing body, the Libra Association, overseeing transactions and verifying them. Libra's transaction history will be stored in one place, and some members within the association will be responsible for maintaining and verifying the digital ledger..Bitcoin.Bitcoin can be used as a payment system, but mostly appeals to a niche group of investors. For various reasons, the original cryptocurrency never took off as a payments network; only about 1% of bitcoin transactions are for payments, according to research firm Chainalysis. As currently constructed, bitcoin is most commonly used for trading. To traders, bitcoin is not about cash, it's about profit. It's a volatile but at times very profitable asset to own, along the lines of a hot tech stock or a parcel of Vegas real estate..While a bitcoin miner might sell a portion of earnings to recoup expenses on the shipping container full on overheating hard drives, most users are inclined to sit on their cache. In late 2017, the cryptocurrency spiked close to $20,000, only to fall a year later to the mid-$3,000 range. Such volatility makes bitcoin owners unwilling to use the cryptocurrency for impulsive purchases..Paypal.PayPal is one of the founding members of Facebook's Libra launch. On paper, there's a lot of overlap between the two digital-payment systems, with one big difference: Libra uses a cryptocurrency, PayPay doesn't. The financial-technology company functions similarly to an online bank, albeit one that appeals to people of all financial levels. One can set up a PayPal account without a credit card or bank account..PayPal provides added security by centralising a user's financial information. Instead of saving credit-card or bank-account numbers on various sites – any one of which can be compromised – users link their financial information through PayPal. In addition, receiving money requires only giving out an email address, not a bank-account number..Unlike bitcoin, PayPal isn't anonymous. The company is a licensed money transmitter and therefore it requires personally identifiable information, such as your name and phone number, when creating an account..While a wide base of merchants accepts PayPal, it isn't accepted everywhere. Amazon, which has it competing Amazon Pay app, doesn't accept PayPal.

How Facebook’s Libra stacks up against Bitcoin and Paypal – The Wall Street Journal

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