Bitcoin has been alive for more than 10 years now, and it gets stronger with each passing day. On the other hand, Facebook’s Libra, which is yet to be launched, is facing a lot of setbacks from the government. Coinbase’s ex-CTO, Balaji Srinivasan, compared Libra to Bitcoin and pointed out the differences that has allowed Bitcoin to thrive.
“When Satoshi launched Bitcoin he combined pseudonymity with decentralization. So neither the person nor the chain could be targeted. Libra might be able to become more decentralized, but it would be hard to not associate it with Facebook.”
Bitcoin is not anonymous, but pseudonymous because each user has addresses which aren’t linked to their original identity, thus making it pseudonymous. Users often use different addresses for every transaction to cover their tracks and to avoid being traced.
Srinivasan described Bitcoin’s pseudonymity as a “bridge” which allows one “to port over some (not all) of the attributes associated with a high reputation identity to a fresh pseudonym, while preserving statistical guarantees around anonymity.”
While there are many privacy-based cryptocurrencies focusing on anonymity and privacy, there are ways where one could be totally anonymous with Bitcoin using methods like CoinJoin, Wasabi etc.
Additionally, Srinivasan described this pseudonymous bridge as an “interface” between fiat identity and cryptocurrency identity, just like exchanges are an interface between fiat and crypto.
Comparing this with Facebook’s Libra, Srinivasan stated that Facebook will always be associated with Libra and the other way around. He added that it wouldn’t be able to achieve necessary decentralization because of this. He added,
“Libra might be able to become more decentralized, but it would be hard to not associate it with Facebook.”
A Twitter user, @Mrauchs, commented,
“How could the Libra network ever become more decentralised than Bitcoin if it relies on a permissioned validator set (i.e. identified actors) and a closed governance model?”