Letter To The Committee Of Financial Services
Dear Committee Members,
Please consider this message intended to help public representatives seeking knowledge on the technologies relating to Facebook’s Libra and other blockchains. In this message I would like to explain the differences between Libra and Ethereum and why the US dollar can benefit from Ethereum.
First, you may be wondering why I am making a comparison between Libra and Ethereum and not comparing Libra with Bitcoin. Although Bitcoin was the first blockchain and is the most well known, Bitcoin is a digital store of value often referred to as the digital or internet gold. There are no real uses for it outside of the purpose of storing value and speculative investing, while Ethereum is an excellent foundation for the future of the US dollar.
Ethereum vs. Libra
Libra aims to create a currency that will be backed by a variety of fiat currencies with the US dollar being the most prominent one. However, members of the Committee of Financial Services in the meeting over Libra astutely recognized that nothing prevents the creators of Libra from rearranging the ratio in the basket of assets.
Facebook's initiative with its blockchain has the potential to reduce the controls the United States government has on its own national currency. The effects of allowing national currencies to be in the hands of a privatized organization in the form of an asset resembling an ETF could be catastrophic.
Ethereum: A Solid Foundation For National Currencies
The Ethereum blockchain is not quite as well known as Bitcoin, but it currently stands in the second position for market cap as well as being the blockchain with the greatest number of developers and businesses building on it.
The vast majority of DeFi (decentralized finance) projects trust Ethereum as the base layer of security for their applications. The most popular of these projects is called Maker, which is a decentralized governance system that supports a stablecoin named DAI and its peg to the US dollar. This project alone currently has 71% of the value of the entire DeFi space on Ethereum.
The incredible success of the Maker project suggests a strong demand exists in the blockchain industry for a representative token for the US dollar. A variety of tokens exist to satisfy this demand in the cryptocurrency industry for the US dollar such as Maker's DAI, USDT, Tether and others.
Bitcoin and the many other blockchain assets of speculative value fluctuate in their valuations so drastically that it motivates an increased global demand for access to the US dollar.
Ethereum Is Neutral
Libra is designed to be managed by a select group of organizations, while Bitcoin is much more decentralized. However, neither of these blockchains are neutral in the sense that Ethereum is neutral when it comes to national monetary policies.
The Ethereum blockchain is perhaps the best example of a utility token in existence. While Libra claims to be a stablecoin and a currency and Bitcoin claims to be gold and the future of money, Ethereum is actually explained by its designers to be a type of fuel. Ether, the native coin of Ethereum, is the fuel that runs many computer applications on its network.
The explosion of ICOs (Initial Coin Offerings) of late 2017 and early 2018 was not connected to Bitcoin so much as it was an unexpected initial outcome due to Ethereum's unique capability to empower governments, businesses and even individuals to create programmable assets that enjoy the security of a globally maintained ledger.
The many use cases for Ethereum's technology excited the developer community as its native language Solidity became the hot programming language to learn. To date, Ethereum maintains the largest community of developers of all blockchain projects, even surpassing Bitcoin.
Why are nations and businesses choosing Ethereum? This is because Ethereum is the most inclusive of the three blockchain visions. The design of Bitcoin, much like gold, is to be a hedge against and one day a potential alternative to the current monetary policy.
Ethereum, on the other hand, is not an alternative to the global monetary policy but an upgrade of it. Ethereum's purpose is not to replace the US dollar but to empower the United States government to create, manage and track a digital representative of the US dollar with enhanced efficiency compared to traditional systems.
Utilizing smart contract capabilities on Ethereum, the US dollar could more effectively be managed for international trading. Additionally, creators of smart contracts are able to manage the unique monetary policy of the tokens they create and are not limited to any economic restrictions. US departments would be able to issue and destroy tokens representing USD according to traditional laws and policies.
The digitizing of the US dollar to a token on Ethereum has many potential benefits. Anything that can be built with a modern programming language can be built on Ethereum, allowing for national currencies to have very flexible procedures. Not only does the Ethereum blockchain provide the US dollar the ability to become programmable money, but the decentralized nature of this network allows for enhanced trustless interactions in sensitive nation-to-nation negotiations.
It can be attractive to a national government to adopt blockchain technology for creating an exclusive and permissioned network rather than embracing an open, decentralized blockchain. However, in cases of nation-to-nation negotiations the ideal medium is clearly a globally secured and decentralized thirdparty platform such as Ethereum that allows all parties to audit the contracts. Only the open, decentralized and trustless nature of Ethereum is suitable for these types of operations, because it is neutral.
Dear @blake.letras
Wow friend the so simple way of understanding I leave me very well informed of all the benefits that has the ETH with respect to the pound. I am equally pro BTC and ETH, however we must see how will be the development of pound and to know how it will be sorry to have to wait.
Remember that the human factor will always make the difference and the power of advertising and hooking that facebook has is something in their favour.
He sent you a big greeting from Venezuela.
Thanks for the comment @lanzjoseg!
It's the best explanation I've ever seen about the meaning of the two biggest cryptocurrencies. The BTC value vs. the Ether utility and the Ethereum blockchain.
I have no care about Libra, already has too many problems with the government of the United States and the community of cryptocurrencies opinion. Many rumors that it has to pay millions in fines and that it is a stolen MIT project. At the moment I don't see much availability of this Facebook project.
I think that the Ethereum network needs to be more scalable in order to be able to respond to the meaning of manage and track a digital representation of the US dollar.
The good news is that the developers are working on a 2.0 version to make it happen.
Thanks for sharing
Thank you for your great comment. I don't think Libra is very valuable either. It might not even launch, we'll see.
Thanks! :)
Yeah! Libra has too many problems. Maybe, it won't launch
Dear @blake.letras
I found it also interesting to why are you comparing Libra with Ethereum instead of Bitcon. excellent explanation.
However I believe most people will keep comparing Libra to Bitcoin and I will probably keep doing it as well. For regular people its easier to understand the differences between one and the other (especially if they never heard about eth).
The biggest difference I noticed is the fact that Libra is centralized and for that reason very vulnerable to subpoenas. With BTC it's not a problem. Noone is there to take a blame / take a hit.
Isn't ETH also quite centralized ?
ps.
I thought that perhaps I could share with you my latest publication and ask about your own opinion on discussed subject:
"DID OUR WORLD LEADERS JUST PUSH GLOBAL RECESSION AWAY from our doorsteps?"
https://www.steemit.com/economy/@crypto.piotr/did-our-world-leaders-just-push-global-recession-away-from-our-doorsteps
I would appreciate it greately.
Yours
Piotr
Thank you for commenting and sharing the post I will check it out. :)
As for:
I believe people are saying that without merit. You have likely been misinformed by many people that possibly don't like Ethereum because they believe Ethereum is a threat to Bitcoin or something.
If Ethereum was centralized we would not have Ethereum Classic. Ethereum is opensource software, which means that if Ethereum was centralized some programmer would be able to explain what technical aspect is centralized. Usually, when people claim Ethereum is centralized they speak vaguely, which I believe is because they have no basis in fact.
That said, one of the reasons ETH 2.0 is taking so long to make is because the Ethereum project has a strong focus on being decentralized. They want to have a very large amount of validators, not just a small number like most POS blockchains right now. When ETH 2.0 comes out, in theory, it should be many times more decentralized than Bitcoin or any blockchain right now. This is because they plan to have thousands of validators 113,664 validators to be exact. That is much more decentralized and secure than Bitcoin is today, because Bitcoin mining competition leads to pools and Bitcoin can really only have 50 total pools. So while Bitcoin will eventually max out at 50 pools, ETH 2.0 will have 113,664 validators across 1024 shards. That's also a lot more decentralized than 21 witnesses.
Wow. Amazing comment @blake.letras
Thank you for taking the time to reply to me. i'm fully aware how busy you are. Appreciate it a lot.
Seriously YOU ROCK!
Yours
Piotr
Greetings dear friend @blake.letras.
Being pioneers in the introduction of smart contracts and RC20 tokens, the benefits of the Ethereum blockchain are so obvious that they have led to its mass adoption. This has resulted in scalability levels having decreased. Those 20 transactions per second are no longer enough.
Soon we will see the birth of Ethereum 2.0
I think ETH 2.0 is going to be pretty cool too! Thanks for your comment. :)
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