What is mining, and what do miners do? Everyone needs to understand the concept behind mining before they can realize how Libra works – and how it does not require mining to follow through its necessary actions.
Miners generally operate the blockchain to secure the financial networks and process the money transactions through a cryptocurrency system called Bitcoin. Technically speaking, miners can complete these actions by solving what is called computational problems – allowing them to chain together blocks of transactions safely and securely.
Now, let’s talk about Bitcoin for a little bit.
Bitcoin is the world’s first cryptocurrency system that encrypts transactions and transfers worth X amount of money. Through this process, all transactions are made 100% secure and completely irreversible – all in all, they’re recorded on what is known as the blockchain, mainly to promote safety. Mining, what we talked about above, is how this process is made so safe and secure.
Bitcoin’s networks don’t stop there, though; according to leading professionals in the field, Bitcoin is decentralized and does not require permission from outside sources, such as business leaders and banking systems. All transactions are final on the backend of Bitcoin, and every person in the world is free to use the system as they are free to use the internet – no government or banking system has the ability to have any input or control over the running processes.
Now that you know a little bit about how Bitcoin works, it’s time to find out how Facebook’s Libra operates.
Yes, Libra is indeed a cryptocurrency – also known as a digitally operating system that controls the passing back and forth of money. However, Libra doesn’t have a lot in common with the nationwide network known as Bitcoin.
Even though Bitcoin claims that its users know the operations behind its system, its users are still scared of the risks that they take using the cryptocurrency. What’s more, is that the system hardly makes any profit – so what’s the real reason it’s still in operation?
Libra payments are said to be a ‘thing’ in 2020. According to leading officials, the system will be written into a new blockchain, separate from the one associated with Bitcoin. The blockchain is still in the process of being built. The one thing that all users of Libra should look out for is that Calibra WILL NOT employ miners to help with the systems. There will be absolutely no mining involved in Libra; you’ll basically just be purchasing the processes.
The new global currency will operate similar to the U.S. dollar – but so far, leaders in the industry are claiming that the Libra payments will be more stable and a lot easier to exchange – more stable than Bitcoin, even.
So far, 27 partners are heading the operation, including Mastercard, Uber, Lyft, Visa, Spotify, PayPal, eBay, and many others. Each investor has contributed approximately $10 million to join the business plan. Libra aims to have at least 100 financial contributors on board by the time the launch date comes around. All contributors will be a part of the voting board in what will be called the Libra Association – to make decisions for the digital wallet and future plugins and apps that are currently being created.
The ‘no mining’ process has worried many regulators in Europe and the United States, but that’s not the only worry that’s on the rise. Many other circumstantial events will prove if Facebook’s Libra will be safe in the near future – we just have to wait and see.