Tuesday, April 23, 2024

The Future of Decentralised Finance: Facebook’s Libra, Bitcoin, or Telegram’s Ton?

Bitcoin, Libra or TON
Bitcoin, Libra or TON

Bitcoin, Telegram’s TON or Facebook Libra? That is the million dollar question which may become more relevant in the future as awareness of cryptocurrencies and digital tokens spread. Bitcoin has proven itself over a decade, weathering the highs and lows of markets. Telegram’s TON and Facebook Libra on the other hand have much to prove.

To TON or Not to TON?

Telegram’s TON represents a fascinating exploration of the share potential of blockchain to expand beyond conventional decentralised ledger technology infrastructures. TON is not composed of just one blockchain. It is actually composed of blockchains of blockchains. It is a collection of 2-D blockchains, which are designed to enable millions of transactions per second, the fastest experienced by any blockchain. While this is great in theory, not much has been shown in practice. This shouldn’t be a reason to discount the TON. Telegram’s founders have a track record of delivering on their promises. While TON shouldn’t be much different, it is hard to ascertain just how much progress is being made.

The development of TON has been under the radar for the most part. Any news that has surfaced about it has somewhat limited in depth. The private nature of the sale may of course be a contributing factor to this.

In contrast, Facebook has exhibited stronger efforts in communicating the dynamics of Libra cryptocurrency. Coupled with its 2.38 billion monthly active users, it shows positive signs for widespread adoption.

Backed by Industry Giants

A lot of hype surrounds the big names backing the initiative, such as MasterCard and PayPal holdings. With the backing of titans of the finance, e-commerce, and telecommunications industries, Facebook has a wider network of resources to pull from in terms of payment channels and technical infrastructure. With the $10 million investment by each of the entities, they have further incentives to ensure that Facebook’s Libra is adopted on a large scale.

David Marcus, former President of PayPal believes that billions of people around the world will gain access to a more inclusive financial system through Facebook’s Libra. In practice, it is too early to say with certainty what will become of Libra. It is essentially a stablecoin supposedly backed by assets which means it is very different in nature from Bitcoin which is not a stablecoin and does not need to be backed by assets. If anything, it is more like PayPal than Bitcoin. Users exchange their local currency (which is used to back the Libra) for the token which they can use to make purchases.

Libra Dividends

Libra investment token on the other hand provides holders with dividends which are paid out by the Libra reserve. Facebook intends to not only back reserves with its own cryptocurrency but also with a basket of currencies, government securities, and bonds deemed as stable and reputable. The association did not go into great detail about the specific weights of the assets. It remains to be seen how Facebook will overcome regulatory hurdles in all corners of the world. Bitcoin has been able to overcome regulatory hurdles with much ease. Facebook on the other hand has a great mountain to climb. Knowing the tenacity and genius of Mark, it wouldn’t be much of a surprise if he finds a way. Telegram’s TON could be the dark horse, springing out of nowhere to dominate the crypto space. There is science in their silence.


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