Facebook Libra vs. TON Gram
Two major blockchain projects have attracted a lot of media attention over the past few weeks. Some critics even predicted the death of digital currencies altogether. Is it us having some deja-vu or it is not the first “cryptocurrency death” in media?
Indeed both projects have been having a rough time lately: Telegram had to postpone the launch of its TON network due to last-minute complications with SEC, and Facebook is facing a lot of skepticism as Mastercard Inc and Visa Inc became yet another partner to pull out of Libra Association just days before hearing in US Congress.
If you’re lost trying to understand the difference between these two, here’s a quick non-tech summary of what you need to know about Facebook Libra and Telegram TON projects.
In essence, Facebook Libra is an ambitious project aiming to bring financial services to disadvantaged people in underbanked regions. This is achieved through fast transactions via messenger using Libra — a stable digital coin backed by various fiat currencies and other assets, including government bonds, which implies that it has a lot to do with authorities and traditional banking institutions.
GRAM is a cryptocurrency issued by Telegram Open Network, a fascinating project by owners of Telegram — controversial and popular encrypted instant messaging service. Although TON obviously doesn’t want to mess with regulators and is ready to respect SEC requirements, the cryptocurrency monetary policy will be regulated by non-governmental TON Reserve fund, which is aligned with Telegram’s vision of the anonymous, borderless and decentralized world.
Let’s look into other aspects of both projects.
Monetary Policy and Pricing
Facebook Libra is a stablecoin backed by different fiat currencies and other assets which makes it more attractive for investors outside a crypto world. David Marcus, the head of Libra project recently hinted that one of the options to go about might include issuing a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc.
TON project has issued 5 bln of GRAM tokens at the time of ICO. To address the volatility issues and keep the token price stable Telegram has created TON Reserve fund similar to Federal Reserve. The fund will hold 50% of total token circulation, automatically buy GRAM in case of price drop and ensure the issuance of new GRAM tokens priced not higher than 2% than a year before. These measures will help to maintain a stable token price against USD.
Privacy and Personal Data
Facebook’s privacy policies have been subject to scrutiny and criticism for years. Which means not so many would want to trust Libra with more sensitive data, such as ID, financial information and many more. Data protection watchdogs from across the world have express concerns over the privacy risks associated with the Libra project. Facebook says that it wouldn’t have access to personal financial information gathered for the Libra project. The company’s blockchain lead, however, acknowledged that third-parties would potentially be building products for Libra, such as wallets and thus these providers are to comply with regulations and standards.
Telegram network seems to have found the balance between anonymity and compliance with the regulation. Before the launch of mainnet, they introduced the Telegram passport feature for identity verification. Users download the documents to confirm the identity just as they do at cryptocurrency exchanges. The difference is that the user’s data is encrypted with a personal key and cannot be revealed to anyone until the user decides to do so.
Some of the TON services may require the verification, in this case, the user will have to either pass personal key to that service to decrypt the ID or choose another TON service that doesn’t require KYC.
Verification is performed by external service, so technically, Telegram doesn’t access or store personal data which is a smart solution since many countries forbid the access and storage of personal data by foreign organizations.
Relationships with Regulators:
Projects with global appetites inevitably have to deal with regulators. Policymakers and regulators worldwide are worried that the creation of synthetic currencies could cause harm to the global financial system, threaten users’ privacy, and facilitate money laundering. Both projects are in the middle of negotiations with regulators and pledged to comply with regulatory requirements.
Libra blockchain is based on PoS (Proof-of-Stake) and will be supported by 100 nodes (validators). In order to become a validator one will have to join Libra Association and pay a $10 mln entrance fee. The White Paper says that initially, the project will not be completely decentralized. Eventually, the developers will pass the rights to independent validators, but the percentage of them should be no more than 20%. Given that maintenance costs of Libra node are quite high — estimated of $280k, we would assume that large businesses will control the ledger. That doesn’t sound much like decentralization.
GRAM transactions will be validated in TON blockchain, which is also based on PoS; contrary to Facebook Libra, TON is fully decentralized and has no limitation or for independent validators.
At the moment neither Libra, not GRAM are live, Telegram has launched a testnet in early September 2019 and was supposed to start the mainnet by 31, October but had to postpone to 2020 pending the approval from SEC. Libra’s testnet launch is scheduled for the end of 2019 and the project launch is planned for mid-2020. It is questionable whether they can meet the deadline given that major partners have withdrawn from Libra Association.
Both projects have access to massive investment and thus have sufficient resources to execute the vision properly. But regulatory obstacles are still there, while Facebook Libra and TON are keen to cooperate with regulators there’s still a long road ahead. No matter which project goes life first, this will be indeed a significant breakthrough in cryptocurrency adoption and have a substantial impact on the global financial landscape.