After Facebook discarded the idea of Libra , a cryptocurrency that in 2019 had the support of such powerful companies as Paypal, Visa or Mastercard, it seems that the social network would be about to launch Diem , another cryptocurrency that would differ from the previous one in which it would present low volatility and would be better supervised than those existing so far, such as Bitcoin or Ethereum.
In fact, some time ago the social network formalized its ambitions for the creation and launch of Libra, a cryptocurrency with which it had managed to gather a really interesting number of partners, as well as a new secure wallet (baptized with the name of Calibra ) where to store these units.
But before the avalanche of criticism made by financial institutions and a good number of authorities, in the end many of the partners ended up leaving the adventure. This is how Diem was born, the name chosen by the Libra Association to change its original cryptocurrency.
What exactly is Diem?
Generally speaking, experts believe that Diem seeks to extend the revolution in online payments , by allowing payments, deposits and transfers almost completely free.
But, it seems, the social network also intends to go a little further, and directly target the 1.7 billion people who, at the moment, even when they have access to the Internet, do not have a bank account.
Although some specialists consider that the social network can, in the long run, have a very precise idea of what people are really buying, thereby fueling the optimization of their advertising campaigns with this data, it should be taken into account that this cryptocurrency would not be controlled by Facebook , but actually, within the governing council created some time ago there are many partners.
What are the differences between Diem and Bitcoin or Ethereum?
Both Bitcoin and Ethereum have some characteristics that, precisely, do not make them certainly ideal options. They are extremely volatile securities , with their share of bubbles, as in fact we have seen since the end of last year with Bitcoin. And these kinds of bubbles, in fact, always end up bursting sooner or later.
This inconsistency in value is, by itself, a major disadvantage that explains why originally very few merchants tend to accept cryptocurrencies. However, only when enough companies start accepting cryptocurrencies, it is clear that cryptocurrencies will cease to be mere speculative objects.
We also run into another problem: the current system is based on a very energy-intensive infrastructure . Also, these cryptocurrencies are not as easy to use as a bank card. Hence, experts believe that it is unlikely that cryptocurrencies can ever replace current means of payment.
Precisely for this reason, Diem would be characterized as a stable cryptocurrency , since its value would be mainly indexed to legal currencies to avoid fluctuations (as could be the case, for example, of the US dollar).
How would Diem work and what could we buy with it?
The operation of Diem would be based, like other cryptocurrencies, on the blockchain . But although it shares this characteristic with Bitcoin or Ethereum, nothing is further from the truth: it has been designed as a stable currency .
This means that, originally, its value is stabilized by a portfolio of currencies, which are the main reserve units in the world. Therefore, an association would ensure its governance in order to guarantee said stability.
At the moment we know little about the main intentions and purposes of Facebook. In fact, since its inception under the Libra name, the project appears to have lowered its ambitions somewhat. In fact, its latest White Paper on cryptocurrencies no longer mentions specific partners or specific use cases.
However, it is hoped that the system is not incompatible with an approach in which Diem can serve as a hidden middleman to simplify transactions, making them less expensive. For example, for the user it would not be impossible for the transfers to be denominated in their national currency. Although we must not forget that Facebook promised payments through Novi (its secure wallet, formerly known as Calibra).
Regardless, it appears that Facebook intends to officially launch it sometime later this year. And although it seems that everything pointed to the month of January, it is evident that this has not been the case. The reason? We must bear in mind that the social network needs to obtain the approval of the competent authorities. Also, the Novi wallet is still in development , so it is clear that there is still a bit to do.
