Diem, backed by Facebook, is about to launch its first digital currency later this year. The project, formerly known as Libra, was initially proposed by Facebook back in 2019.
What is Diem?
Diem is a permissioned blockchain-based payment system. A private currency introduced as a cryptocurrency is also part of the initiative. Unfortunately, the initiative was met with heavy opposition and criticism from governments and regulators all over the world, prompting PayPal, Visa, and MasterCard to withdraw their support.
One major concern was that Diem posed a challenge to the dollar’s supremacy. Former Bank of England Governor Mark Carney introduced a new digital currency focused on a global basket of products two months after Facebook unveiled Libra, threatening the dollar’s status as the world’s reserve currency. According to Ran Goldi, CEO of First Digital Assets Group, which is building infrastructure that allows merchants to accept diem as a method of payment, Diem’s technology has “changed dramatically over the past year and a half from a naïve blockchain to a very sophisticated blockchain that you can see is trying to answer some of the questions that regulators had.”
So what should we expect?
The Facebook-backed digital coin, Diem, is scheduled to launch later this year, but in a much more restricted form. When it actually arrives, Diem won’t be met with the same fanfare and uproar that greeted the social media giant’s original concept nearly two years ago – after changing its idea from one digital currency linked to a basket of sovereign currencies to simply an array of stablecoins backed one-to-one by various government-issued currencies.
The Diem Association, a non-profit based in Switzerland that oversees Diem’s growth, plans to launch a pilot with a single stablecoin pegged to the U.S. dollar in 2021. A source has revealed to CNBC that the pilot program “will be small in scale, focusing largely on transactions between individual consumers. There may also be an option for users to buy goods and purchases.”
Despite the news, there is no confirmed date for when the pilot will begin, and neither Facebook nor the Diem Association have responded to the rumors.
Even though crypto mining is detrimental to the environment, digital money and cryptocurrency is at an all-time high so companies are racing to make their own and introduce their own versions to the market. Though Facebook already has a huge monopoly on everything from social media, to politics, venturing into cryptocurrency will put it at the forefront of world domination. In related news, PayPal has acquired a cryptocurrency security startup.
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