A fast and cheap cryptocurrency for 2 billion people; Diem (Facebook coin)has come to implement this idea.
Facebook’s cryptocurrency project (renamed Meta) has been a hot topic in the field of cryptocurrencies for several years, and many people have questions about the nature of this cryptocurrency and its applications to the potential 2 billion users of this currency.
What is Diem? What is its purpose? how does it work? Is it a good investment option? This article answers all of these questions about Facebook’s cryptocurrency, the world’s largest social network.
What is Diem?
Diem is a payment system based on Blockchain technology as well as a backed cryptocurrency (stable coin). Facebook (renamed Meta) is behind this huge project that is claimed to serve billions of people around the world.
Libra is Diem’s previous name. Due to the fringes of this project called Libra, which we will review in the following article, on December 1, 2020, Facebook announced the change of its name to Diem to reduce some of the pressures.
This project has not been launched yet and is in the development stage, But it is estimated that it will be launched by the end of 2022.
Diem Payment System
According to published documents, the Diem project has introduced itself as follows:
“Diem payment system is made for everyone. Transferring money should be as simple and cheap as texting. “It does not matter where you live, what your job is, or how much you earn.”
According to the official website of Diem, this project has unique features:
It is on mobile: Diem payment system is available to everyone; It can be used only with a smartphone and simple internet.
It is stable: The cryptocurrency has a backing that includes the following assets: Cash or equivalent and 2. Very short-term government bonds.
Fast: Transactions on this platform are fast and easy; Both when sending money and when spending it.
It’s for everyone around the world: Diem payment system makes the global financial system more accessible and connected than ever.
Scalable: Its open-source protocol builds a dynamic community of developers who offer products and services to help people access their payment systems.
It is secure: This network is built on Blockchain technology and is designed with complete security in mind.
Although this project was created at the suggestion of Facebook; To maintain transparency in the project, oversight of all its operations is the responsibility of a council called The Diem Association. It is an institution composed of companies active in various economic sectors, including technology, financial technology, telecommunications, investment funds, and non-profit organizations.
The members of this association initially included large companies such as Visa, MasterCard, PayPal, Visa, Uber, Lift, Quinn Base, etc. However, PayPal, Visa, eBay, and MasterCard justify the association due to concerns from lawmakers.
However, large companies such as Uber, Kevin Bass, and Spotify are still members of the association. The number of these members may reach more than 100.’
Diem cryptocurrency; A currency without fluctuations
As mentioned, this payment system has a stable coin or cryptocurrency with backing, which is also called Diem. Of course, in the documents, the symbol of this cryptocurrency is “LBR”; But due to the name change, its symbol will probably change as well.
The US dollar, the euro, the British pound, and other major Fiat currencies will support this cryptocurrency, and its value will go up and down with them; Like Tetra, the price of each unit of which is equal to the US dollar.
Given the support of this cryptocurrency, it can not be considered an independent cryptocurrency. Facebook itself has repeatedly stated that designing this cryptocurrency only helps make national currencies easier to transfer, and in practice, no new currencies have been created.
So, at least in the early stages, Diem cryptocurrency is just money and a gadget of payment, and it can not be considered an investment option.
Diem Centralized network
Although Meta (Facebook) itself believes that Diem operates in a decentralized manner, most Diem experts believe that it will be centralized.
However, according to published documents, Diem’s ultimate goal is to have a payment system without the need for a license (such as Bitcoin and Ethereum); But according to the evidence that the system is currently set to run on a licensed blockchain. For this reason, only members of the Diem Association can trade on this blockchain.
The long-term goal of the project is to provide people around the world with easier and faster access to financial services. Meta plans to launch this cryptocurrency on Facebook, WhatsApp, and Instagram, which will reach more than 2 billion users.
The project also promises to address government constraints and comply with legal frameworks. In that sense, Diem may be complying with sanctions.
If Diem is approved by the US and other regulators, the project will be like a full-fledged central bank running on blockchain technology. With this description, it is easy to see that this project is something different from Bitcoin and other cryptocurrencies.
How does Diem work?
This cryptocurrency will be launched based on its exclusive blockchain. The chain is based on an algorithm called LibraBFT, which has many similarities to PoS. To confirm any transaction on the network, two-thirds of the participants, or validation nodes, must confirm it.
Initially, only members of the Libra community were responsible for verifying and validating transactions. The main condition for joining the Liberian community is that each member must pay at least $ 10 million in cash as collateral and support. However, in the future, more people will be able to participate by depositing Libra tokens.
Blockchain Libra has a proprietary programming language called “Move” for writing smart contracts. So like Ethereum, we have something more than a stable cryptocurrency about Libra.
According to Libra Technical White Paper, the network’s transaction speed will be at least about 1,000 transactions per second, which will increase according to the network’s needs. The network fee is also very small and close to zero.
Although the Liber blockchain does not ask for real names or information, and only addresses and pseudo-accounts will be available on the network like Bitcoin and other blockchains, the project has reassured lawmakers that it can prevent illegal transactions if needed.
It can be said that Facebook’s cryptocurrency project has three unique parts that work together in harmony to create a comprehensive and secure financial system. These three sections are:
1. Blockchain Technology
One of the components of Diem cryptocurrency is the blockchain infrastructure with scalability and acceptable security, which is the technological basis of this payment system.
The open-source Diem’s source code is available on the Github website. This code is written in the “Rust” programming language and can be accessed by anyone.
Diem code is scalable and allows hosting a large number of projects for the infrastructure of this cryptocurrency. As we said, Diem is developing a new programming language called Move, which is to be used to build smart contracts and execute custom transactions.
One of Facebook’s goals is to create better economic opportunities and high-performance global e-commerce. Such a goal is easily achievable due to the billions of users of Diem’s community and at least three billion global Facebook users.
Shopify, an e-commerce company that is a member of the Diem Association, will ensure Dime’s integration into e-commerce websites. Those companies that are members of the Diem Association that provide business services to the customer (B2C) will implement the Diem system on their platform, and this will lead to unprecedented ease of use.
3. International payments
Diem helps to reduce the cost of overseas money transfers, which currently have a high fee of 6.5 %. Having enough payment systems for Diem means that the currency is almost entirely digital.
Diem can pre-program transactions in its database. Diem operating costs are much lower than traditional remittance systems. The result of these features is that the cost of using diem sum is lower and its share of the market’s cryptocurrency users will be higher.
One of the important applications of Diem (Facebook coin) is related to the sphere of governance which arises from its governance structure. It is impossible to infiltrate Diem’s operations and capabilities, and this ensures that Diem can be an alternative monetary model for cash flow in government institutions.
Diem transactions can be used for a variety of actions that are in the public interest, and since the method of budgeting and spending in Diem is recorded in a public domain and is accessible to all, the benefits to the public will be twofold.
Also, since Facebook does not have exclusive control of Diem, it is impossible to use Diem against public interests.
These are the main differences between Diem and another Facebook product called Facebook Connect. Facebook Connect was launched in 2008 as the next version of the Facebook platform, allowing users to connect their Facebook friends, identity, and privacy to other sites on the Internet; But Diem is a blockchain payment system that has a private cryptocurrency.
Diem’s challenge with governments
Diem was scheduled to officially launch in late 2019 or early 2020; But after the project was announced, a wave of concern from lawmakers around the world, especially the United States and the European Union, halted the project indefinitely.
Lawmakers believed the project could jeopardize global financial stability and the value of national currencies.
The same fear of legislative obstacles causes big giants such as PayPal, MasterCard, VisaCard, and eBay to leave the Diem Association.
Concerns about Diem went so as far as the US Treasury Secretary and the German and French Economy Ministers officially announced in statements that they would not allow the project to operate at this time until Diem’s activities became transparent, and the work even escalated to the point where Mark Zuckerberg, Facebook CEO, appeared before members of the US Congress and promised that the Diem project would not pose a threat to national currencies.
Facebook (Meta) is still negotiating with lawmakers around the world to gain their trust. Legislators have said they will only allow the project to be launched if they are relieved of their concerns about money laundering, the weakening of national currencies, and the fight against terrorist financing.
With all these interpretations, experts believe that given the rapid development trend, Meta may not be worried about the legislature and may eventually be able to obtain the necessary licenses.
The end of Diem cryptocurrency
Following last week’s reports that the Diem Association had been dissolved, the association confirmed that it had sold its Diem Payment Network assets for $ 200 million.
According to ZDNet, the Diem Association had announced in a statement that they would sell its assets to Silvergate. Silvergate is the bank that the Diem network worked with last year to launch the US dollar-denominated StableCoin.
The CEO of Diem network said:
We are confident in the ability of StableCoin to be designed on a blockchain to provide benefits that have motivated the rainfed community from the beginning. With today’s sale, Silvergate will be well-positioned to advance this vision. This sale is the end of Meta’s controversial journey to build a new cryptocurrency.
Diem is a large project of Meta (Facebook) Company, which has been developed to facilitate payments and money transfers to people all over the world and is to be launched soon.
This project was founded by Facebook, But the world’s technology and financial giants are also contributing to its development. This project, unlike other blockchain projects, is highly centralized; But it looks very interesting in terms of efficiency.
Many critics believe that this project is not going anywhere; But despite the large companies involved in the project as investors and a golden set of experts and outstanding people as its team, the chances of this project succeeding seem high.
If Facebook’s revolutionary cryptocurrency project successfully overcomes its progressive legislative challenges, it could be the start of a major transformation of the world financial system.
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