Facebook Diem Aims to Rule Global Digital Currency Stage

Facebook has launched a blockchain based permissionless payment system and its own token Diem to replace its virtual currency Libra.
Facebook has launched a blockchain based permissionless payment system and its own token Diem to replace its virtual currency Libra.

In 2019, news that Facebook had plans to create a global cryptocurrency, Libra, filled the news media. A moment of silence followed that could suggest they backed down on the issue. Now, Facebook has restrategized and launched “another” worldwide virtual currency, named “Diem”. 

The defunct Libra Association, expected to manage the initial project, changed to the Diem Association. Contentions with regulators around the world allegedly delayed the world’s largest social media network’s plans.

Facebook Diem is a centralized blockchain-based permissionless payment system. Diem is the name of the stable coin which will run on the system’s blockchain network.

Being a stablecoin, Diem will remain equivalent to the USD. That is, one Diem would be equal to one US dollar and would be ever redeemable for it.

If regulators in the US approve the virtual currency, Diem will act as a full-blown central bank utilizing blockchain technology. Major fiat currencies like the USD, BP, and EUR will back up the project. As you’d probably figured, Facebook Diem is completely unlike Ethereum, Cardano, and other decentralized currencies. One difference is that, while those others are ruled by various developers and partners Diem is a form of cryptocurrency that belongs to a large corporation.

Components of the New Digital Currency

Facebook Diem comprises three unique components that work together to give a secure payments system that includes different payments possibilities. They include:

A Virtual Wallet

One of Facebook’s outlets, Nori Financial, is developing a sophisticated virtual wallet for the Diem Project, Nori. Formerly Calibra, Nori is a user-friendly separate app, which would likely integrate into other Facebook platforms like WhatsApp and Instagram.

The Stablecoin

The Diem coin is another crucial component of Facebook’s new global virtual currency. Diem is a stablecoin, with solid backing from Facebook’s cash assets, alongside short-term government securities.

And a Dependable Blockchain-Based Technological Foundation

The final vital component of Facebook Diem is a blockchain infrastructure that’s scalable and secure. The blockchain would function as the technological foundation of the payments system.

Potential Applications 

The new currency can find utility in international transfers, more straightforward and quicker remittances, and e-commerce.

Diem can help minimize the cost of sending money across international borders. Users can expect significantly lower operating costs than those expended in traditional financial platforms. In the same vein, users can expect cash payments to become more straightforward and less complex. The currently convoluted process involved in sending money with traditional means, particularly to foreign countries, could well become outmoded.

As one of the Diem Association members, Shopify will see to it that users of its site can easily integrate the Coin. Every other member of the independent association with similar services as Shopify will incorporate the Diem system. And that’s poised to provide a remarkable improvement in the ease of making financial transactions. Other members of the 27-member association are Lyft, Coinbase, Spotify, and Uber.