Project Libra, the experimental cryptocurrency announced by Facebook in 2019, has a new name – Diem. The new stablecoin is all set to release later in 2021.
What is Diem?
The Diem is an associative body that was created by the Facebook company which consists of 26 financial firms and non-profit organizations.
Facebook plans on launching the Diem backed by the US Dollar just how cryptocurrencies like Bitcoin and Ethereum are backed on either blockchain transactions or something else. The Diem will be backed by the US Dollar to maintain stability over assets.
By definition, experts say that Diem is not a token but rather a stable coin. This means that the stability of the Diem will be highly dependant on the USD. It’ll be a 1:1 ratio, which means the Diem will be one dollar at the start of its trading journey.
Criticism and Backlash
With all the hate cryptocurrencies have been attracting towards them, Diem stepped in with its own chunk of issues. Diem got major backlash from multiple financial institutions as well as several countries having strict cryptocurrency laws stating – “Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability.”
Not only could Diem fuel the fire that Facebook had already placed with Cambridge Analytica, but they could also be a serious threat to cyber theft and privacy violations to the end-users. Diem has since lost some of its most major vendors like VISA, MasterCard. PayPal, Stripe, Vodafone, and still counting.
What Diem Means For Crypto
Diem is not a threat to any major cryptocurrency as long as it does not follow Facebook’s poor track record of breaching data. Being a stable coin, it is highly dependant on the USD and will have minor influences, if any on other cryptos.
From a profitability perspective, Diem is tricky crypto. Diem is a first of its kind that is using an established currency to stabilize itself instead of being based on blockchain technology or the likes of it. But, by any means, It is not a threat to any cryptocurrency. Be it Bitcoin or the Ethereum or even Dogecoin, about which you can check out more on our cryptocurrency guides.
The key factor that differentiates Diem from any other major Crypto is that it is centralized. This means it will yet again be controlled by laws and rules from corporations in comparison to Bitcoin, which is a completely decentralized blockchain payment system.
We’ll know more about Facebook’s Diem stablecoin as rumours take us closer to the launch timing.
It is unsure as of now if the Diem will be mineable and what portals and miners will give support to it so stay tuned to our website to know more about Diem. Till then check out some of our articles on Dogecoin and Crypto wallets.