Libra is now back as a less-threatening variant of one of the most divisive crypto-currency ventures ever, Diem. When the American social media giant, Facebook, Inc. revealed plans to enter the industry, the entire crypto market felt ripples of enthusiasm last year. At that moment, with its approved blockchain-based payment system and stablecoin dubbed Libra, the platform tried to create a bold entry. The move would have revolutionized the movement of money and placed Facebook and its partners on the blockchain-based digital payments sector’s ground floor.
The project turned out however, to be a little bit more than politicians and legislators were prepared to accept. For a number of factors, Libra saw swift regulatory push-back. Regulators expressed a myriad of worries about the impact of currency issuance by for-profit tech firms. Some lawmakers thought that by injecting these channels into global economics and geopolitics, this maneuver will offer them too much authority.
Not ready at that time, regulators
Soon, complaints from lawmakers reached a fevered pitch. Notably, last year the House Financial Service Committee held a hearing on the matter. At the hearing, members of Congress took turns blasting Mark Zuckerberg, the CEO of Facebook. They expressed concerns ranging from political meddling all the way to foreign governments’ misinformation campaigns.
The classification of this new form of currency and what branch of the government would supervise the activity were also concerned. It was clear to see that Facebook lacked the courage to pull off the Libra launch, as it is. Lawmakers even stopped all further debate on Libra until they were able to get a better understanding of the project.
The Original Concept Libra
The original Libra idea was to introduce a stable coin funded by an asset basket. The stable coin would be more stable than any fiat currency and could be used as a means of exchange worldwide. Libra was designed broadly similar to other cryptocurrencies such as Bitcoin in the original plan, but with basic differences designed to make it more stable and less of a speculative asset.
It had a dream team of financial firms ready to back the project when the Libra network was first brought to the attention of the market. Firms such as Mastercard, PayPal, Stripe, and Visa all pledged to back the Libra coin with assets. Unfortunately due to all of the regulatory uncertainty and bad press Libra received, these backers left the project early in the year.
About Diem, what’s different?
Diem is more than just the Libra blockchain being renamed. In order to speed up the regulatory approval process, the creators behind this idea agreed it was better to alter their plans for Libra. The change of name is part of these modifications. Developers decided that because it was tied to an earlier iteration of the project, the Libra name was no longer appropriate.
The reduction of Facebook in the equation was one of the primary changes that occurred when Libra became Diem. Lawmakers want the social media network’s organizational independence if the project is ever to gain enough confidence to gain regulatory approval. The project has recently updated its white paper in order to reduce the position of Facebook.
Another big change that took place with this update was a radical shift in the project’s overall purpose. Libra was initially seen as an alternative to the existing economic structure. Libra was in essence, in competition with the global fiat market. Now, Diem is eliminating the competition. Diem is designed as a compliment to domestic currencies such as the USD, not a replacement for them.
As part of this transition to support both existing government-backed currencies, such as the US dollar and the euro, Diem is now launching a single stable coin with a dollar peg. If regulatory approval is reached in a timely manner, this token is planned for a 2021 launch. Developers are then planning over time to issue other single currency stablecoins. Finally, a multi-currency stable coin would enter the picture, and only after regulators are okay with the idea.
Diem brings to the market and individual users some important benefits. The token would have the advantage of immediate adoption. A new era in cryptocurrency use would signal the launch of Diem. Facebook has billions of global users who are suddenly going to become users of cryptocurrencies. The consequences of such a rapid rollout would help educate masses of individuals about the endless benefits of blockchain technology.
This huge user network would attract numerous developers to the platform as well. Diem could be leveraged by Dapp developers to create new and exciting Fintech apps that would have instant access to a huge crowd of potential users. Based on the global feedback they received from the Diem network, developers could then adjust and alter their application.
Diem’s a fast one. Using this network, both consumers and companies can conduct instantaneous, low-cost, highly secure transactions. Within seconds, Facebook users could send payments internationally. This flexibility and freedom could in just weeks, help cement Diem as a major global currency.
How Diem works
Diem combines blockchain transparency and security with the involvement of Facebook’s network of platforms and their global reach. The ability to conduct secure global transactions across the blockchain would be gained by anyone on this network.
Diem will use a custom-built blockchain as part of this advantageous approach. From the ground up, this blockchain was built to service the needs of billions of network users. Interestingly, for over a year before it publicly announced the Libra concept, Facebook constructed this blockchain in secrecy. The Diem blockchain functions as the token’s technical foundation and the transaction and ownership verification tool.
Novi Wallet by Novi Wallet
Another aspect of the Libra notion that has changed significantly is the Novi wallet. The original Novi wallet was originally known by the name Calibra. This digital wallet was scheduled for release this summer, but when developers decided to make changes to its capabilities and design, it was pushed back. The original wallet was intended for storing Libra coins only. The platform’s new Novi rendition does much more.
Novi wallet holders can store multiple currencies in keeping with Diem’s new inclusive strategy. Major fiat and digital currencies will support the wallet. Interestingly, this move is seen as a way of calming down regulators and shows that Diem is all about promoting the entire economy’s digitization and not just a takeover of Facebook.
Its easy integration into the daily lives of users is the best thing about the Diem project. To achieve this task, developers changed many things about the Calibra wallet. The team’s desire to include Novi on both the Facebook Messenger and WhatsApp networks was however, one constant that did not change at all.