Diem, a stable coin created by Facebook after Libra failed, is set to launch soon. The stable coin is backed by Silvergate bank and is pegged to the value of a dollar.
Facebook is pushing to get its digital currency on its feet. After a.long period of delay, it seems that the social media giant's dream of a stable coin is, at last, coming to life. The foremost and largest social network previously tried to launch its digital currency, Diem back in 2019. It failed to do so after objections from the government and several other influential people over whether such a powerful company should delve into digital finance. There were also concerns over user privacy and if the giant company would stay neutral in politics etc.
Major Signals
- Diem is a US backed stablecoin.
- Previously called Libra, this Stablecoin is more scared down.
- Facebook has 2.8 billion users on it's platform.
- It could potentially be used on Facebook apps like Whatsapp and Messenger.
Over 2 billion people have signed up for Facebook's online platform. That would be more than double the population of the world's most populous country. That is also over a third of the total number of people on the planet.
But Facebook addressed most of those concerns and scaled-down a lot of previous features to something more simple. The strategy is a far more modest variant of what Facebook initially revealed in the summer of 2019 when it said it would introduce a worldwide currency in conjunction with monetary giants like Visa and PayPal.
On Wednesday, the Diem Association, the association behind the project, confirmed the release of Diem, a US backed stable coin.
Users inside a specific group of corporations will be able to use a virtual token fixed to the price of a dollar until the platform launches.
In disclosing the stablecoin, the Diem Association also announced that it would relocate its headquarters from Switzerland to the United States, claiming that this would make planning for the digital currency known as US Diem easier. The stablecoins will be issued exclusively by Silvergate Bank, a California bank that serves a variety of crypto companies, according to the organization.
"The creation of this relationship is an essential phase in the planning for a Diem USD pilot," the Diem Association said in a statement that didn't say when the pilot would begin or when customers would be exposed to it. The Diem Association was formerly known as Libra, but it changed its name in December of last year. This could partly be because it wants to be dissociated with the previous failed version, Libra.
Many of the high-flying executives and leaders of the previous project left with chaos. Even as of last month, the vice president of Diem Association also stepped down from his position to join stablecoin, Circle.
It's unclear how committed Facebook is to the project now. Mark Zuckerberg, the CEO of Facebook, led and was a critical part of the promotional activities when the company first revealed its cryptocurrency plans in 2019. However, Facebook said nothing about the news of the stablecoin on Wednesday, which may indicate that the organization is dissatisfied with the venture or is deliberately avoiding the scrutiny of US legislators who have been highly critical of previous iterations.
The Diem Association, on the other hand, seems to be losing steam. The group's website still listed Geneva as its headquarters as of Wednesday evening, although its Twitter account had been inactive since December.
Conclusion
Facebook's new stable coin seems to be pretty exciting news. With the many many users that are active on the Facebook platform if such a stable coin is launched and adopted for financial transactions on Facebook and its affiliate companies like WhatsApp and Instagram. It could mean a cryptocurrency that could reach a demographic that other cryptocurrencies haven't been able to reach. Although they have been pretty quiet about the news of the stable coin, it's launch could change the future of cryptocurrencies and could herald wider societal adoption.
Question of the day
What do you think of this new token, would it be widely adopted? Let us know in the comments.
