Diem (formerly Libra) is a payment system proposed by Facebook. It is built on a foundation blockchain licensed, which is expected to power an ecosystem of payments and other digital financial services.
The currency of this system is called Diem dollars, backed by a basket of currencies stablecoins and is expected to launch in 2021. So, what do we need to know about copper? cryptocurrency of Facebook?
Electronic payment is an area with a lot of "land" for development. Smartphones are getting cheaper by the day, giving more people access to them. Much of the economic activity is happening online. Companies like Paypal, Visa and MasterCard have been providing a lot of financial services, electronic payment. World cryptocurrency are also trying to build products around this area.
Facebook's strength is that it already has a very large user base. Saying “very loud” is probably still an understatement. According to Q3 2020 figures, Facebook has about 2.7 billion monthly active users. This is a big advantage for their upcoming payment system to quickly achieve success.
What is Diem?
Diem is a payment system based on blockchain proposed by Facebook in 2019. It helps people without a bank account get access to financial services. Some of the most important founding members of this system are listed as Morgan Beller, David Marcus, and Kevin Weil.
Initially, the project was scheduled to launch in 2020, but it was delayed due to various reasons and is likely to launch in 2021.
Diem will be run by the Diem Association, an independent membership organization with headquarters in Geneva, Switzerland. Association members include a number of companies from the blockchain, technology, payments, telecommunications, venture capital, and non-profit sectors.
The members of the Association are responsible for governance decisions, monitoring the operation of the Diem payment system, projects built on the Diem blockchain, and providing grants. Facebook aims to have 100 members in this association at launch.
Is Diem a Cryptocurrency?
Diem is built on top of blockchain and it uses cryptographic technology. However, the term cryptocurrency often implies specific properties that the coin does not currently have. In summary, according to many reviewers, it would be more accurate to call Diem a cryptocurrency.
How does Diem work?
This means that anyone with an Internet connection is free to access, transact with, or build upon them. There isn't anyone (or anything) controlling access to these blockchains.
However, this will not happen with a licensed blockchain. To use it, you will need the permission of the person who is controlling the network. Or more specifically, the apps you use will need special permissions. Diem is a permissioned blockchain, which also means it won't be able to mine or stake to validate transactions, like many other blockchains.
Instead, it will rely on a set of licensed validators (members of the Diem Association) to validate transactions. According to its creators, Diem is convertible to Proof of Stake (PoS) after the first five years.
However, this is a long time for a new platform to launch. So, why didn't Diem use PoS right from the start? Facebook explained this choice in the white paper. In that, from their point of view, there is currently no permissionless system that can support billions of people trading at the same time.
Decentralized or Centralized Diem?
According to many experts, licensed blockchains cannot be as decentralized as unlicensed “peers”. After all, they are more like traditional corporate databases. In this sense, Diem is not as resistant to censorship as Bitcoin and other cryptocurrencies.
Since validators need to be members of the Diem Association, the network can become relatively centralized. However, controlling and regulating which applications can interact with the distributed ledger can be difficult. there are other advantages. For example, it can be easier to rule out malicious and phishing apps.
Diem payment system
The Diem payment system supports several stablecoins anchor prices with fiat currencies like USD, EUR, GBP. These coins work similarly to the stablecoins you may already know in that their value is derived from a reserve known as the Diem Reserve.
This reserve is made up of cash, cash equivalents and short-term government securities. In addition, the Diem payment system will also support a multi-currency currency called the Diem Dollar. It is a composite of all other stablecoins and is backed by a basket of assets that back it up.
You can think of it as a stablecoin of stablecoins (and possibly other assets, such as securities). The idea is that different forms of collateral can protect it from volatility - an important aspect for something that wants to act as a form of payment.
The Diem cryptocurrency will be stored in an upcoming wallet called Calibra (formerly Wallet). Novice). As you might expect, this digital wallet can be integrated into other social media products, such as Facebook Messenger and WhatsApp.
According to the plan, users will be able to easily convert between US dollars (or other fiat currencies) into Facebook currency. The Diem Core source code is open source and written in Rust - you can check it out for yourself on Diem GitHub. According to the plan, Diem will also assist smart contrast through a programming language called Move.
Can Diem Replace Bitcoin?
For now, it's clear that Diem and Bitcoin are fundamentally different and they will most likely co-exist in the future. While both can be thought of as electronic payment systems, they serve different use cases.
Bitcoin is a decentralized, censorship-resistant cryptocurrency that typically acts as a reserve asset or store of value. Diem is an idea based on a licensed network that proposes a more centralized model.
What is Diem's future?
Facebook has faced some criticism following the initial announcements of Diem, particularly from central banks, lawmakers and regulators. It remains to be seen if they can incorporate applications of blockchain into creating a successful Diem system.
diem is a payment system proposed by Facebook based on a licensed blockchain. It aims to bring financial services to the unbanked, using financial services through Facebook's social media apps.