Facebook’s Libra to Launch Next Year in a new coin named Diem
Have you heard about Facebook launching a cryptocurrency? Their plan to launch a cryptocurrency known as Libra was progressing well. But it did not materialize, and the process was stalled. The good news is that the Libra cryptocurrency is coming out soon. This time, it won’t be known as Libra anymore. The organization managing the Libra cryptocurrency is now Diem Association. Thus, Libra cryptocurrency will now be called Diem.
Why is Libra renamed as Diem?
To prove that the organization is independent and not a part of Facebook, they decided to rename the cryptocurrency and the organization. When the project was announced initially, it attracted widespread criticism from the government and related organizations. You must be wondering – What was the issue because of which Libra received such a pushback? The major reason behind it is the association of Facebook with Libra. At the same time, Libra’s mission was a threat to financial organizations run by the government. These two factors made the government-run financial organizations wary of it.
As per Bloomberg reports, Libra Association will be now called Diem Association, and Libra cryptocurrency will be Diem dollar.
It’s not the Same Anymore!
The scope of Diem cryptocurrency has now shrunk considerably. Its scope is not the same as the one announced for the first time. The association lost the support of many big names last year. They had to withdraw because of the regulatory heat that the Libra project was attracting. The controversial nature of the Libra cryptocurrency made it even more difficult for the big names to back the project.
The distrust of Facebook was obvious at the questioning of Mark Zuckerberg by the House Financial Service Committee hearing last year. During the committee hearing, they questioned Zuckerberg about the Libra project and its goals.
Diem Association’s CEO, Stuart Levey, said:
The Diem project will provide a simple platform for fintech innovation to thrive and enable consumers and businesses to conduct instantaneous, low-cost, highly secure transactions.
Diem – The Dollar-Backed Cryptocurrency
The Financial Times reported that Diem is a cryptocurrency. Every Diem coin will have an equal volume of the US dollar backing it. They have also mentioned in their report that the Diem Association will launch the Diem coin in January 2021.
Their initial plan was to back the value of the Libra coin with multiple fiat currencies. Now, there is a change in the plans. Each of the cryptocurrency rolled out by the Diem Association will only be backed by a single fiat currency. It means that they will launch multiple coins, and each type of coin would be backed by a single fiat currency.
Libra Association, known as Diem Association now, wrote in April that none of the coins are meant to be a replacement of the fiat currencies anymore. Instead, these will act as a compliment.
It would be interesting to see how Diem, the watered-down version of Libra, performs in the market. Without the support of the big names such as Stripe, eBay, Mercado Pago, Visa, and Mastercard, the road ahead will be a bit more difficult. It is also very likely to face intense competition from current stablecoins such as USDT, USDC, among others.
However, the Name Facebook itself and people’s expectations do do a huge impact on the coin itself why I am as an investor would expect a large bull move on the Diem. After all, at some point, it will be approved at some large key-points services I believe.