Here’s the Latest on Facebook’s Crypto Project Diem
Takeaways~
- Novi Wallet, and Diem stable-coin set to launch by the end of the year
- Diem project has been plagued by regulatory hangups
- Member of Diem’s board are playing into being the “choice for
consumer protection”
It seems like a long time since Facebook’s ‘Diem’ crypto project has been mentioned in the news. Maybe that is because basically it still has not launched. However, Facebook is not giving up, despite the project facing numerous roadblocks, and different changes. Apparently, Diem will “launch as a single coin backed by the US dollar”. The news that ‘broke’ today was that the project is set to release soon, with their digital wallet ‘Novi‘ as the centerpiece. The wallet will be “built on the stable coin Diem”, which has still yet to be released, too.
Because of the project’s obvious ties to Facebook, it faced extreme regulatory scrutiny in 2018 when announced, for obvious reasons, as Facebook’s data privacy issues have marred them for years. The project has since re-branded and now operates as an “independent association”. However, it is clear the project still has close ties to Facebook as one of their executives David Marcus sits on Diem’s board while also heads up Facebook Financial.
Marcus told Yahoo that they could’ve built Novi on “existing payment rails”, meaning ACH transfers, Venmo style digital wallet app. As Facebook probably realized, the winners in that space are in fact Cash App, Venmo, and Zelle. Marcus claims that building their wallet this way would “not solve the systemic issues that we believe exist currently in our current payments infrastructure.” I can’t imagine anyone in the space is clamoring for Facebook to come “save us” from these systemic issues by throwing their hat in the crypto ring, but here we are.
It will work like this: “Diem coins will be backed by a combination of cash or cash equivalents and short-term government securities”. Facebook creating a stable coin with cash reserves is really not groundbreaking news, and won’t be much different from USDC by Centre, as they are centralized too and can shut down addresses at their discretion. Marcus admits Facebook is working with regulators to be sure they launch a product that is fully compliant.
Facebook has ambitious goals for this project. According to Marcus, he thinks Facebook can lead the way for interoperable internet money. “If there was ever a chance to create an open, interoperable protocol for money on the internet and truly change the game for people and businesses around the world, it is now.” Facebook already has a massive user base, and already is in payments. Notably, Facebook has done “more than $100 billion in payments volume in the last four quarters and is used in more than 160 countries”–that is pretty staggering.
They are working behind the scenes to drop something major. According to Marcus, Novi wallet has “has secured licenses or approvals in nearly every US state”. Does that mean the Diem stable coin has as well? If so, that would be interesting. I can imagine Facebook is making a major push in the merchant area–for everyday transactions, with low fees, as well as for remittances. Of course, their blockchain which Diem runs on will be fully centralized and thus, very fast. Basically, Facebook is looking to do what Stellar (XLM) is trying to do.
Marcus said: “We believe that in terms of consumer protections, both on the purpose-built payments blockchain that Diem is and on the stable coin itself, it’s in a class of its own”. Here Marcus is playing into the “concerns” over consumer protection by people like Senator Warren and Chairman Gensler.
Nevertheless, I actually have a feeling that Diem and the Novi wallet will actually be more successful than many people care to imagine, however, they have clear issues–including years-long hangups, which considering their resources is quite surprising. Also, people do not trust Facebook with their data, and they must find a way to mitigate mistrust through privacy mechanisms. Also, just who will really care? Considering all the other great options, that are decentralized, that we have at our disposal. One thing is clear, Facebook will bring something high quality to market, that’s if they ever bring it.
The post Here’s the Latest on Facebook’s Crypto Project Diem appeared first on CryptosRus.
Text source: CryptosRus
