by Hodler Ash 
The controversial cryptocurrency headed by Facebook got a new name “Diem” very recently. Earlier it was named Libra. Diem means ‘light’ in Latin, reflecting the evolving maturity and independence of the project.
It has not been an easy journey from Libra to Diem. The initial partners have withdrawn interest, the goals have changed, details are meddled with and legislators have shown concerns by pointing towards privacy problems of Facebook and whether it could be trusted with users’ financial data. However, Facebook is determined to go through with the project.
Diem is announced to be set to launch in January 2021. The initial plan was to back the cryptocurrency with multiple single-currency stable coins but the plans have changed and Diem is inclined to be backed one-for-one by the US dollar.
Why Facebook wants a cryptocurrency of its own?
It cannot be technically called Facebook’s cryptocurrency. This project belongs to the Diem Association, which was originally co-founded by Facebook as the Libra Association. The association will have the complete monetary authority of the cryptocurrency. The reason portrayed behind this project is empowering the 1.7 billion people without bank accounts, who can use this currency for transactions.
But there are also other angles to it. Facebook has shown its interest in other digital currencies prior to Diem. It had implemented a virtual currency which ran for four years called “Credits.” It was used to make payments for games played on Facebook. Mark Zuckerberg, the founder of Facebook has commented that transactions of money online should be as hassle-free as sending photos. Diem is an initiative to make this process easier and cheaper so that people will prefer transferring money online. This will also attract new users to the social media platform. It will be a great benefit for Facebook as the use of cryptocurrency for ads will be a new desirable attraction and, therefore, the ads can be made expensive.
There will be a wallet for holding and using the digital currency. Initially named Calibra, now the wallet is called “Novi.” The mission is to help people around the world have access to affordable financial services. The services would be games and commerce.
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How to buy Facebook cryptocurrency?
You cannot buy this cryptocurrency as of now, because it is yet to launch. For now, you can invest in the shares of Facebook as they have reached new heights after the announcement of Diem. Diem will be available to be bought with national currencies but the exact process is yet to be revealed.
Imagine the Diem wallet “Novi” as your bank account that you open virtually through Facebook. You can add money to it with your own national currency. Use it while buying products or services on Facebook and other partner stores like Lyft and Shopify.
However, the main advantage is when you store Diem in your wallet and transfer it to friends and family across the globe. International transfers will be as easy as sending a text on Facebook. It eliminates all the complexities of exchange rates and transfer fees. You will be transferring one currency, Diem which will be accepted across the world.
There are other alluring reasons as well to keep Diem in your wallet. There are possibilities of getting a better savings rate than what your bank gives. It might become easier to loan out this cryptocurrency in the future. It is very likely to become a better experience than banks and make the banks look outdated.
How is Diem different from other cryptocurrencies?
Diem is very similar to other cryptocurrencies, like Bitcoin and Ether. It will be existing in digital space and will not have any physical existence. Just like other cryptocurrencies are monitored, every transaction with Diem will be recorded on a software ledger or blockchain, that will confirm every transaction. The responsibility of managing the Diem blockchain will be initially given to the founding members but is expected to adapt to the notions and become a fully open system in the future.
The only difference with other cryptocurrencies is that that Diem will be supported by real assets. This format makes it a stable coin. Other cryptocurrencies are not backed by anything and hence, fluctuate very often. The initial plan of the founders was to back Diem with a basket of assets to increase the currency’s value. It was not made clear what the assets would be but suggested that they would be denominated in global currencies like the dollar and euro, as they do not fluctuate frequently. If people decide to buy more cryptocurrencies, the association will buy more of the underlying assets which will help to create or “mint” new Diem. If people lose interest, they can sell those assets and “burn” Diem.
Facebook has a tainted reputation when it comes to privacy protection. When the plans were first revealed, people were concerned whether Facebook was indulging in ploys to access the financial data of users. But it was made very clear by the founders that the wallet is placed under a subsidiary roof of the social network. The wallet is designed in a way so that it can be regulated by authorities to prevent money laundering and other financial crimes. The company also pointed out that financial data would be kept separate from Facebook’s social data.
It is definitely a great way of transactions. The transfer of money and paying for online services will become very versatile and openly accepted around the globe. Facebook is trying to make it an open ecosystem with other authorities involved in it. This is a good reason to trust their intentions and give Diem a chance.
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