Editors Note: This article comes fromGolden Finance, reprinted by Odaily with authorization.
Golden Finance
Golden Finance
, reprinted by Odaily with authorization.
In December 2020, Libra suddenly announced that it would be renamed Diem and confirmed that it would be launched in early 2021. At the same time, the original Libra Association was also renamed Diem Association. As we all know, the social network giant Facebook has already designed the cryptocurrency Libra, so what is the purpose of changing the name to Diem?
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In fact, as early as 2018, Facebook had plans to develop a cryptocurrency-based payment platform. At the time, David Marcus, the vice president of the instant messaging app business, was named head of the blockchain division. He previously served as president of PayPal and served on the board of directors of cryptocurrency exchange Coinbase. Immediately afterwards, Facebook began to hire more and more cryptocurrency developers, and gradually the social media giants digital currency plans began to emerge, and other details related to Facebooks digital currency have since begun to flow out. At that time, Facebook intended to turn the instant messaging application WhatsApp into a cryptocurrency remittance tool, and was preparing to launch a pilot in the Indian market, but it failed in the end.
In 2019, Facebook officially announced the launch of the digital currency Libra, and also disclosed in detail the specific structure of the project. Initially, both Libra and its blockchain were backed by the Libra Association, a consortium of 27 large companies independent of Facebook. According to Facebooks plan, they will build a digital currency wallet called Calibra (now renamed Novi) for Libra, and will support independent governance voting, but this method will allow Facebook to benefit from the digital currency Libra. profit.
However, when the launch was announced, the Libra project still faced many regulatory obstacles, including the U.S. Senate and some European regulators did not support Facebooks issuance of digital currency. Since then, the Libra digital currency plan has not developed as expected. By the end of 2019, some initial members of the Libra Association began to choose to leave, including PayPal, eBay, Visa, MasterCard, Stripe, Mercado Pago, and Booking Holdings. In the end, Facebook had to rebuild the Libra Association and also attracted some new members to join.
secondary titleEthereumRetrofit Libra - Diem comes out
As a modified version of Libra, it can be said that the current Diem is more similar to Tether (USDT) or other cryptocurrencies linked to legal tender. Diem will run on the self-owned Diem blockchain, and all tokens will be stored in a digital currency wallet called Novi. The rebranded Diem project is working with the Swiss Financial Market Supervisory Authority (FINMA) to obtain a payment services license, which, if all goes well, will allow it to operate in certain territories.
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Similarly, the Diem blockchain is powered by validator nodes, currently licensed by members of the Diem Association, who are required to confirm transactions and validate blocks.
Currently, Diem is confirmed as a stablecoin that, like Tether and other stablecoins, will be backed by traditional assets. If early plans are followed, Diem will be pegged to government securities and fiat currencies of different countries. According to the latest reports, the Diem token will be fully backed and pegged to the U.S. dollar. If it is pegged to the U.S. dollar, it means that the market value and circulation of Diem may not be fixed. The Diem Association can mint tokens when the Diem reserve increases, and can also destroy tokens when the reserve decreases. So far, there is no accurate data on the circulation of tokens issued when Diem is launched.
It’s worth noting that despite Diem’s ongoing commitment to global financial inclusion, they have had to comply with regulations, and the Diem blockchain is still controlled by a small group of validators who transact according to Diem’s LibraBFT consensus protocol Confirmation, this ensures that no one participant (including Facebook and Novi) can have too much power over Diem. This means that the Diem Association is likely to be able to blacklist some addresses, while also preventing token transactions that violate relevant regulations. If this is the case, Diems design method may run counter to the original intention of blockchain technology, because Satoshi Nakamoto originally designed Bitcoin to provide people with absolute financial freedom and unstoppable transactions.
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The Diem blockchain is actually very concerned about efficiency issues. The actual transaction processing speed is very fast. It is estimated that it can process 1,000 transactions per second when it goes online. This is quite different from previous media reports that the test network can only process 6-24 transactions per second, which is far lower than non-blockchain payment networks such as Visa or MasterCard.
More importantly, Diem promises that the transaction fee is close to zero. On the Diem blockchain, the interest income of the reserve assets will be paid to the validators, which means that they do not need to pay for each transaction like other payment companies. A 1-3% fee is deducted.
The Diem Association recruits troops to deal with regulatory challenges. It is worth mentioning that Facebook has learned the lessons of the previous Libra project and knows the importance of regulatory approval. Therefore, the Diem Association has recruited a number of key figures to lead the project, such as: Microsoft and VMware veteran Dahlia Malkhi serves as chief technology officer; former HSBC executive Christy Clark serves as staff advisor; and former U.S. attorney Steve Bunnell serves as chief legal officer. Additionally, Kiran Raj was appointed Executive Vice President, Growth and Innovation and Deputy General Counsel, James Emmett was Managing Director, Sterling Daines was Chief Compliance Officer, Ian Jenkins was Chief Financial and Risk Officer, and Saumya Bhavsar was General Counsel consultant. Judging from the work experience and industry background of these new members, they are likely to help the Diem project enter a new phase and address regulatory challenges while ensuring organizational independence.
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Will Cryptocurrency Exchanges Support Diem?
According to information disclosed in the Diem white paper, the project is working with “a number of highly competitive cryptocurrency exchanges” in order to allow more users to freely buy and sell Diem tokens. So far, though, we don’t know which cryptocurrency exchanges will support Diem. As of December 2020, no cryptocurrency exchange has explicitly endorsed Diem, but as members of the Diem Association, Coinbase and Xapo may offer some support. In addition, it is unclear what practical applications Diem will have, and no major companies have announced support for Diem transactions. However, it should be noted that some companies in the Diem Association may accept the token, including Shopify, Spotify, and Uber, which are well-known global companies, and they all have the possibility of accepting Diem tokens for payment.
If more cryptocurrency exchanges support Diem transactions in the future, more users will buy the token, which may further push up its market value. On the other hand, if the Diem token can only be used through the Diem app, it is unlikely to attract the attention of the crypto community.
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How do you see the future of Dime?
