From Libra to Diem ...Four kay things have changed...

qsyal (62)in Project HOPE • 4 years ago (edited)

Unless you've been living under a rock for the last year or so, you have already heard that Facebook is going to launch its own cryptocurrency called Diem (formerly known as Libra).

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After over a year of opposition and hard negotiations, it seems that Facebook has finally managed to persuade financial authorities in many countries including the United States.

Many of us still remember well the famous tweet series that Donald Trump published in 2019, criticizing Facebook for "planning to become a bank".

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Skeptical regulators that just last year saw Libra as a big threaten for their sovereign currencies appear to be pretty satisfied with what they are seeing with Diem.

So, the big question must be WHAT HAS CHANGED?

Well, besides the fact that they rebranded their project in an attempt to look in a different appearance, Facebook has made a few core changes to their project to appease regulators.

In this post, I'm going to delve into these amendments and back them up with my closing thoughts...

1)Mandatory KYC documentation:

Modified-sourceDiem will guarantee to governments that every user must provide KYC documentation in order to create a Diem wallet. In regions where KYC cannot be verified like the case in some developing countries in Africa or Asia, it will still be possible to use the Diem network but with limitations on sending, receiving, and other functions.

2)No Decentralization:

source The initial goal of Libra/Diem that they announced last year was to turn the entire payment network into a decentralized autonomous organization within five years of launch. This would have given control of the entire network to users.
However, the disappointing fact today is that Diem was pressured by regulators to abandon this aspiration. This means that Deim network will be a centralized payment network controlled by a multinational consortium. After all, governments will NOT be so happy for giving this amount of financial power to the average person.

3)Diem reserves:

sourceThe Diem blockchain will host assets for almost all major fiat currencies in the world. This means that Diem's stablecoin will still be backed by a basket of fiat currencies but the composition of this basket will no longer be decided by the Diem association but instead, by international financial entities such as The World Economic Forum and International Monetary Fund.

4)Six transactions per second:

sourceGiven that Facebook along with heavyweight global entities (such as Coinbase, Uber..etc) are working on developing Diem/Libra project, it was expected to be an advanced and sophisticated cryptocurrency, or at least to be equal to other main cryptocurrencies in the market in terms of technological and effectiveness aspects.
Alright, I must admit that I couldn't believe my eye when I read several days ago that Facebook’s crypto testnet averages only 6 transactions per second!!
It's worth mentioning that in 2019, Facebook claimed that their cryptocurrency would have 1000 TPS and nobody knows why this number has fallen to only 6 today...
I cannot understand What Facebook is going to do with this ridiculous TPS, but I can safely say that with this humble performance, Diem blockchain will be literally a decade behind almost every cryptocurrency in existence. Even the 10-year old Bitcoin will ironically be faster than the newborn Diem!!

Conclusion:

At the end of this post, the logical conclusion that may form in reader's mind that I'm NOT that bullish on Diem/Libra project...
Honestly, this is true, simply because Diem/Libra is going to be a centralized stablecoin controlled by a multinational consortium, and Facebook (which has terrible records when it comes to data security and information manipulation) will be the main member of this consortium.
And given that it is a fiat-backed stablecoin, then maths tells us that investing in Diem will NOT make anyone rich. In fact, you would be losing money by investing in Deim because you are essentially investing in a fiat currency that is losing value every year thanks to inflation...
Despite that though, we cannot deny the immense influence that Facebook's cryptocurrency will have not only on the crypto space but maybe on the entire global economy.
After all, according to Statista, Facebook has over 2,700 million active users on its platform. This is the largest human gathering in history, and it would be shortsighted to ignore or dismiss this fact.

What do you guys think about the upcoming Diem/Libra cryptocurrency?
I'm really keen to know your opinions and thoughts...

Thank you for reading :))