The online social networking platform Facebook has announced its plans for launching the new Diem digital currency project in early 2021, which will eventually be launched in two sets consisting of a multi-currency coin and the other in the form of stablecoins pegged to the U.S. Dollar and the Euro.
The Diem digital currency is intended to revolutionize the fintech space and allow money transfers to be performed as easily and as seamlessly as sharing photos and other media on the web. It has also been said that the transfer fee for Diem will be very cheap, which will surely attract a great number of new users and see the currency experiencing high trade volumes.
This news comes shortly after Elon Musk’s announcement that Tesla will no longer be accepting Bitcoin as payment for their cars due to environmental concerns around Bitcoin mining.
No concerns have been voiced on Diem’s ecological impact as this may certainly become a topic for crypto critics if Diem does indeed experience high transaction volumes as anticipated and if the environmental impact can be compared to that of Bitcoin.
The Diem Association, an independent membership organization responsible for the governance of the Diem network and the development of the Diem project, consists of 26 geographically distributed and diverse businesses and non-profit organizations.
The association had been planning a payment system license with Switzerland’s FINMA watchdog, but has now decided to withdraw its application for a Swiss payment license and will rather be focusing on the United States, as Diem will be moving their operational headquarters from Geneva to Washington D.C.
The idea for the Diem digital currency was first announced back in June 2019 under the name Libra and was met with severe backlash as central banks and politicians were concerned that Libra could undermine dominant currencies and aid money laundering.
This has led to the organization losing a few important backers since the first announcement in 2019 such as Visa, which has since taken a step toward blockchain, and PayPal, which has recently partnered up with Coinbase.
But in the last year and a half, Diem has gone through a complete makeover by rebranding from Libra and making a few changes to the leadership team such as the new CEO, Stuart Levy, the former chief legal officer at HSBC.
Diem is preparing to launch a small-scale pilot with its U.S. Dollar-pegged stablecoin later in the year which will mainly be focusing on transactions between individual consumers.
Meanwhile, central banks are also opening up to the idea of digital currencies. The U.K. has its eyes set on a digital currency pegged to the British Pound and China has been testing out its version of a digital Yuan in various cities.
If the Diem digital currency is successful, it will change eCommerce quite significantly as the transaction process will be reshaped into the lives of many users, even those who remain skeptical about cryptocurrencies. It will be interesting to see if Diem will attract more investors and regulators to ensure a smooth launch later this year.
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