Facebook wants to test its Diem cryptocurrency this year
The coin, which was first announced in 2019 as Libra and then renamed Diem, is supposed to be linked to the US dollar, provided the social media giant can get rid of the hype and controversy over the original idea it conceived nearly two years ago.
Facebook first announced plans for digital currency in June of 2019, and has faced a backlash from governments and consumer groups around the world who were concerned about what might happen if Facebook took control of what might become the world’s largest currency.
Facebook has nearly 2.8 billion active users on a planet of 7.9 billion people.
Facebook’s plan in 2019 was to launch the blockchain-based currency by early 2020, something that clearly hasn’t happened after the tech company’s partner organizations, such as PayPal and eBay, began pulling out after the wave of negative press.
Facebook appears to be taking a more cautious approach this time, as Diem, the Swiss-based non-profit organization that oversees day-to-day business development, aims to launch a pilot program with a single stable currency pegged to the US dollar in 2021.
This pilot model will be small in size, and focus heavily on transactions between individual consumers, and there may also be an option for users to purchase merchandise and purchases, however, there is no confirmed launch date, so the timing may change.
The goal of Libra was to have a global currency linked to a basket of sovereign currencies, such as: the US dollar and the euro, but after facing strong opposition from regulators around the world, the organization overseeing the project lost its main supporters.
The group relaxed its plans, choosing several stable currencies backed by various government-backed currencies, in addition to one multi-currency currency.
Central bankers and politicians fear the currency could threaten monetary stability and possibly enable money laundering, and Facebook’s participation also means there are concerns about how to protect users’ privacy.
One of the big concerns was that Diem might pose a threat to the dominance of the US dollar, and two months after Facebook unveiled Libra, the former Bank of England governor proposed a new digital currency based on a global basket of commodities that could reduce the dollar’s position as the world’s reserve currency.
Diem technology has changed dramatically over the past year and a half from regular blockchain to highly sophisticated blockchain.
Diem is now in talks with Swiss financial regulators to secure a payment license, a move that will set the organization on the path to launching its digital currency project.