Why is Facebook starting a crypto currency

Diem: Facebook's cryptocurrency will likely be launched in 2021

Less revolutionary than planned

Facebook apparently wants to publish its crypto currency Diem in 2021.
Facebook is apparently pushing ahead with its plans for an in-house cryptocurrency. According to the insider report, Diem should start in 2021 - but it will be far less spectacular than initially planned.
In 2019, Facebook announced for the first time that it wanted to stir up the financial world with an in-house crypto currency called Libra. It should be usable worldwide and secured with a basket of different currencies and government bonds. The revolutionary plans of the group were, however, thwarted by regulatory authorities, bitter criticism and numerous data protection concerns, important supporters such as the financial service providers Visa and Mastercard jumped out. At the end of 2020, Facebook announced a change in the name of its currency, Libra became Diem. Apparently, Facebook has not only improved the name, the company has also refined the concept of its cyber money. This is reported by CNBC.com, citing an anonymous insider. Accordingly, Diem will start as a so-called stablecoin in 2021, which will take over the value of the US dollar.

Just a small test balloon at the start

According to the report, the currency will initially be available as a test balloon and will primarily be used for transfers between private individuals. However, initial payment options are already possible at selected retailers. The First Digital Asset Group is working on building the infrastructure to make Diem a recognized means of payment. Chief Ran Goldi told CNBC that the technology behind Facebook's cryptocurrency has changed fundamentally in the past year and a half. A "naive" blockchain has now become a sophisticated solution that should largely meet the requirements of the regulatory authorities. Blockchain analyst Michael Gronager firmly expects Diem to be released this year, according to CNBC, marking another important step in the spread of digital money.

Not all concerns addressed

Facebook is currently in negotiations with the Swiss tax authorities to license Diem as a means of payment. The company claims it is working on important mechanisms to prevent money laundering - one of the major concerns that Libra's critics originally raised. It remains unclear which trading partners Facebook will cooperate with in the future after Visa, Mastercard, PayPal, Ebay and other well-known companies have withdrawn due to initial concerns. In addition, there is still concern about a lack of data protection. Facebook repeatedly draws attention to itself through its lax handling of user data and only had to justify itself for a gigantic data leak at the beginning of April 2021. According to the group, however, no user data should be stored for the use of Diem. There are plans to strictly separate the social network data from the financial data. However, it remains to be seen whether this will actually be implemented.
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