What Is Facebook Diem?
Diem, formally known as Libra, is an upcoming global payments network that is expected to launch in 2021. The Diem Network will operate using the Diem Blockchain, a new blockchain designed to be highly scalable, secure and flexible. According to its whitepaper, the mission of the project is to develop a financial infrastructure that “empowers billions of people.”
The project was first announced in June 2019 as a single global currency backed by a reserve of assets. However, after much international regulatory scrutiny, Diem was revised to include a basket of single-currency fiat-pegged stablecoins in addition to its multicurrency coin, XDM. In December 2020, the project rebranded from Libra to Diem, representing a “new day” for the project.
See more: Libra coin
Who Are the Founders of Facebook Diem?
The Diem Network is a project of the Diem Association, an independent nonprofit association whose founding members included social media giant Facebook, payments processors Mastercard and PayPal, crypto and blockchain firms Coinbase and Bison Trails, and venture capital firm Andreessen Horowitz, among other financial, technology and nonprofit entities. However, several founding members have since left the association amid regulatory scrutiny, including PayPal and Mastercard.
Facebook, although it now shares governance with the other association members, has been highly involved in the development of the project. In June 2019, Facebook announced that it had formed a new subsidiary, Calibra — which has since changed its name to Novi — to develop the front-end infrastructure for accessing Diem, starting with a digital wallet that will be integrated into Facebook-owned apps.
Novi is led by David Markus, who also oversees all of Facebook’s payments and financial services products. He led the development of the project at Facebook before its launch as an independent association. Prior to Facebook, Markus served as vice president of mobile for PayPal, later becoming the company’s president. He has founded a number of companies, including mobile payments company Zong.
In May 2020, the Diem Association appointed Stuart Levey its first CEO. Levey was previously chief legal officer of global banking company HSBC, where he also sat on the executive committee. Prior to this, Levey worked for the administrations of both George W. Bush and Barack Obama as undersecretary for terrorism and financial intelligence in the Treasury Department.
What Makes Facebook Diem Unique?
According to its whitepaper, Diem seeks to create an open, distributed, global payments network in order to bring forward a more inclusive, innovative payments system that can be easily accessed from mobile devices. It intends to launch a series of stablecoins that form the backbone of “the internet of money,” including tokens pegged to the U.S. dollar, the euro, the British pound and the Singapore dollar. The project also plans to issue a multicurrency token, XDM, that is a composite of its single-currency coins.
In order to accomplish this goal, Diem is building a new blockchain called Diem Blockchain that relies on Move, a newly created smart contract language that is designed to prevent digital assets from being cloned. Diem anticipates that its blockchain will be able to serve billions of users.
The Diem Association receives funding in the form of contributions from its members, with each founding member required to pay a $10 million membership fee. As such, much of its business plan is centered around bringing new members on board and ensuring that existing members renew their involvement. The Diem Association hopes to encourage an open application process in which potential members compete among each other for a limited number of membership slots.
Learn about Tether, the largest stablecoin by market capitalization.
Learn about USD Coin, a stablecoin backed by Coinbase, a founding member of the Diem Association.
Want to know more about stablecoins? Read an in-depth guide on Alexandria, CoinMarketCap’s online educational resource.
Stay up to date on Diem and other stablecoin initiatives with the CoinMarketCap blog.
How Many Facebook Diem Coins Are There in Circulation?
Diem will have no fixed token supply. Rather, its single-currency stablecoins will be minted and burned by Diem as needed in response to market demand, and each token will be backed by a reserve of liquid assets. According to the association, at least 80% of the reserve will consist of “very short-term” government securities, while the remaining 20% will consist of cash.
XDM, Diem’s multicurrency token, will be managed by a smart contract that combines each single-currency stablecoin based on predetermined fixed nominal weights. Diem has stated that this may result in the value of XDM fluctuating in relation to local fiat currencies.
How Is the Facebook Diem Network Secured?
The Diem Network will be secured with a Byzantine fault tolerance consensus called “LibraBTF,” under which two-thirds of all validators must agree that a transaction is accurate for it to be added to the blockchain. Validator nodes will be operated by Diem Association members, which are required to demonstrate their technological capacity to operate a validator node when applying for membership. The network will also have a second layer made up of publicly operated full nodes that replay and revalidate transactions when synchronizing with the blockchain’s current state.
The protocol of the Diem Blockchain, Diem Core, is open source, meaning that anyone will be able to independently audit its safety and security.
As a centralized entity, the Diem Association will operate a financial intelligence unit to monitor the network for any illegal or nefarious activities, and it has committed to working with both law enforcement and internet service providers to combat any misuse of the platform.
Where Can You Buy Facebook Diem?
Neither Diem’s single-currency nor multicurrency stablecoins are yet available for purchase, but upon launch, its tokens are expected to be listed on major cryptocurrency exchanges.
While Diem has not yet launched, there are many other cryptocurrencies with which you can currently transact and trade, such as Bitcoin (BTC). CoinMarketCap has a simple, step-by-step guide to teach you all about crypto and how to buy your first coins.