The year 2022 seems to be a big yr for the blockchain earth as several projects, such as nonfungible tokens (NFTs) and centralized decentralized finance exchanges (CeDeFis), are taking the central stage. Also at the forefront is Facebook's Libra.

Not as well long ago, the media was rife with the news that the globe'due south largest social media network was developing plans for a global digital currency. Then, after a while, it looked like Facebook shelved plans for it. Disputes with regulators effectually the globe had a paw in delaying and redirecting Facebook's plans a bit. Instead of backing out, Facebook decided to strategize and launch a "unlike" global digital currency later in 2022, later rebranding the project to Diem.

Related: New proper noun, onetime issues? Libra's rebrand to Diem withal faces challenges

It is different in the sense that they had a change of name and administration. Yet, the Libra Association, later on renamed to Diem Association in December 2022, will manage the project.

What is Facebook Diem?

Facebook Diem is a presentlyhoped-for-launched permissionless payment organisation based on blockchain technology. The system will have a stablecoin called Diem and run on its blockchain network.

Although Facebook proposed the project, Diem Association will oversee the entire functioning of the project for transparency's sake. The Diem Clan is a body of companies from different sectors of the economic system, including technology, fintech, telecoms, venture capital and nonprofits.

The initial coin, Libra, was not decentralized, and neither is Diem. While the goal is to be permissionless, the current plan is for Diem to run on a permissioned blockchain. Consequently, just members of the Diem Association can run transactions on it.

However, it is so considering the evolution team has not yet developed a robust solution that can handle permissionless transactions for its billions of potential users. Enthusiasts are hopeful this will modify every bit soon equally the project develops in the pipeline.

In the long run, the ultimate objective of Diem is to help the world to proceeds admission to fiscal services easier and faster. The United States dollar, the euro, the British pound, and other major fiat currencies will back up the Diem Project. If the project gets approval from the U.Southward. regulators, Diem will function equally a full-scale primal bank that runs on blockchain applied science. Every bit you probably know, this is nothing like Bitcoin (BTC) and others.

Related: The metaverse: Mark Zuckerberg'southward Brave New World

Components of Facebook's new global digital currency

Facebook'southward new global digital currency has its sights set on revolutionizing the global payment arrangement. As such, the Facebook Diem projection comes with 3 unique parts that work in sync to create an inclusive and safe financial organisation. They include:

1. A reliable blockchain technological foundation

1 component of the new Facebook Diem cryptocurrency is a blockchain infrastructure with scalability and trustworthy security that serves as the technological foundation of the payment system.

Diem's source code is open-source on Github. The source code, written in Rust, can be accessed by all and sundry.

It affords scalability and would help the infrastructure to host several projects. Diem is also developing a new programming language called Move for edifice smart contracts and executing custom transactions.

2. Novi digital wallet

While it's pretty easy to build a digital wallet after undergoing renowned practical classes, Novi is a sophisticated wallet that requires all the time and attention you can afford. One of Facebook'due south numerous companies, Novi Financial, is developing the digital wallet for the Diem Project. The wallet was chosen Calibra upwardly until tardily 2022.

Novi is a standalone app that nosotros expect to back up integration into WhatsApp, Messenger, Instagram, and probably several other platforms. Its ease of employ is already mind-bravado.

Related: Novi-FT? Facebook's NFT back up may non bulldoze crypto adoption

3. The coin

The Diem coin is one crucial component of Facebook'southward new global digital currency project. It has a solid backing of the Diem reserves, which includes cash assets or greenbacks equivalents.

There are besides short-term regime securities. As such, Diem is a stablecoin. According to the development team, the coin volition non be minable as it is with Bitcoin and a host of others. In its initial stages, only Diem Association members can process transactions. However, Diem plans to fully transition into a permissionless proof-of-stake system within the first v years of its launch.

Values driving the pattern of Facebook Diem

As with other reputable cryptocurrencies, some tenets act equally guiding principles for Facebook Diem's role and design. So hither are some central values firing its unique design as all hands are on deck for its launch later in 2022:

  • People ought to own the right of control over their legal labor and its outcomes.
  • More people should have access to financial services.
  • Global payment networks should exist open, cheaper to utilize, and have better speed. All of these translate to ameliorate economical opportunities and more effective global commerce.
  • Slowly but eventually, people will build their trust in a variety of distributed forms of governance.
  • In addition to supporting upstanding agents and consistently upholding the integrity of payments, people and institutions are responsible for driving the growth of financial inclusion.
  • An open and much broader payment network, with unmatched levels of interoperability, along with high compliance standards, should follow the governance and design practices.

How does Facebook plan to apply it?

There are tons of opportunities that a cryptocurrency backed by a visitor with the might and reach of Facebook can offer users across the world. In addition to that, the unique opportunities that it offers make Facebook Diem a dandy creation in this crypto age. Hither are some means that Facebook volition be using Diem soon:

1. Remittance

Users should look remittances and money transfers to exist easier and stressless. In addition to ease, the project assures a fast transaction speed and less expensive charges than those of financial intermediaries.

The long processes involved in sending money, especially across borders, via traditional financial intermediaries could well be a thing of the by.

2. E-commerce

One of Facebook'south focuses is on creating meliorate economic opportunities and effective global e-commerce. It becomes an fifty-fifty easier achievable utilize case when you lot consider that the Diem Association has billions of users and Facebook has at least iii billion global users.

Existence one of the Diem Association members, Shopify will ensure that the due east-commerce site owners tin hands integrate the coin. Every member visitor that runs B2C services will implement the Diem system on their platform — that is unmatchable ease in every sense of the word.

3. Cross-edge payments

Diem can assistance to bring down the cost of sending funds cross-edge, which is already high enough at 6.5%. Being a cryptocurrency with acceptable payment systems in place means that Facebook Diem is nigh entirely digital.

Transactions will be pre-programmed into its database. Expect operating costs are to be significantly less than those incurred through traditional remittance channels. The result volition exist a lower cost of use and a higher market share on the part of cryptocurrency users.

4. Governance

Governance is one of the crucial utilize cases of the Diem cryptocurrency, and it stems from Diem's governance structure. Compromising the functionalities and features of Diem is impossible. In turn, this ensures that the project tin help to serve equally the model budgetary culling for the passage of fiscal menses in governance.

What's more than? Government bureau transactions for various public welfare tasks, in improver to a detailed overview of grants and expenses in the public domain, will guarantee benefits for the public.

Besides, since Facebook does not have sole command over Diem, information technology is not possible to misrepresent the apply of Diem against the public interest.

Here is how Facebook Diem differs from Facebook Connect. Facebook launched Facebook Connect in May 2008 equally the adjacent iteration of the Facebook platform. Information technology allows users to connect their Facebook friends, identity and privacy to sites on the internet. On the other hand, Facebook Diem is a permissioned and blockchain-based system of payment that includes a private cryptocurrency.

Facebook'south Libra is coming with risk

The announcement of the launch of Facebook's Libra generated diverse debates. Some believed it would rival sovereign currency while others looked at the technological and data privacy issues it posed. To exist more than specific, those who believed information technology would supercede sovereign currencies may accept gotten it wrong for several obvious reasons while those who considered the project in light of Facebook'south data violation history and monopolistic nature could be right.

Outset, the Libra currency is said to be backed 1:1 with traditional currencies, such equally the U.Due south. dollar, the euro, the yen, etc. Proverb that Libra, the supposed secondary currency, will exist an alternative to its base currency is incorrect. It raises the question of how a secondary currency relying on a primary currency for value will supervene upon it. That being said, the possible threat is that it could manipulate users' data.

For instance, Hyun Song Shin, economical adviser and head of research at BIS, acknowledged that big tech's involvement in digital currencies comes with some potential benefits fifty-fifty though it could reduce competition and create data privacy issues. Shin re-emphasized: "The aim should be to answer to large techs' entry into financial services to do good from the gains while limiting the risks." He added:

"Public policy needs to build on a more comprehensive arroyo that draws on financial regulation, contest policy, and data privacy regulation."

Today, anyone can build a cryptocurrency payment system from home. However, the defining factor is that reputable organizations with verifiable track records support Facebook's Diem.

The views, thoughts and opinions expressed here are the author's alone and practise not necessarily reflect or represent the views and opinions of Cointelegraph.

Michael J. Garbade is the co-founder and CEO of Education Ecosystem. He is a serial tech entrepreneur who formerly worked at Amazon, Full general Electric, Rebate Networks, Photobucket and Unicredit Grouping. Garbade has experience working in the U.s., Europe, Asia and South America.