TL;DR: Diem, Facebook’s new crypto-currency (previously called Libra) is being heavily criticized by European governments while losing U.S. reinforcements because it wants to be the best alternative to the dollar, the euro and other currencies. Also, Diem is not really a crypto currency since it does not meet several requirements to be named as such. Finally, the direct comparison with Bitcoin emphasizes that privacy is one of the most important pillars of the crypto world.
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Diem (formerly called Libra) project will be a Facebook tool to send money based on the Blockchain technology. The technological giant expects to launch its crypto-currency (stablecoin) by the beginning of 2021 and will be supported by an infrastructure capable of tolerating a large number of transactions.
It is worth mentioning that Diem’s main target client is the more than 2600M users that have active accounts, so, we will be able to see 1 out of 3 people on Earth with Diem in their virtual portfolios, which means that many people will invest their own savings without knowing what a cryptomoney really is and the risks it entails.
Diem wants to be the alternative, in the first place, of the US dollar and later of all those currencies that depend on the States or Institutions, in which, the euro is found. This is why Europe (and more specifically Germany) has already put the brakes on them as it will not accept this digital currency until the regulatory risks are solved.
According to some European finance ministers, the monopoly of the currency must remain in the hands of the States, and not in those of companies that can profit from it, the main and generic objective of all firms in the world.
A wolf in sheep’s clothing is still a wolf”, German Finance Minister, Olaf Scholz.
However, we have to shell Diem because even though Diem is promoted as a crypto token (stablecoin), if we take the premises for a crypto coin to be considered as such, we see that it fails in many of them. Next, I highlight in which Diem fails to become a crypto-currency:
The pillars of the crypto world are wobbling with this Facebook project. The fact that Diem can associate Diem Wallet to your Facebook account makes the two big pillars of crypto currency, privacy and anonymity, disappear completely. In the current crypto world, we are codes, not names and surnames.
All crypto-currencies must be open source. Diem is only open source to a certain extent. Why? Because it is still in development, so they have not released the code yet. The same thing happens with your accounting book. If they do, this post will obviously be updated.
Crypto currency can’t be censored, in this case Diem does allow to control transactions that can take place between crypto-enthusiast and Diem.
The crypto-currencies are not issued by any government (which Diem complies with) but should not be managed by any institution, and here we already find the first major flaw. Diem will be controlled by Novi and the Diem Association, thus having a totally closed ecosystem.
Why will Bitcoin continue to be better than Diem?
As for its main competitor, Bitcoin has at most the possibility of having 21M of Bitcoins in circulation. In the case of Diem, the offer will be subject to the Diem partnership.
As we’ve mentioned, if you want to undermine Diem… it won’t be easy because you will have to pass a selection process. Therefore, it will be more difficult than with Bitcoin. You can start mining it today.
Finally, one of the main points that crypto currencies have is privacy, and that’s that unlike Diem, Satoshi Nakamoto’s crypto currency protects it throughout the process. As for Diem, we know that it will be associated to the personal Facebook account, so, there is the possibility that they know our name, location, photos and even passwords! Even if they say that the name change was to distance themselves from Facebook, I don’t recommend putting the same password on both.
I have to admit that I’m afraid of Diem’s relationship with Facebook. I’m really afraid of investing in something that is so closely related to a company that doesn’t respect the privacy of its users at all, and even more so when there is a whole institution (EU) against its business strategy. If years ago I deleted my account for the same reason, now I am less likely to create an account with thousands of other more reliable altcoins such as Internxt ($INXT) or Stellar ($XLM) that are going up!
