Let's start by addressing how it's similar to other cryptocurrencies, such as bitcoin and ether. Like them, Diem exists entirely in digital form. You won't be able to get a physical note or coin. And like other cryptocurrencies, Diem transactions are recorded on a software ledger, known as blockchain, that confirms each transfer. The Diem blockchain will be managed by the founding members in the early stages but is supposed to evolve into a fully open system in the future. Diem will be pegged to real assets, a format widely known as a stablecoin. That contrasts with bitcoin, ether and some other cryptocurrencies that aren't backed by anything and swing wildly in response to speculation.
Some of the bigger founding members appear to have gotten cold feet. Seven of the original 28 founding members -- that's a quarter of them -- dropped out before the association's inaugural meeting in Geneva. The exits included PayPal, eBay, Stripe and financial services giants Visa and Mastercard. The departures are big losses because those members brought expertise in payments and transfers technology. The other dropouts are Mercado Pago, the online payments platform of Argentina's Mercado Libre marketplace, and Booking Holdings, an online travel company that runs sites including Priceline, Kayak and OpenTable. The association currently has 26 members.
No. Facebook is one of the members of the Diem Association, the nonprofit that will serve as a de facto monetary authority for the currency. (Facebook's membership is through Novi.) The association hopes to grow to 100 members, most of which will pony up $10 million to get the project going. Each member has the same vote in the association, so Facebook won't technically have any more say over the association's decisions than any other member. That said, Facebook has played an outsized role in the initial phases of the project. After the network is launched, Facebook says, the social network's role and responsibilities will be the same as those of any other founding member.
This isn't actually Facebook's cryptocurrency. It's a project of the Diem Association, which Facebook originally co-founded as the Libra Association. The association, which will serve as a monetary authority for the cryptocurrency, says its purpose is to "empower billions of people," citing 1.7 billion adults without bank accounts who could use the currency. But Facebook has its own interest in digital cash that predates Diem. The social network ran a virtual currency, called Credits, for about four years as a way to make payments on games played within Facebook. Mark Zuckerberg, Facebook's CEO, has said that sending money online should be as simple as sending photos. Diem is designed to make it easier and cheaper for people to transfer money online, which might also attract new users to the social network..
Formerly known as Libra, Diem hasn't gotten much love since the association publicly launched in mid-2019. Partners have bolted from the project, details have shifted and legislators have criticized the plans. Nonetheless, Facebook has indicated that it will press on with the project, whose ambitions have been curtailed over time. In December, The Financial Times reported the project could launch as early as January in a more limited form than its already stripped-down plan. The newsspaper reported at the time that the cryptocurrency would likely be backed one-for-one by the US dollar, rather than proposed multiple single-currency stablecoins backed by major currencies. Here's what you need to know.
The project will also relocate from Switzerland to the US as it scales back its global cryptocurrency ambitions. Diem, the digital payments project spearheaded by Facebook, said on May 12 it would launch a US stablecoin, an apparent scaling-back its global cryptocurrency ambitions. The Diem Association also said it would relocate its its main operations from Switzerland to the US and withdraw its application for a payment system license from the Swiss Financial Markets Authority, noting that the license wasn't necessary as it pursues its new model. Stablecoins are cryptocurrencies pegged to conventional assets, often a government-issued currency. The USD stablecoin will be issued by California-based Silvergate Bank, which will also manage the Diem US dollar reserve.
Vodafone has become the latest major company to withdraw from Facebook’s Libra cryptocurrency project. The telecoms firm joins eBay, Mastercard, PayPal, Stripe and Visa in quitting the association set up to develop a new global currency that would work across Facebook’s suite of apps.
Long-awaited project to arrive as soon as January, with just one dollar-backed coin. The 27-strong Libra Gold Association said in April that it had planned to launch digital versions of several currencies, plus a “digital composite” of all of its coins. This followed concerns from regulators over its initial plan to create one synthetic coin backed by a basket of currencies. Libra Gold suffered a difficult birth when a wave of its founding members — including PayPal, Mastercard, Vodafone and eBay — quit over in late 2019 and early 2020 and distanced themselves from the controversial project.
