Facebook on its way to launch its own stablecoin

Facebook-backed digital currency project Diem (originally called Libra) could launch in 2021. While the exact date is unknown, the stablecoin pilot would, however, be on a small scale. The pilot would primarily focus on payments between individual customers, while there could be an option for users to purchase goods and services. Also, the Diem Association is currently discussing with Swiss regulators a payments license.

Background

Since the initial announcement of the Libra whitepaper back in June 2019, the stablecoin project has undergone a series of developments. The stablecoin received quite a lot of regulatory backlash from different governments, with the major concern being that Libra could threaten sovereign monetary policies globally.

Another issue was the involvement of Facebook, being the company accused in the past of exposing users’ data privacy violations. The high level of regulatory scrutiny caused the Association to lose some of its members, as a consequence.

Diem’s stablecoin is a significantly scaled-back and rebranded version of Facebook’s initial vision for a global digital currency, native to its platform, that would be tied to a basket of multiple fiat currencies. Aside from shedding the name Libra, commentators have pointed to the thoroughgoing changes to Diem’s evolving project in response to a striking pushback from global regulators and nation-states.

Testing and Implementation

Back in January 2021, Diem’s testnet reached over 50 million transactions. However, the testnet which processed three transactions per second (TPS), was slower than transactions processed by Ethereum, and credit card giants Visa and MasterCard.

First Digital Assets Group is currently building infrastructure for merchants to facilitate Diem’s use as a means of payment. Its CEO Ran Goldi, told that Diem’s underlying technology has “changed dramatically over the past year and a half from a naive blockchain to a very sophisticated blockchain that you can see is trying to answer some of the questions that regulators had.”