Facebook has stated that it will launch a new cryptocurrency this year known as 'Diem' that seeks to revolutionise the world of cryptocurrency.
The social-media giant had previously aimed to set up a cryptocurrency known as 'Libra' in 2019 but was halted after government regulators dismissed the plan. The loss of official regulation meant that many credit-card companies and financial institutions also stepped back from backing the plan.
The new currency Diem will be what is known as a 'stablecoin' meaning that it is backed by different real-world currencies. Stablecoins are also known to be less volatile than traditional free-floating crypto-currencies.
The Diem currency will be overseen by The Diem Association based in Switzerland and will launch the currency with an equal value to 1 US dollar.
Given Facebook's billions of users, and the social-media site likely promoting the currency, it means the potential number of users of Diem is huge.
Ran Goldi, CEO of First Digital Assets Group, said of the project:
"Diem's 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."
Michael Gronager, CEO of blockchain analysis firm Chainalysis, added:
"What you get with an institution like Facebook backing a stablecoin is much better distribution. You can put it into apps, add it to a lot other places and I think that will be strong. We'll see when it launches how it's going to play out but already today a lot of the interest in crypto is also speculative. It will basically enable more people to easily get into crypto."
Cryptocurrencies have generally seen a huge spike in value over the past year, with some increasing in value by hundreds of percent. This has been due to a variety of issues, one being that the uncertain economic climate has meant that people are looking for unique investments and as a hedge against potential future inflation, which some economists are predicting. Another reason for the increase in value is because many huge companies and financial institutions have also been investing in crypto currencies, meaning that the general public has become more and more confident that they are a legitimate and sensible investment.
[h/t: CNBC]
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