In the last year, 2020, we have heard another name on Facebook. But due to some reason, it was not welcomed in the market. So, Facebook decided to refurbish it and launch with a new name Diem. Here we will know about this new so-called Cryptocurrency Diem and Bitcoin.
What Is Facebook’s Diem?
We all know about Facebook. Not only understand, but it is also connected with our daily life. This American social media company is behind Diem. It is based on a permissioned Blockchain. This has a plat to implement a private currency as a Cryptocurrency. To know more about it visit official site.
Before December 2020, this same project was named “Libra.”
5 Major Differences You Should Know
Here are the top 5 major differences between Bitcoin and Facebook’s Diem.
Though Diem and Bitcoin both are considered as Cryptocurrency, there is a primary difference between the technologies that are used here. Diem uses a form of distributed ledger technology or Blockchain. But the Blockchain technology that is used here is permissioned, which is just the opposite for Bitcoin.
Though in the future, the technology can change, and no permission is required for it. But for now, the Blockchain Technology of Diem is permissioned. A group of trusted parties only can add transactions to the network. But the scenario is totally different for Bitcoin. All the transactions are recorded here anonymously on the Blockchain.
The network of computers maintains the database in such a way that there is no chance of those data getting tempered.
Bitcoin enables peer-to-peer payments for its users. People can exchange money or make a transaction without necessarily going through a bank. It has become a common form of investment today with the “HODL” term, which is now used as slang in this industry. This implies the buying of Bitcoins and holds it for a long time till the price rises to a tremendous rate.
On the other hand, the basic intention of Facebook’s Diem is to be used in cross-border money transfers or payments. There are several government-backed assets and currencies. This way, it will be more stable, and unlike Bitcoin, it will not be volatile in nature. The basic characteristic of a Cryptocurrency is volatility.
Thus Diem is addressed as a “Stable Coin.”
3. Regulatory Questions
Now comes to the regulatory questions. Facebook’s Diem is talking about regulating Cryptocurrency. Thus there is a chance of plumbing the Blockchain technology with other digital assets when talking about the regulations. So, it is clear that there are financial intermediaries present in the case of Diem, or previously named Libra.
But as well all Crypto people know that there is no need for financial intermediaries with Bitcoin. This regulatory difference is a huge difference between Bitcoin and Facebook’s Diem. Without the intermediaries, there will be no intermediary risks. So, no additional safeguarding is required here.
4. Can Develop Decentralized Applications
Blockchain technology is the base technology that is used for Cryptocurrencies. Every Cryptocurrency like Bitcoin, Ethereum, Litecoin has its own network based on this Blockchain technology. It itself is a decentralized system.
While the contempt behind Facebook’s Diem is used to develop other decentralized applications, it is built in such a way that apart from Blockchain, other decentralized networks can be developed using this.
5. Backed With physical Entity
As we have discussed earlier, Bitcoin is totally decentralized. As it is not backed up by any government organizations, it has volatility in its nature. In addition to that, any government has no authority over the Bitcoins that you have.
If we consider Facebook’s Diem or Libra in this scenario. The outcome will be totally different from Bitcoin. Diem is backed by government entities and currencies. That is the reason behind Facebook’s Diem’s stability. This feature makes Diem one of the stable coins.
If we look closely at the development and uses of Diem, we might conclude that it is not a proper Cryptocurrency. There are some basic features and technology behind the whole Crypto concept that is totally different from Facebook’s Diem. But as it is yet to launch, no conclusion can be written.