Facebook and cryptocurrency, the dollar DIEM, interview with Ignacio Sainz COO de VeraCash
Facebook and cryptocurrency, an ambitious project that will soon see the light of day. Indeed, the GAFA project has been underway since 2019 under the name Libra. Renamed DIEM, it is expected to become a reality in early 2021. The project was very quickly controversial by the world powers. Indeed, by aiming to be a stable corner in connection with the major currencies the DIEM is owned by Facebook. This aspect highlights, in particular, issues of transparency. It will be said that the American giant, is not blameless in terms of data leakage … Ignacio Sainz, cryptocurrency expert and COO of VeraCash, gives his vision on the strategic stakes of this new cryptocurrency.
What is Facebook’s DIEM and how does it work? What is its place as a means of payment?
DIEM is by definition the name given to Facebook’s future cryptocurrency. Unlike other cryptocurrencies, the DIEM is stable. Thus through this project the goal is to offer a simple motto at the service of the user community. With the DIEM dollars, they will be able to make purchases on the platform or at the project partners. They will also be able to exchange between members by making money transfers. To do this, Facebook has developed an app, Novi. This application is actually a space that allows you to buy, sell or store cryptocurrency. However, formerly called Libra, Facebook’s project has experienced difficulties.
“The project had to scale back its targets”
Indeed, with the introduction of this cryptocurrency, governments have not been kind to Facebook. In particular, they asked for guarantees regarding the management of personal data. It must be said that this digital currency managed on Novi, applies to all Facebook services, such as Instagram, WhatsApp or Messenger. Thus, with more than 2.7 billion monthly users active worldwide Facebook can have access to a considerable history (2). Thus, in the face of the reluctance of the states of many partners such as PayPal, Visa and Mastercard have left the adventure.
Often demonized, is DIEM a danger? Is this a threat to the euro? bitcoin?
“The DIEM, integrates into a transparent and secure blockchain”
The blockchain is a giant decentralized database. It is a technology for storing and transmitting information. The blockchain thus constitutes a database that aggregates the his or her history of all exchanges between users. The principle of the latter is that it is shared by users who can each verify its validity.
However, DIEM may be at risk. Indeed, although Facebook wants to detach itself from the cryptocurrency project, it still depends on it. As mentioned above, the fact that DIEM is dependent on a private company involves a risk of data leakage and exploitation of transaction hisms. Moreover, many states have been hostile to the project for fear that Facebook will develop even more power.
“For states and governments, however, it is necessary to reflect on the integration of these currency systems”
In order to control this digital currency system, states must, like central banks, come into reflection. The aim of this questioning is to push for better use, clearer and more transparent. The path of a legal framework for delimiting cryptocurrency could be a solution. Indeed, it would reduce the risks of a parallel economy.
What impact could the launch of DIEM have on how to consume and/or pay?
“I don’t think we’ll lose our currency ringing and stumbling, but we still have to say that we use less and less cash”
Indeed, today, shopping behaviors are mainly related to the use of a bank card or a smartphone. Every effort is made to simplify purchases with apps like Apple Pay or Google Pay. This trend has been greatly democratized by the COVID-19 crisis. Contactless payment has been favoured in particular with the increase in ceilings. In short, if our currency persists, consumer habits are already geared towards digital and dematerialized payment. Thus, he is likely to have the arrival of DIEM, Facebook’s cryptocurrency, does not greatly disturb consumers and the way they pay if a trusted legal framework is proposed.
And if we want to look further, companies as well as individuals may well start investing and investing money in bitcoin to diversify and fluctuate their portfolios. With caution and risk measurement, they could benefit from additional investment.
(1) “EXPERT DIEM (Facebook cryptocurrency) – what are the real strategic issues?” Escal Consulting, January 8, 2020 press release