As a medium of transaction, the form of Cryptocurrency has gone through several evolutions. It has started its journey from being a digital currency, and now it is viewed as one of the top digital assets. Soon the concept of decentralized Cryptocurrency changed to stablecoins. The concept of the stablecoins soon became the next step of the decentralized digital currency.
A major milestone was covered by th Facebook when they announced launching a stable coin Diem (formerly known as Libra). Diem is not like the other stable coins. It can neither be mined nor provide any incentives to its users.
Though Diem comes with many uncertainties, global stablecoins are always welcomed to provide the much needed financial stabilization.
How Stablecoin Came Into Existence?
Though Bitcoin has been there in the market for quite some time, it has yet to reach a stable coin status. Another issue with Bitcoin that has restricted Bitcoin from becoming stable is the fact that it is not backed with any element or traditional assets.
Since the introduction of Cryptocurrency, there have been more than two thousand Cryptocurrencies. Out of all the Cryptocurrencies, stable coins have more than $3 billion in market capitalization. There have been several projects to make a stable coin that can be recognized globally. One of such famous attempts is Facebook’s Diem. Learn more about facebook’s Diem at www.bitcoins-union.com.
Diem: A New Outlook On Stablecoins
If you are not aware, let me tell you that Diem is a stable coin backed with bank deposits, company shares, numerous national currencies, and short-term government securities. Diem follows the idea of diversifying the assets to ensure the stability of the coin.
The association behind Diem’s maintenance work updates the assets on a regular basis depending on the currency market fluctuation. However, it is worth pointing out that the price of the Diem might be more than most of the stable coins because it is backed by banking sectors that might charge some fees.
The technology of Diem is more advanced than the other Cryptocurrency transaction. The consensus algorithm of the Diem updates the data when the transactions are reached to two-third of approval. This will automatically update the distributed ledger. Hence, by the time the transaction is complete, your account will be updated.
No matter how fast we consider the Bitcoin network, it can transact only four transactions per second. However, Diem is supported by modern programming language island is capable of transacting almost 1000 transactions per second.
How Diem Will Leave An Impact On The Existing Financial Sectors?
If you see the market and how Facebook is fighting against all odds to launch a real stable coin backed with tangible assets, it is facing confrontations from the sovereign currency and existing order.
If we look back in history, we will find that the traditional financial system has failed to deliver what was expected in the last century. Even after that, the same old financial system has been carried. Hence, seeing Cryptocurrencies that can potentially threaten the fiat currencies’ whole existence, central authorities are all riled up.
Diem might act as a moderator between Cryptocurrency and fiat currency to give a mutual solution. For instance, Diem is drawing the analogy of the Euro, which is limited to the Eurozone and cannot be issued independently by any other country.
Will Facebook’s Diem Emerge As A Worthy Stable Coin?
Whenever people ask this question, our answer remains the same, “Could be.” Similar to the other Stable coins and Cryptocurrencies, the Question of Diem being a stable coin is still in the yes/no zone. We lack the right evidence and market performance to conclude an answer.
Diem has been created as a would-be global stable coin. It’s a self-declared digital, mobile, stable, low inflation currency whose main aim is financial inclusion.
The Bottom Line
Due to instant crashes and gains in the market, several people faced the consequences. Hence, experts believe that with stable coins in the market, these predicaments can be stopped. Governments are already testing new stablecoin to regulate in the market. However, the development is still far from completion.