Status: 07/18/2021 9:36 a.m.
As usual, Facebook boss Zuckerberg presented plans for its own cryptocurrency in 2019. Then nothing happened for a long time. Only now is the project moving again.
By Marcus Schuler, ARD Studio Los Angeles,
currently San Francisco
Two years ago, Facebook announced its own cryptocurrency. It should be called Libra. The idea sounded revolutionary because the currency should also be hedged with various currencies and government bonds and traded worldwide.
Facebook boss Mark Zuckerberg was correspondingly self-confident in 2019 before the US Congress when he presented the Libra plans there. The financial system has failed; there is no adequate financial architecture that meets today’s requirements of the digital world.
“We were extremely naive”
Zuckerberg’s statements to US politicians were also the beginning of the end of the grandiose Facebook plans. There have been privacy concerns, and regulators have crossed the line. Then Visa and Mastercard dropped out and were supposed to become partners. However, Facebook never completely buried the idea: At the end of 2020, the Facebook crypto currency reappeared as a project, this time under the name Diem.
The project’s chief economist, Christian Catalini, now admits errors in an interview with the specialist magazine “Coindesk”: “We were extremely naive with the first version of our white paper. We had a lot of ideas. And it was exciting to see how the public reacted to it and we were able to accelerate the development. ”
The Diem umbrella organization has long since dwindled. In May they left neutral Switzerland behind and moved to the USA. The Libra was originally planned as a currency that was to be hedged with, among other things, dollars, euros and Japanese yen. Switzerland was chosen deliberately as a location to signal independence from traditional financial institutions. Today there is no longer any talk of this.
Pilot test later this year?
“We’re talking to regulators about a step-by-step approach to implementation,” says Diem manager Catalini. “We want to start with just one currency that will be stable and develop naturally.”
Allegedly this year, the US dollar-linked Diem will be launched in a pilot test. Facebook users could use it to exchange US dollars for Diem and send money to one another using the Novi Facebook app. As a long-term goal, the Diem managers have a means of payment in mind that could leave the Facebook universe: For example, to pay at the supermarket checkout.
By pegging it to the US dollar, the Diem would be a so-called stable coin. That would make it less volatile. The publisher is said to be the Californian company Silvergate in San Diego. The “US dollar diem” could then be used as a means of payment by Facebook and the 25 partners in the Diem umbrella organization.
Facebook’s books are its users
Critics may be reassured by this development, especially the US Federal Reserve. Nevertheless, caution should be exercised, says the British cryptocurrency expert Dave Birch on the business broadcaster CNBC: “Privacy starts with the wallet, not with the currency. That is why many people are likely to get nervous when their transaction data is processed by Facebook and used for advertising purposes and other things be evaluated.” Facebook alone has 2.8 billion users worldwide. Not counting: the millions of users of the other Diem members such as the music streaming service Spotify.
Trust in Facebook has gotten scratches. Nevertheless, the project driven by the social network could end up as a winner. Because the major central banks around the world are under pressure to offer their own digital currencies in order to counteract unregulated crypto currencies such as Bitcoin. So what could be more obvious than a private-public partnership, which is also based in the USA and no longer in Switzerland – and under the supervision of the US Federal Reserve.
What became of Facebook’s cryptocurrency?
Marcus Schuler, ARD Los Angeles, 8 July 2021 9:42 a.m.