Meta’s Diem Project Shuts Down
Meta Inc, responsible for famous apps like Facebook, Instagram, and WhatsApp, has recently made the decision to shut down its digital wallet, Novi, which happens to be the last piece of the Diem Project (formerly Libra) that Meta began a few years ago. This decision comes with a huge downturn in the market of cryptocurrency, especially in the midst of Bitcoin reaching its lowest month ever.
The Diem Project (also known as Libra) was a stablecoin payment system structured around blockchain, orchestrated by Meta Platforms in late 2020. Stable coins are cryptocurrencies that are maintained around having a stable price that doesn’t fluctuate with the volatility of the market. The supply of stablecoins are usually regulated by an algorithm.
The Diem Project had been designed to bring easy monetary access to the hands of many adults, and organizers cited Facebook’s intention for 1.7 billion adults to use the currency (none of which had bank accounts.) Before the Diem Project, Facebook had run a different virtual currency called Credits, used for payments on digital games inside Facebook. However, Diem was created for people to easily transfer money in a cheaper manner; it also served as a mechanism working to bring new users to the network.
Chief Executive Officer of the Diem Project, Stuart Levey, stated that “in the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the U.S. government had ever seen,” after the project’s initial launch.
However, while Facebook aimed to transform financial services in a global manner, Diem Association members began to leave, including PayPal, eBay, Visa, Mastercard, and Stripe. However, Meta stayed despite the huge financial losses that each of the leaving companies had brought in regards to their expertise in technological transfers.
Why was Meta so hung up on Diem? Cryptocurrency was taking a huge step forward, and Diem was different from other cryptocurrencies. Similar to currencies like Ether and Bitcoin, Diem was only digital with no physicality, and its transactions were also recorded through blockchain. However, its stablecoin was established similar to the monetary value of the US dollar; this contrasted with bitcoin in its low volatility and low risks with speculation. Diem was also backed with assets inside the association, which isn’t new with currencies in general, but hadn’t been seen too often with Bitcoin.
Inside the Diem Project layed one aspect of the project, the Novi digital wallet. It debuted just eleven months ago, and it is now ending on September 1st, 2022. Meta acknowledged the remaining balance for users that did use Novi, and reminded them to withdraw whatever was left over.
Novi was released in a beta version through the help of Coinbase, a cryptocurrency exchange. It provided digital storage and security for Novi, and while it was pitched as an easy way to transact money, it went under enormous scrutiny because of the regulation protocols regarding crypto. Soon, more association members left Novi. Mark Zuckerberg’s attempt to expand on the Metaverse was being interrupted by Novi, which was causing a lot more trouble than it was worth.
What Does This Mean for the Future:
Cryptocurrency is beginning to fall downhill in popularity due to its lack of regulation. For companies like Meta, the way to launch cryptocurrency successfully seems to depend on whether or not its regulation could occur anytime soon.