One of the most asked questions among crypto enthusiasts; Diem, a famous stablecoin owned by Facebook that has psychologically targeted people’s minds, and Bitcoin, which is the most famous and traded cryptocurrency so far, what is the Diem Bitcoin difference?
We get that a lot, which is why we have decided to give a piece of brief information. If you are also looking forward to knowing all about Diem vs. Bitcoin, you are in for a treat. Additionally, Diem and Bitcoin aren’t on the same page here. However, to decide a boss from one of them you should learn about them individually first.
- What is the Diem Bitcoin difference?
- Is Diem also a cryptocurrency?
- What is Diem Association, and how does it work?
- What was the need for Diem?
- Why they had to change the name of Libra?
- How can we use the Diem?
- How is Diem different from other cryptocurrencies in the market?
- Can Diem succeed in the market?
- Are there any risks of using Diem?
- Can Diem takeover the Bitcoin?
What is the Diem Bitcoin difference?
Diem is not at all like Bitcoin; rather, it is a stablecoin, which is more similar to Tether and other cryptocurrencies pegged with some collaterals. Although Bitcoin has its blockchain, Diem runs over its own Diem blockchain, and the wallet is called Novi (formerly called Calibra).
In the vision of Facebook, Diem will be used for payments. Nonetheless, the Diem blockchain is different from the Bitcoin blockchain; it is programmable, so developers around in the market can make applications; it sounds much like Ethereum, right?
Also, the Diem blockchain has other ways around; the Diem association’s validator nodes give them strength. Similarly, these nodes will confirm the transactions and verify the blocks. Thus, users will have reasonable control over their work and benefit from efficient results.
On the other hand, we have Bitcoin. Bitcoin is not a stablecoin like Diem or pegged to any national currencies. This means that Bitcoin is a decentralized cryptocurrency, and there is no mediator, no banks, or any other sources. This is the main reason sellers and buyers were interested in this cryptocurrency on an international scale.
Suppose you can pay international sellers anonymously without any questions asked or without getting into government policies for your business, sounds about right! But the major hype of Bitcoin was getting wealthy just by trading this cryptocurrency. Surprisingly, when prices boomed into the sky in 2017.
In spite of the reason for Bitcoin, its trading isn’t neglectable. You will be surprised to know that one coin’s average price has reached about 40,000 US dollars in January 2021. For such fluctuations, people are more eager to trade with Bitcoin, but there are risks.
Is Diem also a cryptocurrency?
People are still in bemuse when they think over Diem. Surprisingly, Diem (formerly Libra) was meant to be a simple cryptocurrency, but now it isn’t. Hence, the word “Stablecoin” is more appropriate for Diem.
A stablecoin is a type of cryptocurrency pegged to some national currency or some valuable asset, such as gold and platinum. Currently, Diem pegged with the US dollar, which subsequently means that one Diem’s price is equal to that of one US dollar.
Still, confused? In other words, we can say that Diem is a stablecoin, which is not going to fluctuate its prices as Bitcoin does. However, it is pegged to some reserves, that in the case of Diem, are other cryptocurrencies that are further pegged to national currencies. Now, if these national currencies fluctuate, so would Diem.
But here is the good part, as Bitcoin fluctuates and gives high volatility in prices, Diem won’t. In fact, Diem values would remain stable. For this reason, the Diem Association is ready, who is there to monitor and control Diem Dollar.
What is Diem Association, and how does it work?
In the early phases, Libra was about to form. A group to take care of their crypto project, Facebook made an association called Libra Association to work and manage their digital currency Libra.
Admittedly, the Libra association is no more; as a matter of fact, the Libra association is shifted to another form called Diem Association, and it has to manage the Diem Dollar, the next big thing from Facebook.
The Diem Association has twenty-seven members in total, and they claim to be an independent organization. Now, this can be a way around to make this Diem project away from Facebook, but there are no doubts about who is it at the back end.
However, the headquarters of the Diem Association is situated in Geneva, Switzerland. Therefore, this organization’s members are further several fortune companies, capitalists, and non-profit associations, such as Spotify, Uber, Mercy Corps, Coinbase, and last but not least, Facebook.
Subsequently, this means that the Diem dollar has the potential to change the vision of the business. If such big companies are running at the back end of an association, they have high capabilities.
What was the need for Diem?
Most people are still wondering that what was the actual need for Diem? To answer these simple questions, Diem isn’t under Facebook in a clear picture. Although Diem works under Diem Association, which is regulated by major tech giants and capitalists, the leading organization is still Facebook.
Clearly, Facebook has its own vision when it comes to digital cash, as the CEO of Facebook Mark Zuckerberg, claims that payments should be as simple as sending photos to each other; Diem is there to make life simpler and easier, which might attract some other users to on their social network.
Along with that, Zuckerberg raised the hat that people using their cryptocurrency would definitely benefit Facebook, and they can advertise on their social network— therefore even more expensively, which is the main cause.
Up to a point, our expert panel believes that Facebook might have other plans in focus relating to cryptocurrency. Clearly, they have invested in their own blockchain, which was originally called Calibra, but later rebranded as Novi in May. Furthermore, it is claimed that the sole purpose of Novi is to “help people around the world giving them better access to affordable financial services.
Why they had to change the name of Libra?
Diem was formerly called Libra, but do you wonder why they had to change the name? Now, the real reason is still untold, but some evidence-based factors show why they had to do so?
Because it was officially announced in June 2019, Libra had to see a number of straggling blocks, such as the major parties that were supposed to be in the Diem association, have walked away. Libra had to face a major pushback from the Senate.
Simon Peters, a crypto-analyst at a multi-asset investment platform eToro, explains: ‘Being known as the “Facebook coin” could be seen as restrictive, and a deterrent due to some issues. Facebook has had over the last 24 months with privacy and data usage.’
Admittedly, it is an attempt to show people that Diem isn’t under any influence of the major social media network Facebook. With that said it this incident reflects that the Diem project has “organizational Independence” as there are some regulatory concerns with Facebook.
However, with Diem Association on board, it is not linked to Facebook anymore, and it has the vision that seemed to threatened traditional government financial systems. As Bloomberg reports, the Diem Association is managing this project. Moreover, their currency will be known as the Diem dollar.
How can we use the Diem?
Diem dollar can be a game-changer, according to the Diem association. With that said, previously, people had to make their purchases, and in return, they had to wait for their transactions to proceed, but with the digital currency onboard, this isn’t the case anymore. You don’t have to wait for the transactions, the minimum limit, the maximum limit, and the list goes on.
The bad part of this story is that it’s only possible for transactions that aren’t in bank accounts, such as cryptocurrency but wait, it gets better; according to Diem Association, it costs about seven cents to send the money internationally. The even better part of this story is that you don’t have to wait for weeks. The average time needed for a complete transaction is about three to five working days.
However, for this purpose, the Diem association has its own tools. If users aren’t on Facebook, Messenger, or WhatsApp, they can still connect through their wallet Novi. But here is the catch, Novi is still under the procedure and not officially available; we aren’t sure what fees would apply.
According to Novi’s website, it is still pretty much clear that no matter what people are keeping in or taking out of the wallet, there are no hidden charges, and Novi is cutting fees to help people keep more money in their wallets.
What is the Diem Bitcoin difference from other cryptocurrencies?
As Diem is gaining fame in the market prior to its official launch, people are more confused about how Diem is different from Bitcoin and other cryptocurrencies? For this purpose, we have to study how Diem is not different from other cryptocurrencies first.
First of all, Diem is going to be entirely digital cash, and you will not be getting any physical note, coin, or wallet to keep it. Sounds similar to other cryptocurrencies, right? Secondly, Diem would also be operated through its Blockchain, a software ledger, similar to that of Bitcoin.
Now, things get a little tricky; Diem isn’t going to be a decentralized cryptocurrency. Instead, it would be pegged to real-life assets that would keep it stable. Hence, stablecoin is the right term to use for Diem. Originally the idea behind the Diem was to peg it with a basket of assets, but unfortunately, the Diem association couldn’t carry that further.
However, they are planning to peg Diem with a bunch of cryptocurrencies, which will be further backed up by their national currencies. Although Diem is a cryptocurrency, but you won’t see a similar idea in any competitive cryptocurrencies; they aren’t bound to any reserve, which is the reason for their high price fluctuations.
Can Diem succeed in the market?
Can the Diem dollar really prove to be a revolution in the trading industry? Well, according to the vision that Diem Association beholds, the answer is yes, it can. The parent company standing behind the Diem association is not other than Facebook; as a matter of fact, Facebook has 2.7 billion monthly active users worldwide.
With that said, Diem can be accessible by those users, and they can quickly use Diem to pay for things they need. Surprisingly, if we put facts and figures on the table, chances are pretty good that after Diem’s launch, the accessibility to financial services might change forever.
As you know, when we have to manage our income, banks charge fees in multiple ways, but what if we get away from purchasing anything without any limitation of banking procedures? Secondly, around 1.7 billion people don’t have bank accounts—this means that around 31 percent of people don’t have banks, and Diem can be a solution to all of them.
If things go as expected by Diem Association, there are pretty high chances that Diem is going to succeed. After all, Facebook, WhatsApp, and Instagram already target a high audience, and Diem would be benefitted from their outreach.
Are there any risks of using Diem?
Although there are several benefits of using Diem, you have to keep in mind that all good things come at a price. Therefore, we must explain some of the risks that you might be facing while working with Diem.
As we have told you previously, Diem would be working on its blockchain; although blockchain can’t be hacked or manipulated, whereas social media platforms and digital wallets can fall prey to cyber-attacks.
Peters says: ‘Like with any asset or business that uses digital technology, you run the risk of cyberattacks and hacks. If Facebook encountered any attacks on its systems, then potentially, people’s Diem dollars could be at risk.
In short, this means that digital cash isn’t safe, but you should know that same applies to online banking as well. If you consider banking a safe medium, it isn’t as well. If a bank system’s security can compromise, people risk their bank accounts to nill.
Can Diem takeover the Bitcoin?
Well, the final results can only be seen in real-time; until then, we can only assume believing in the facts and figures. Although Diem targets a high population, experts believe that it isn’t a threat to already established cryptocurrencies such as Bitcoin.
However, over one billion Facebook users would definitely change the transactions over digital currency by making fast payments. On the other hand, if you see Bitcoin, the BTC blockchain size has increased to 316 gigabytes, which is a significant value as well.
Furthermore, the Diem isn’t launched yet, but Bitcoin is already the true king; experts believe that if Diem succeeds in the future, Bitcoin will not be affected much. But here is the good part, Diem is pegged to the US dollar; it will have its benefits and shortfalls, but at the end of the day, there are pretty high chances that people would go for the switch.