Since ancient times, people have used trade to simplify exchange between one another. Long before the discovery of money, coin, or paper, they have used bartering as a primitive form of exchange. Long before the evolution of money, people started to use commodities and materials to help trade. Once gold was discovered and treasured as a rare commodity, it was minted coins, paper money, banknotes. Fast-forward a few hundred years to our current digital world, cryptocurrencies are taking centre stage as a means of trade, store of value, and payments.

There are a lot of existing cryptocurrencies in today's world. Among recent innovations is Facebook’s Libra digital coin, which is planned to be introduced in 2021. Facebook reported the creation of a new subsidiary on June 18, 2019, Calibra (now known as Novi). The new subsidiary will be focusing on creating a new digital currency called Libra (now Diem), at the centre of which will be the blockchain technology which will allow billions of Facebook users to send, receive, spend digital currency Libra.

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Facebook's Crypto Goals

Its main goal according to Facebook CEO Mark Zuckerberg is to create a global digital currency for both individuals and businesses, without the need to access traditional central back currencies and capital.

Figuratively speaking, Facebook's Libra can be alluded to as the “big bang” in the cryptocurrency market, as it is backed by 28 heavyweight firms (Figure 1). By this means, Facebook expects to tap on 1.7 billion unbanked adults worldwide as per the 2019 FDIC16 study.

Diem (used to be called Libra), if it is going to overcome all legal and regulatory obstacles, will be the future of crypto. On the other hand, Libra differs slightly from Bitcoin and cryptocurrencies. Even though it claims that it is decentralized, still all the transactions are going to be governed by the Libra Association (LA, 2018), on the contrary Bitcoin is purely a peer-to-peer electronic network without a trusted third-party. It is interesting to say that Diem is the new cryptocurrency on the block but without a block. On the other hand, Diem is like Bitcoin and Ethereum as it exists only in digital form. Furthermore, each transfer is confirmed by the software ledger, also known as the blockchain, which is like other cryptocurrencies. The Diem blockchain will be managed by the Diem Association.

Facebook's Stablecoin Play

Libra is going to be pegged to the so-called stable coins– digital currencies that try to keep a fixed value, the most popular being Tether. In contrast, Bitcoin and other cryptocurrencies are not backed on anything and are very volatile. The Diem currency was intended to make it simpler for individuals and organizations to safely send currencies over the world. Dissimilar to bitcoin and other digital forms of money, which can be massively unpredictable and theoretical, Diem will be backed by government cash. That implies a few coins offered by the group would serve as the identical estimation of a U.S. dollar or a Euro, for instance.

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Facebook and privacy, Not very Crypto

Facebook does not have a good reputation in privacy, and the massive criticism on data privacy and protection led to significant obstacles while in transit to making any cryptographic money a triumph. For some time now, governments have been dubious about cryptocurrencies, and Diem is not an exception, in a joint statement published by the U.K. Information Commissioner’s Office (ICO), data privacy commissioners from Australia, Albania, Burkina Faso, Canada, the EU, the U.K., the U.S., shared concerns that “while Facebook and it's crypto wallet-focused entity Calibra has made broad public statements about privacy, they have failed to specifically address the information handling practices that will be in place to secure and protect personal information.” On the other hand, Facebook, argues that it will not have access to personal information when the platform is used for cryptocurrency. Kevin Weil, vice president of product for Novi, says: “Your financial data will never be used to target ads on Facebook.”

Given the above discussions, one can argue that Libra is a cryptocurrency, and competition to current cryptocurrencies, others say that Libra (Diem) is a payment app and a direct competitor to current payment applications and banks. Christoph Kley, a banking lecturer from Zurich University, argues that banks can lose market share in payments transactions. Money makes the world go round, but how it goes right now is not fast or cheap enough. Fixing that is Libra’s siren call.

Unlike Bitcoin, where the prices fluctuate and are highly speculative, Diem’s value is tied to fiat currencies. When a user buys Libra with fiat, the Diem Association will invest the money into safe securities. So, one can argue that Diem is based on stable fiat currencies and its price will not fluctuate, therefore its value will be stable. On the other hand, cryptocurrencies offer riskier investment, therefore a higher return, and users will always look to invest their money in higher return cryptocurrencies.

Investing vs Payments

Cryptocurrencies are the future of money, as with any innovative technology, Facebook’s Diem is going to disrupt the banking and crypto market. It can be said clearly that Diem has its advantages, one being Facebook's user base. Central bank digital money and online payment systems are directly affected by the blockchain technology and decentralized ledger; therefore, Diem is contended to disturb the current cryptocurrency models. There is still time until Diem will be officially available, however, the time is running out and companies like PayPal are already entering the cryptocurrency world and are backed out from the Libra Association. In the face of Facebook’s troubled past about privacy and the exploitation of users’ data, Facebook assures that Libra will be run by its subsidiary Calibra and the sensitive financial data including the Libra account holders’ transaction history will not be shared with Facebook unless authorized by account owners.

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Although Facebook has plans to make Libra permission less shortly, it must initially start as a permission network to support billions of potential transactions generated by a user base of close to three billion account holders across the globe. On this vast scale, Libra’s closest competition Bitcoin and Ethereum are no comparison with less than 50 million joint users. Time will show whether Libra will sputter out or become a reality. Some users of Facebook trust the platform implicitly as it is already a large part of their digital life as a social platform. It is a platform that is used by billions of people around the world and its entry into the crypto world will just bring more people into crypto that may eventually become interested in Bitcoin. The future for crypto looks more promising with more major players involved.

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