So whatever happened to facecoin? or libra?

Facecoin was lauched by Facebook with much fanfare in the spring of 2019. “The excitement among crypto-buffs is palpable. Facebook, the world’s largest social network, appears to be planning to launch a digital coin early next year” shrieked The Economist magazine. The Facecoin project within Facebook had gargantuan ambitions – it was supposed to be both the future of Facebook and the future of money, an initiative that brought together other Silicon Valley giants such as payment processors Paypal and Visa, as well as Uber and Lyft, the ride sharing players. The Valley’s major venture capital firms, never shy about throwing their hat into the ring, also came together to “make the world a better place”.

The mission statement for Libra, as Facecoin came to be rechristened, was dedicated to 2 billion people on this planet, who according to Facebook, did not have a bank account (the “unbanked”). What was not clear then was how exactly Libra was going to help the unbanked. Was Libra going to go through the complex business of verifying the identity of these people (simply because they had Facebook accounts) to comply with anti-money laundering regulations, without incurring lots of costs. Or even worse, now that you wanted to open up a bank account, you needed to open up a Facebook account!

Needless to say, the Libra project never really worked out. In December 2020, it was spun out of Facebook and re-christened once more. The new name is Diem (hey, we just do the analysis, we don’t pick the names!). According to the Diem website, the Diem payment system is built on blockchain technology to enable the open, instant, and low-cost movement of money. Presumably, this will allow people will be able to send, receive, and spend their money, enabling universal access to financial services (and given that this is not a part of Facebook anymore, maybe trust the platform a bit more). Also interesting about Diem is that the “Diem Coins” are “fully backed” by a reserve of assets made up of cash or ca​sh eq​uivalents and very short-term government secu​rities. This should hopefully give the Diem Coin some price stability (a drawback of Bitcoin, whose prices fluctuates wildly on a daily basis).