Diem: global, stable and secure
According to Diem Association, Diem is “a global, digital-based and reserve-backed cryptocurrency built on blockchain technology.” Similar to Ethereum, EOS and NEO, Meta’s cyber currency supports smart contracts, i.e. contracts that are processed automatically. Neither a manual contract check nor coordination with third parties, such as supervisory authorities, is necessary for this. The association wants to use the digital currency, according to the official Diem promotional videocreate a world currency that should be global, stable and secure – a high claim.
The coin has yet to prove whether Diem will be global. The fact that Diem will be at least as secure as other cryptocurrencies is due to its construction. Like Bitcoin, Ethereum & Co., Diem is based on a blockchain. This virtual chain writes all transactions in blocks that are connected like a chain. Each block refers to all previous ones, which is why it is not possible to change transactions.
It also seems a fact that Diem is significantly less susceptible to fluctuations than the classic cryptocurrencies Bitcoin Cash, IOTA or Monero. Meta Platforms creates all the prerequisites for Diem to be able to exist alongside the fiat currencies dollar, euro & co. in the future: Diem will be fully covered by a so-called reserve fund with various currencies, including euros, dollars and yen.
It works like this: If Diem coins are bought for 100 euros, for example, then these 100 euros flow into the reserve fund managed by the Diem Association. The cryptocurrency could possibly even be backed by high-quality government bonds. “Facebook would have achieved that there are no more exchange rate fluctuations for transactions within the network,” said economist Markus Demary from the Cologne Institute for Economic Research (IW) in the Interview with Business Insider Germany.
Tip: If you want to deal with the opportunities that blockchain offers you as an investor, then we recommend our guide to investing in blockchain technology.