Facebook Diem (formerly Libra): A Global Currency and Financial Infrastructure Empowering Billions

What is Facebook Diem (formerly Libra)

Facebook Diem, originally named Libra, is a blockchain payment system project proposed and led by social media giant Facebook (now Meta). You can think of it as a "digital bank" jointly operated by multiple large companies, which does not issue traditional currency but rather a special "digital currency"—a stablecoin. The core goal of this project is to enable billions of people worldwide without bank accounts to make payments and transfers conveniently, quickly, and at low cost, as simple as sending a text message.

Stablecoin: A type of cryptocurrency whose value is typically pegged to fiat currencies like the US dollar or commodities like gold, to reduce price volatility and make it more suitable for everyday transactions.

The envisioned typical usage process is: users convert their fiat currency (such as US dollars) into Diem stablecoins via a digital wallet (such as Facebook's Novi wallet), and then can send Diem to anyone globally, with extremely low fees and fast speed.

Project Vision and Value Proposition

The vision of the Diem project is "to build a simple global currency and financial infrastructure that empowers billions of people." Its core value proposition lies in addressing pain points in the traditional financial system, such as:

• Financial Inclusion: Helping the 1.7 billion people worldwide who are unbanked or underbanked to participate in the digital economy.
• Lower Costs: Significantly reducing the fees for cross-border payments and transfers, making remittances cheaper.
• Improved Efficiency: Providing instant, convenient global payment experiences, making the flow of funds as fast as the transmission of information.
• Price Stability: By pegging the digital currency to a basket of low-volatility assets (such as bank deposits and government bonds), its value remains relatively stable, avoiding the dramatic price fluctuations common in cryptocurrencies like Bitcoin, making it more suitable for daily use.

Compared to similar projects (such as Bitcoin), Diem emphasized stability and compliance from the outset, and sought to cooperate with the existing financial system rather than completely disrupt it.

Technical Features

The Diem project had some unique technical aspects. Although it ultimately was not successfully launched, its design concepts and some technical achievements have influenced subsequent blockchain development:

• Permissioned Blockchain: The Diem blockchain was initially designed as a "permissioned blockchain," meaning only members approved by the Diem Association could run validator nodes and process transactions. The project once planned to transition to a "permissionless" system within five years, but later abandoned this plan to address regulatory concerns.
• Consensus Mechanism: Adopted a Byzantine Fault Tolerance (BFT) consensus protocol called "LibraBFT." This mechanism aims to ensure network security and efficiency, so that even if some nodes fail or act maliciously, the system can still operate normally.
• Move Programming Language: The Diem team developed a new programming language—Move—specifically for writing smart contracts and custom transaction logic. The design of Move emphasizes security and flexibility, aiming to prevent double-spending of digital assets and unauthorized access.
• High Throughput: The Diem blockchain aimed for high transaction throughput, targeting support for 1,000 transactions per second, far exceeding early blockchains like Bitcoin.
• Open Source: The Diem blockchain software is open source, meaning anyone can view, audit, and develop based on it.

Permissioned Blockchain: A blockchain network where only authorized participants can access and validate transactions.
Permissionless Blockchain: An open blockchain network where anyone can participate in transactions and validation, such as Bitcoin and Ethereum.
Consensus Mechanism: The rules and algorithms by which all participants in a blockchain network agree on the validity and order of transactions.
Smart Contract: Self-executing protocols stored on the blockchain, where contract terms are automatically executed when preset conditions are met.

Tokenomics

Diem's tokenomics revolve around the characteristics of its stablecoin:

• Stablecoin Design: Diem (originally Libra coin) was designed as a stablecoin, with its value pegged to a basket of low-volatility assets (such as bank deposits and short-term government securities). This means that for every Diem coin issued, there is an equivalent real asset held in reserve to maintain price stability.
• Multi-currency and Single-currency: The initial plan was to issue a composite stablecoin pegged to multiple fiat currencies. Later, to address regulatory pressure, the project shifted to mainly issuing stablecoins pegged to a single fiat currency (such as the US dollar).
• No Mining Mechanism: Unlike cryptocurrencies such as Bitcoin, which generate new coins through "mining," Diem does not rely on crypto mining. New Diem coins are only created when users purchase them with fiat currency and are backed by reserve assets.
• Reserve Management: The Diem Association is responsible for managing these reserve assets to ensure the stability and convertibility of Diem coins.

Since the project has been terminated, Diem tokens were never officially issued or circulated, so there are no details on token symbol, total supply, issuance mechanism, inflation/burn, allocation, or unlocking information.

Team, Governance, and Funding

• Diem Association (formerly Libra Association): The project was managed and operated by an independent membership organization—the Diem Association. Association members included payment companies, technology companies, telecom companies, online marketplaces, venture capital firms, and non-profit organizations.
• Governance Mechanism: Governance was handled by the Diem Association Council, with each validator node holding one vote. Major policy or technical decisions required a two-thirds majority to pass. This design aimed to prevent any single entity (including Facebook) from having absolute control over the project.
• Core Members: Although Facebook was the initiator and a major contributor, its team members did not have special privileges within the association. The project hired several senior professionals from companies like Microsoft, VMware, HSBC, and former US prosecutors to address regulatory challenges and drive project development.
• Funding: Association members supported the project's development and operations through investment and contributions.

Roadmap

The lifecycle of the Diem project (originally Libra) was full of twists and turns, and ultimately was not successfully launched:

• June 2019: Facebook announced the Libra project for the first time and released the whitepaper, planning to launch in 2020.
• October 2019: The Libra Association released its first roadmap, detailing key milestones before mainnet launch, including onboarding partners to run full nodes.
• April 2020: The Libra Association released an updated whitepaper (v2.0), making major adjustments to the project design, including offering single-currency stablecoins in addition to multi-currency stablecoins, and abandoning the plan to transition to a permissionless system in response to regulatory concerns.
• December 2020: The Libra project was renamed Diem.
• 2021: The Diem Association planned to launch a US dollar-pegged stablecoin in 2021.
• January 2022: The Diem Association announced the termination of the project and sold its intellectual property and other assets to Silvergate Capital, due to ongoing regulatory resistance.
• January 2023: Silvergate Bank announced in its Q4 2022 earnings call that it had fully written off its investment in Diem.
• March 2023: Silvergate Bank closed.

Therefore, the Diem project has no future plans or milestones, and its history has come to an end.

Common Risk Reminders

During its brief lifecycle, the Diem project faced enormous risks from multiple aspects, which ultimately led to its termination:

• Compliance and Operational Risk: This was the biggest challenge faced by the Diem project. Governments and central banks worldwide expressed strong concerns about Diem's potential impact on monetary sovereignty, financial stability, privacy protection, and antitrust issues. Ongoing opposition and pressure from regulators were the main reasons for the project's closure.
• Economic Risk: Although Diem aimed to be a stablecoin, the management of its reserve assets, value fluctuations, and potential impact on the global financial system all raised concerns among economists and regulators.
• Technical and Security Risk: As a brand-new blockchain system, Diem was still in the prototype stage technologically, with security measures not fully in place. Any large-scale digital payment system may face security threats such as cyberattacks and vulnerability exploitation.
• Loss of Partners: Due to regulatory pressure, several founding partners—including Visa, Mastercard, PayPal, and eBay—exited the Diem Association early on, weakening the project's support base.
• Centralization Concerns: Although the project claimed it would eventually move towards decentralization, its initial permissioned blockchain design and governance structure led by the Diem Association raised questions about the degree of centralization.

Not Investment Advice: Please note that the above information is for project introduction only and does not constitute any investment advice. The cryptocurrency market is highly volatile and risky; please conduct thorough risk assessment and independent research.

Verification Checklist

Since the Facebook Diem (formerly Libra) project was terminated in January 2022, its official website, block explorer contract address, GitHub activity, and other information are no longer practically relevant for verification. The Diem Association has been dissolved and its assets sold. Therefore, no active must-check links can be provided.

Project Summary

Facebook Diem (formerly Libra) was an ambitious project that sought to leverage blockchain technology and the concept of stablecoins to provide a simple, low-cost, inclusive digital payment system for billions of people worldwide. Its design concepts, such as the stablecoin mechanism, Move programming language, and pursuit of high throughput, all reflected its technical innovation.

However, from the very beginning, the Diem project faced enormous resistance from global regulators. Governments and central banks were deeply concerned about its potential impact on monetary sovereignty, financial stability, and privacy protection. This unprecedented regulatory scrutiny, coupled with the withdrawal of major partners, ultimately led to the Diem Association announcing the termination of the project and selling its assets in early 2022. Although the project did not succeed, Diem's attempt sparked widespread global discussion about digital currencies and stablecoins, and promoted research and development of central bank digital currencies (CBDCs) in various countries. Its failure was not due to technology itself, but because it challenged the global financial system too quickly.

For more details, please conduct your own research and note that this project has been terminated.