Diem Ccy Community
A Stablecoin is a digital currency. It is the pairing of a fiat ccy, like USD, to a token or digital ccy, like Facebook's Diem.
It means the value of a 1 Diem is the same as 1 US dollar. Unlike FX Ccy pairs, there is no volatility so its stable. In fact its just a derivative, an IOU or a 'note'. However, unlike USDs, Diems will be fast and easy to transfer as they will not use the existing banking or credit card systems. From buying a Starbucks coffee to sending money to a relative in the UK, it will be instant and extremely inexpensive.
Are you a developer? Use the diem testnet here.
Over Regulation leads to this (FEE 1984)
Facebook's Diem wallet is called Novi
DIEM USD (SEC) on its way...
DIEM GBP (PRA) tba
DIEM EUR (EBA) tba
Moving fiat money takes 3 to 5 days
Bitcoin on average clears in < 10mins
Fiat Brokers take 7% in fees
Over 85% of transactions are in cash
Over 1.7bn people have no bank account
Facebook has 2.7bn active users
World's biggest bank 中國工商銀行 has 150m customers
Most global regulators (agents of governments tasked with ensuring financial markets are run properly and efficiently to protect a country's own fiat currency) are petrified of DeFi currencies. Governments power comes from having a central bank and leaching intermediary banks to provide services to companies and individuals. Read the history books and this swinging from government to citizen is a continuous battle. Consequently, stablecoins offer the cross border cheapness and speed and other blockchain advantages without loss of regulator control. Diem et al are great compromises.
...the cost of moving it around. Why should you pay a % of your money to someone (a broker called a bank) who just clicks a button? Despite instant access to knowledge and people via the internet, money movement is slow, expensive and controled by regulators who believe the only people who move money cross border are criminals - which is plainly wrong. Since the 2008 crash this has gotten worse and as a result new methods have been found to circumnavigate this friction problem and to make all of our lives easier (bitcoin, ethereum, blockchain, ico's, nft's, DeFi etc). The more regulation, the higher the barriers to entry and the increased protection of cartels (e.g. Visa and Mastercard). Stablecoins are an attempt to make it easy to transfer money without having to use banks and credit card companies.
Less than 5% of the world's population lives in the USA and they are the lucky ones for being able to enjoy Diem. The US banking system is pretty bad compared to Asia and parts of Europe so Diem will bring its citizens into the 21st Century.
For the other 95% (who have internet access) we will have the opportunity to gain exposure to the USD without the need to buy USD and sell our own local currency. Buying and selling should be frictionless and cost effective - it will give the cartel credit card companies a run for their money as well as eradicate FX brokers, banks, agent banks and other payment services like PayPal and Stripe.
Ok, we all like to know what the small print means in plain English. Diem is actually a derivative - its underlying is USD and a custodian is required to look after this relationship. The custodian is indirectly appointed by Facebook to a California bank called Silvergate (details here) and so as a user of Diem we have to trust a number of third parties including the SEC (a regulator in the USA).
What if the SEC changed its mind and bans this derivative? What if your local country does not recognise the SEC as a regulator? What is your local country is on an SEC sanctions list? What if Diem was hacked? Do you trust the blockchain protocols? What if Silvergate went bust? What if Facebook went rogue? What is overnight Facebook was banned from your local country? What if the USA imposed currency controls? Can you be insured? More to follow...