While tech companies can be emancipatory and powerful for social, political, economic, and cultural development, they have emerged more as double-edged swords for the world. The example of Facebook is often by many to how tech capitalism and monopoly can be bad for the world.
The bad reputation of Facebook has become evident with every passing Congressional Hearing its Founder Mark Zuckerberg has to attend. In the last few years, it has been accused of colluding with dictators, influencing democratic elections, and selling data to private corporations.
When Facebook decided to throw its hat into the cryptocurrency arena with the Libra and the Libra Association in 2019, it sent alarm bells ringing all over the world.
Lawmakers, international watchdogs, and others cried foul about a tech giant trying to monopolize the financial world and its workings.
This led to Facebook dropping the Libra term and relaunching the same as ‘Diem’ in November 2020.
Facebook’s Diem: What has Changed from Libra?
While Bitcoins and other cryptocurrencies have their share of problems, everyone feels that this is nothing compared to what Facebook is capable of.
It tried to pitch for a centrally responsible almost democratic governing body with the Libra Association (the Diem Association still remains and functions on the same principle). However, many of the initial backers soon withdrew their membership. This included PayPal, Visa, MasterCard, and other big names.
Facebook and Zuckerberg felt that what Libra needed was an image makeover and hence the change in name. The company has also invested heavily in positive PR, engaged with lawmakers in the United States, and used its extensive lobbying resources to generate popular reception.
It seeks to abandon its earlier idea of using a plethora of various world currencies and creating the backing behind Libra. Now in Diem, the same will just have the American Dollar.
The rollout is also not as ambitious as it was before. You can say that it is a new form of digital payment, which will be heavily regulated by government authorities.
Will Diem Succeed where Libra Failed as a Crypto?
While it is still too early to tell the results, according to Bitcoin Use there are some indications, which can be made.
- Facebook is going to rely on its huge database of users (Facebook + Instagram + WhatsApp) to make it popular.
- It is going to threaten traditional currencies in different parts of the world, which are already reeling under the weight of the dollar.
- While the idea is to extend banking to more than a billion people who are not part of financial systems, it seeks to create a financial monopoly of sorts.
- Courting the United States government means using its influence to pressurize foreign governments to allow for the Diem’s circulation.
- It seeks to ride on the popularity of Bitcoin and other cryptocurrencies and removes all the negatives associated with the same.
Why International Law-Makers are up in Arms against Facebook and Diem?
While Facebook harbors global ambitions with Diem, we have already seen a bunch of scathing criticisms from lawmakers in Europe.
Olaf Scholz, the Finance Minister of Germany has already referred to the new Diem as a wolf in sheep’s clothing. Several others have warned that this can severely contribute to the unsettling of their national economies.
It is no secret that Facebook and Zuckerberg are facing several lawsuits in different parts of the world. However, they are so big and command such vast resources, that it is even getting difficult for sovereign governments to take them to the task.
Such is the financial integration of the company in the national economies. However, one thing is for certain, Diem will meet the same resistance as Libra did.
How Facebook and Zuckerberg will be able to manage the negativity around the same is something, we will have to watch and see.