What is Facebook Diem again?Diem is Facebook’s crypto-based payments platform. Originally known as Libra, the project was unveiled in June 2019. The Libra Association consisted of 27 major partner companies. Unfortunately, the project faced numerous regulatory roadblocks by the U.S. Senate and various European regulators. Consequently, several members of the Libra Association like Visa, PayPal and Mastercard left the project. It was back to the drawing board for Mark Zuckerberg and his team.
In December 2020, the project was rebranded to Diem and plans to go live in 2021 were announced along with some new partners.
In essence, Diem is a stablecoin that is backed by traditional assets like the U.S. Dollar. At this stage, it is unknown what Diem’s market cap and circulating supply will be. If 5% of Facebook users (2.7 billion users) buy $50 worth of Diem, the coin’s market cap will be more than $6.7 billion. This will automatically put Diem among the top five cryptocurrencies!
Furthermore, Diem Tokens will be held in a wallet called Novi and it aims to support 1 000 transactions per second. It is said that the project will have near- zero transaction fees and work with a “competitive group of exchanges.” Sounds exciting!
Who’s who in the zoo?In order for Facebook Diem to succeed, it will require countless hours, the best innovative minds coming together and of course, getting the US Senate to approve. With that said, the project has brought together various leading blockchain companies, software developers and industry leaders who can get the job done. Let’s take a look at who’s who in the zoo and the role each one plays in the bigger picture:
Pontem is an experimental network for Facebook Diem. At this stage Diem is not open to public participants, thanks to the permissioned nature of the project. So how can developers and entrepreneurs build open-source solutions that can compete with other public blockchains like Ethereum? Pontem uses Substrate. Now Substrate is a software development kit by Polkadot. Substrate enables developers to build a blockchain with a codebase that is almost identical to Diem’s. Substrate gives developers the opportunity to test Diem features and solutions on the Polkadot ecosystem.
As you may know, for any blockchain to perform transactions, it requires nodes that can validate blocks. This is where PinkNode comes in. PinkNode will use Polkadot’s canary network, Kusama to deploy nodes and other API endpoints.
Why is this bullish for Polkadot?As previously stated, Pontem is testing Diem features on the Polkadot network. At this stage, it is pure speculation if Diem will be built on Polkadot or not. Regardless, this is bullish news for Polkadot as new projects will be able to test if their product is market fit for Diem on Polkadot. Polkadot can be regarded as the gatekeeper to Diem. It will also afford developers the opportunity to test new features for other projects on the Polkadot network. Take a second to think what will happen when Diem launches its stablecoin and starts offering DeFi services to Facebook’s followers? Even if Diem is not built on Polkadot, it will serve as Diem’s gatekeeper.
In conclusion, do not sleep on Polkadot. Be sure to load your bags with Polkadot (DOT) on South Africa’s favourite cryptocurrency exchange, AltCoinTrader and be ready for the day Facebook Diem takes off.