The expansion of the crypto world made one of the most consolidated Big Techs in the market turn their attention to the sector. This is how, in mid-2019, Facebook/Meta announced the launch of the Libra cryptocurrency . The project, however, faced numerous challenges and regulatory problems and ended up not going forward.
Libra moved the internet and technology aficionados, even rocking the financial universe that year: since its official announcement, in June 2019, a considerable number of people have become interested in the launch — and also speculating about it.
The project had lofty goals, but ended up being blocked by regulatory pressure and a series of questions about its function. Libra changed its name, became Diem, and continues to find it difficult to exist. Meta disbanded the project and now it can reappear in the hands of other interested companies. Check out the details below!
What was Libra?
Libra was a digital asset project developed by Facebook with the aim of facilitating financial transactions over the internet.
At the launch event, which took place in June 2019, Mark Zuckerberg said that cryptocurrency would be a way to allow more than a billion people who do not have access to bank accounts, but who have a smartphone, to carry out financial transactions over the Internet. network.
Libra’s idea was to boost the commerce of products within social networks, thus developing a cheaper payment method. With fewer intermediaries, the coin could be more efficient than current fiat currencies.
Although it is known as the “Facebook cryptocurrency”, the creation of Libra involved more than 20 companies, which came together in a kind of non-profit consortium called the Libra Association. Even Coinbase, one of the largest crypto exchanges in the world, got involved in the creation of the asset.
Particularities of Libra compared to other cryptocurrencies
Libra had a slightly different role when compared to cryptos like Bitcoin (BTC) and Ether (ETH).
While Bitcoin and other important altcoins have a decentralized character and are not linked to any investment or asset, Libra would be centralized by the founding companies and would have ballast associated with investments in banks — an attitude that would make it less volatile compared to other assets. That is, Libra would be a stablecoin (stable currency) linked to a group of assets.
According to its White Paper (a document that specifies the particularities of the cryptocurrency), the late Libra would be backed by a basket of assets in several top-tier currencies, which would be held in top-tier financial institutions.
What Happened to Facebook’s Cryptocurrency?
The project, however, ran into numerous regulatory difficulties, in addition to a series of delays and setbacks. Project managers began to face a severe boycott by traditional companies in the monetary system, as well as far-fetched demands from regulatory bodies and entities.
Experts pointed to Libra/Diem as a method that could facilitate money laundering and harm – even more – the privacy of Facebook users.
In the face of scandals involving data leakage, Mark Zuckerberg saw no other solution than to change the name of the cryptocurrency to Diem and introduce new features. However, this did not go ahead either.
With that, Facebook decided to dispose of the project, selling it to partner companies in January 2022. Together with that, it decided to redesign its identity and was renamed Meta, a move calculated by Zuckerberg to invest once and for all in the concept of metaverse and try to clean up the company’s image.
How did Libra cryptocurrency become Diem?
After all the initial obstacles, Meta announced the creation of the Diem Association, the company’s arm organization in the world of crypto assets, to bring together new companies interested in updating and launching the asset.
The new cryptocurrency was thought to be pegged to the US dollar and would serve to subsidize transactions made on Meta platforms (Facebook, WhatsApp and Instagram). However, the proposal did not go ahead either.
The Diem Association announced, in January 2022, that it will close the Diem stablecoin project, putting the project up for sale for the low price of US$ 200 million (about R$ 1.05 billion) to Silvergate, a bank focused on cryptocurrencies and which was one of those responsible for the project.