The Diem cryptocurrency will be in 'class of its own,' Facebook executive says.
Facebook (FB) has a plan to take over the world of digital wallets by using the cryptocurrency to differentiate itself from cthe likes of PayPal (PYPL) and other digital payment platforms. Its upcoming digital wallet, Novi, will be based on the still-pending stablecoin Diem.
Diem is a cryptocurrency that arose from a Facebook in-house project that began in 2017 and was first known as Libra. After its public unveiling in 2018, the coin drew intense scrutiny in Washington, DC and throughout the industry.
Diem, the rebranded cryptocurrency project, now operates as an independent association but retains close ties to Facebook. David Marcus, a Facebook executive, sits on Diem's board of directors as well as heading up Facebook Financial, which plans to launch Novi in the coming months.
Marcus sat down with Yahoo Finance this week for an in-depth interview for Influencers with Andy Serwer, a weekly series featuring the biggest names in business, politics, entertainment, sports, and academia. Marcus explained to Yahoo Finance's editor-in-chief, Andy Serwer, why Facebook still believes Diem is the right platform to build Facebook's new digital wallet on.
“We believe that Diem is in a class of its own in terms of consumer protections, both on the purpose-built payments blockchain that it is and on the stablecoin itself,” Marcus says.
Diem digital wallet is attempting to ‘resolve systemic issues'
Marcus claims that it would have been simpler to design the wallet to run on "existing rails."
"In fact, many people internally/externally have been perplexed as to why we didn't do it that way," he added. However, he stated that using existing rails would "actually not solve the systemic issues that we believe exist currently in our current payments infrastructure."
Marcus claims that the Diem coins will be secure because they will be backed by a combination of cash or cash equivalents and short-term government securities. Finally, he stated, it is "much better than a current deposit with a traditional wallet here in the United States."
Marcus also addressed initial concerns about Facebook's coin's ability to deter criminals who have turned to cryptocurrencies in an interview with Yahoo Finance.
“I actually believe and strongly believe that new infrastructure that enables more real-time reporting to all of the appropriate authorities at the appropriate time,” Marcus says.
He acknowledged that a number of other blockchains have improved their traceability. “I think in our case, we've taken it like really, really to a whole new level,” he added.
The goal is to launch the Diem cryptocurrency "before the end of the year"
It remains to be seen whether the industry agrees with Marcus' assessment. Libra has struggled to retain members, with financial behemoths such as Mastercard and Visa abandoning the project in 2019.
Marcus frequently discussed the association's goal of having 100 members by the time it launched, including in a Yahoo Finance interview at the time. The association currently lists 26 members on its website, with the regulatory approval process still ongoing.
Brian Cheung, in a 2019 interview, stated, Marcus was adamant that Libra was "absolutely not" jeopardised. Nonetheless, the project's launch date has been pushed back from 2020 to 2021. Novi and Diem are currently aiming to launch before the end of the year. Nonetheless, Marcus stated in a recent interview with Yahoo Finance, "We are definitely not going to launch without the proper regulatory framework."