Facebook’s Diem has been wound up, ending the cryptocurrency dreams of Mark Zuckerberg. Is it a sign or an isolated event?
Diem was born as Libra, an ambitious collaboration led by Facebook involving several major financial giants such as Mastercard. The plan was to embed a ‘stable’ cryptocurrency into Facebook’s platforms, making payments seamless, easy and attractive.
We were critics from the start. In fact, we poked a lot of fun at the thinly disguised attempt at taking over the entire payments space. The financial giants left after the group had been on the receiving end of regulator intransigence and feet dragging.
It would be easy to poke fun at Diem even now, as it sells off its technical assets to a bank in California that manages cryptocurrencies for a yet to be confirmed $200 million.
Even by Zuckerberg’s standards, it was an ambitious plan until he decided to recreate the entire world as a virtual one.
Yet we may look back on Diem being wound up and conclude that it was a sensible move after all.
Facebook, now Meta, of course, has thrown its towel and everything else into a different ring. The Metaverse. And whether or not you might think that the Metaverse would be the perfect platform for a grown-up cryptocurrency, the overall crypto market is still in an era of extraordinary instability.
Just as large but forward-leaning financial institutions such as JP Morgan try and lever bitcoin into the mainstream, the cryptocurrency markets crash. Again.
One estimate puts the figure wiped off holders’ ‘paper’ wealth last time at close to $1 trillion. This must put a spanner in the works when it comes to supporting the argument that crypto is anything but a betting shop. Add to this the fact that people who hold cryptocurrencies are not the sophisticated, asset-backed investors in the US and Europe. The top ten countries in the cryptocurrency index include Nigeria, Ghana, Vietnam, Indonesia, India and the Philippines.
Facebook’s Diem experiment was bold – and expensive – but the tide was against it. Getting out of the cryptocurrency game now might actually prove a wise move for a company used to taking big bets. It will need to focus all its attention and a lot of money to pull off something as ‘out there’ as the Metaverse.
The question is: what will the death of Diem mean for smaller crypto ventures?