As per general conception, it seems hard not to get rich with cryptocurrency. But, there is one noteworthy digital currency that won’t get you rich…… believes Jesse Champion @ Bank Breakers.
Since my inception, I have not done a cryptocurrency review. Isn’t that strange? Well, today, I want to discuss a particular cryptocurrency that I think won’t get you rich. So, you’re probably asking yourself, why would I do an article related to a cryptocurrency that won’t get you rich? Wouldn’t I want to include a piece instead of a cryptocurrency that intends to get you rich?
Well, I understand where you’re coming from. However, not all cryptocurrencies will get your rich, and I’ve been discussing this particular cryptocurrency with others who have thought it could get them rich. I want to discuss this with you in case you had the same opinions as them. It’s vital that we highlight the significant cryptocurrencies on the market including those that are not intended for you to make enormous gains. Instead, it allows you to continue to build your financial literacy and dive even deeper into your research.
Because I know some people will look at a particular cryptocurrency, buy into it, and hope and pray that it goes up a million percent which is not the case. I want to provide my opinion on this particular cryptocurrency and help you question your judgment of the same cryptocurrency and whether it is right for you.
Libra
Let’s get started. Diem is the cryptocurrency that I’m going to be talking about today. Now I’m sure some of you are not very familiar with this cryptocurrency; it’s sort of new in a sense.
The last name for Diem was Libra cryptocurrency that Facebook is currently working on as we speak. I’ve done some research related to this cryptocurrency, and Libra has been around since 2019. Libra (Diem) is a stablecoin. However, it was in 2020 that the group changed its name to Diem.
Yet if we remain in the year 2019, some of Libra’s initial supporters had decided to drop from the project they were progressing towards. Some of the companies included eBay, Mastercard, and PayPal, among others. While the companies have gone on to state their leave was due to focusing on other projects or efforts, among other reasons, other concerns had arisen. For example, lawmakers initially questioned how the project would impact currencies and how it would ensure consumer protections. No doubt other regulatory reasons were involved as well.
Since then, however, Libra decided to make the changes in-house and file for their white paper.
Diem
Their decisions have led to this article today. Facebook among Diem’s Association strives to make the cryptocurrency available for the public to use. There have been reports cited earlier this year that Diem Coin would be released to the markets, yet it remains unavailable.
In more recent news, during May of this year, the Diem Association will plan to launch Diem Coin in the U.S. after it has gone through registering as a money services business within the U.S. Therefore, it is possible that we can expect to see this cryptocurrency sometime within this year; however, that remains speculative, not guaranteed.
Read More: Silvergate To Become Exclusive Issuer Of Diem Stablecoin
There is an association for Diem that will be responsible for overlooking the Diem network, including the development of this project itself. They act as a regular board of governance in any major company. They are responsible for working a feasible strategy for major long-term success, ensuring smooth operations, and much more.
While many may believe that Facebook is the force behind Diem, it isn’t necessarily. Facebook is a member of the Diem Association, but yet the Association has many other members included. Notable members include Coinbase, Uber, Spotify, and Shopify.. So while Facebook does have involvement within this Association, they are not the sole owners of the organization despite the fact that many people believe this is Facebook’s cryptocurrency. Maybe we’ll save the explanation on this one, especially if it’ll be too complicated to explain. Then again, you can point them to this article (wink wink).
What Does Diem Coin Do? What Are Their Visions?
Diem is a stablecoin. So, to explain what a Stablecoin is, it’s a type of cryptocurrency that focuses on tracking a particular exchange. For example, some crypto may track the U.S. dollar, the price of gold, or even silver. For Diem Coin, its sole design is to follow the particular benchmark it’s tracking, and anytime that the benchmark increases in price, most likely this may increase in price although not able always happen, especially with ones that back a major currency.
Diem is meant to act as a payment method. People can exchange goods or services for a certain amount of Diem. This stablecoin is acting as the solution for those who do not have access to traditional banking. Anyone seeking to transfer money anywhere in the world can do so securely, very quickly compared to other conventional money transfer methods, and with meager costs. The system is built to make money work for everyone, according to their website.
Whenever made public to the U.S. initially, investors will purchase the coin into their specially designed wallets from designated developers. Then, of course, exchange them with friends, families, and, when applicable, businesses for goods and services.
Why wouldn’t you choose a bank to transfer money? Well while e-transfer has become vastly popular among ways to complete payment methods, depending on your financial institution, it isn’t always free to uses. Additionally, there may be limits on the amount you are able to transfer and while e-transfers are particularly secure, not everyone has access to traditional banking, therefore, Diem will be the solution to that large problem.
How Will This Impact a Country’s Currency?
This type of currency will not interfere with any primary currency of a particular country. It would be much different per se if a government like in the U.S. stated the country’s official currency was Diem Coin. Major chaos would break out with the federal reserve, central banks, financial institutions, and consumers everywhere. Which I don’t know about you, but there’s reportedly going to be a big crash in the form of a recession and we can’t put fire out with fire. Or can we?
Anyways, Diem Association wants to work with central banks, financial institutions, and regulators to implement their payment system and technology across the globe. This will allow easier access to the general public to this technology and Diem Coin to enable and encourage them to use this as a payment method in the future. In addition, it can be encouraging more businesses to uses their payment system as a form of acceptable payment.
Thinking about it aloud, these businesses can benefit from using cryptocurrency payments, even Diem Con payments. People who cannot access credit cards due to bad credit now will be able to pay for goods and services digitally even if many businesses do not want to accept cash anymore. These businesses in turn can still accept payment from clients, instead of turning them down if they do not have access to debit or credit cards.
How Will My Privacy Be Protected?
There are various threats that a payment system such as Diem’s will face. The Diem Association recognizes these threats and wants to ensure they provide a safe method for your use. Therefore, Diem’s Association will conduct due diligence on selecting Designated Dealers for designs of particular wallets that will store Diem. They will continuously monitor their network for suspicious activity while meeting the compliance standards for network participants set out by regulators. In addition, their blockchain will analyze addresses that aren’t associated with specifications needed to hold Diem Coin to controls that are to be enforced by protocol.
Additionally, the Association will implement a Compliance Program to meet laws, standards, and requirements to run their network. Some of the responsibilities it will take on include hiring a Chief Compliance Officer, designating a committee with oversight reporting responsibilities, and perform risk-based due diligence on members, Designated Dealers, and certified VASPs (virtual asset service providers).
Will they collect your data? Yes, they will. I will encourage you to read the Diem Association’s privacy policy if you want to know more. Still, to quickly note a few things, the Association may collect further personal data from third parties about your dealings or affiliations with regulators, government agencies, courts, or your organization(s) you deal with. In addition, your data may be shared with third-party vendors, affiliates, or authorized third-party vendors. Finally, you can exercise your right to have them delete your data should you so choose.
Why Wouldn’t I Make Money From Diem Coin?
So, if this is a cryptocurrency backed by a large organization in Facebook, why can’t it make me some extra cash? I’ve heard from some people I know that this would be the next big cryptocurrency and because Facebook is backing the project, it would not fail. While their goals may not fail, their goals are not specifically to obtain the largest amount of price for their Diem Coin as possible. Because each Diem Coin is going to be backed with the USD 1:1. Meaning, each Diem coin will be worth USD 1. That isn’t very exciting now.
But to further illustrate to you exactly how Diem Coin won’t get you rich, we will look at an example of a similar stablecoin that replicates what Diem Coins are intended to do. Let’s take a look at Tether Coin seen in the graph down below.
As you can see, there isn’t much fluctuation based on this crypto’s price. It’s designed to track the USD closely and does not display significant volatility in its tracking progress. While yes, you can technically still make money on the exchange, have fun trading, or holding this sort of crypto to gain $0.0020 per coin, which all-in-all isn’t that great if you’re a new investor attempting to find the next big volatile crypto.
I expect Diem coin to follow suit to Tether, given that the USD will back it. However, the U.S. currency won’t be the only one it’s backed by. Instead, the Diem Association intends to have this cryptocurrency backed by other foreign currencies as well, so it’ll spread across the globe.
So no, you’re not going to make your thousands of dollars betting on this particular type of cryptocurrency or any stablecoin that is backed by the USD dollar or any other main currency of any country across the world. Instead, it will offer us the ability to send money across the globe or domestically to friends or loved ones while even paying for goods or services from select businesses. Its not designed for you to get rich, its designed for you to access new financial options that aren’t always available to you or your loved ones.
However, yes, of course, you can still make some money off this cryptocurrency based on its minimal volatility. I don’t think it is worth salivating over and would avoid day trading this for other riskier types of cryptos or stocks myself. However, you should suit yourself and do more research if this interests you.
Why Would Facebook Want to Invest in a Cryptocurrency?
Simply put, to encourage more people to use their platform. According to According to Statista, currently, there are 2.85 billion Facebook users globally, and while some people are deemed to have duplicate accounts, it does not negate that this is a significant number. But as we both know, it’s not everyone in the world. So by promoting the use of Diem Coin as acceptable payments on Facebook Marketplace, people can complete transactions through the platform. In contrast, potentially more and more people swarm to the Marketplace to buy and sell for reliable and quick access to additional cash.
Of course, this is assuming they will make the crypto payment network compatible with their media. Although this isn’t hard to believe, they will. It gives them the chance to increase the total number of media users, and even if it doesn’t, it promotes the use of a simple payment system that can be done instantly. This, in turn, means they will get more revenues from their affiliation with the Diem Association. A win-win situation if you ask me.
What Are the Alternatives to Diem?
The best alternatives to Diem are any stablecoins that follow a benchmark that will make you money. Pretty obvious. Some stablecoins follow gold benchmarks, for example, and will allow you to achieve gains based on that reference.
For example, you can always invest in Tether Gold, a stablecoin representing one ounce of gold on a London Good Delivery bar. There is a significant fluctuation in price, as represented by the changing price of gold. If you are a big believer in precious metals and their value for the foreseeable future, it could be for you.
I might even say that ETFs could be a better investment strategy, especially for those looking to buy and hold a security/digital asset for an extended amount of time. ETFs (exchange-traded funds) are similar to stablecoins in that they are public security that follows a particular benchmark. For example, popular ETFs include ones created to track the returns of the S&P 500 or Russell 2000 indexes.
For myself, I would instead choose stocks or ETFs than any cryptocurrency given its track record, but you might already be aware of this by now. In addition, these public securities are more consistent than cryptocurrency and can be much less volatile than popular cryptos like Dogecoin and Bitcoin.
Recap:
Because Diem Coin is a stablecoin backed by USD 1:1, you will earn tiny gains per coin. Diem Coin is intended to act as a new wave payment method that makes transferring money cheaper, easier, and faster than ever. Just because Facebook backs this project certainly doesn’t mean anything for your wallet. If anything, you might be reaching for extra cash or cards to place an order of Diem Coin as we potentially see a new (possible) payment method in our future.
Like what you read? I encourage you to check out these other helpful links so you can find out more information on cryptocurrency and ETFs:
- Diem Association’s White Paper (this page provided much of the information used in this article)
- Purchasing ETFs in Canada: Why Are ETFs So Popular?
Author’s Note: I am not a financial advisor. You are trading at your own risk and should consult a financial advisor for any investment decisions. Do your own due diligence when considering investing, and this information is for education/informational purposes only.
Author: Jesse Champion, Owner of Bank Breakers
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