Facebook is in a dilemma of launching an ambitious new cryptocurrency that is based on the payment system which it claims can boost financial inclusion and can slash traction fees too. Though there are a lot of discussions going on whether it can truly achieve its goals or not, the company plans to put forward a digital wallet called ‘Novi’. It was created to let people trade Diem which is a stable coin that is backed by the US dollar.
The project is a re-branding of the cryptocurrency called ‘Libra’ and Calibra wallet which was launched and faced pushback from the lawmakers in 2019. After which Facebook plans to launch this back this year offering person-to-person transfers which can be done both domestically as well as across borders. The head of Facebook Financial (F2), David Marcus said in a blog post that this project focuses on handling systemic issues such as high transaction fees, and slow cross-border payments.
The executive director of the Global Financial Markets Centre at Duke University says that they are pointing to a real legitimate issue but why do they need a new cryptocurrency to address this problem. The coin which has been proposed is controlled by a consortium of companies called the Diem Association which was formerly known as Libra, of which Facebook is a member.
A research professor of computer science at Georgetown University, Shin’ichiro Matsuo says that if Facebook is lowering the fees of transactions, that’s a business decision, but not a feature of the technology. For this very reason, the approach is unlikely to significantly boost financial inclusion, says Frances Coppola, an economist, and a financial commentator. “You can do this without cryptocurrency. I don’t see any advantage to having a blockchain other than marketing”’ he adds.
So, let’s watch and wait for what Facebook and Diem Association has to say on that!
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