The Diem Dollar is a new cryptocurrency and global payment system. It was established back in 2019 by a group of founding members called the Diem Association, an entity of 27 companies which form part of the consortium. If you associate the term cryptocurrency with Bitcoin, you’ll be surprised to find out that the Diem Dollar and Bitcoin don’t actually have a lot in common. Diem issued a stablecoin, called DiemUSD, which can be used for peer to peer transactions and payments.
Here are some key facts about Diem and how it works.
Diem is a Stablecoin
Stablecoins are digital currencies with value directly tied to a stable real-world asset. In the case of Diem, the Diem Dollar is pegged to the US Dollar 1:1.
As a result, Diem is a lot more stable than many other forms of cryptocurrencies and the value of a Diem Dollar won’t fluctuate wildly based on coin investment and investor speculation. The price of a single Diem Dollar will always be redeemable for, and equal to, one US Dollar.
Diem is a Centralized Payment System
Unlike other cryptocurrencies, Diem is a centralized payment system. That means it isn't controlled by a network of independent users using a consensus mechanism, rather by a group of pre-defined validator nodes which are run by members of the Diem Association. These nodes confirm transactions and validate blocks.
Diem is managed by the Diem Association –– a consortium of 27 corporates, nonprofits and VCs which make up its founding members. Its most notable members include Facebook, Spotify, Coinbase, PayU, Shopify, Uber, Lyft and Checkout.com. One of the most important roles of the Diem Association is to oversee the Diem Reserve which protects users’ funds by ensuring they are backed 1:1 to the US Dollar with cash equivalents.
Diem Uses Blockchain Technology
Like all other cryptocurrencies, Diem is built on the blockchain. Blockchain technology allows users to make financial transactions which are far more secure and transparent than traditional banking methods. The blockchain allows for simplified financial exchange without the need for the middleman, making exchanging diems will be a lot faster compared to exchanging government-issued currency.
While blockchain technology has many benefits, its primary advantages are that it allows for much safer, quicker, and easier financial transactions. For example, when you make a bank transfer both the sender and the receiver have to agree on the transaction which can take up to three days with traditional banking services. Using the blockchain, Virtual Asset Providers can communicate with one another instantaneously to approve transactions, cutting down transfer time significantly. Here's our site for reviewing Diem Blockchain transactions.
Diems Are Held In a Digital Wallet
A digital wallet, or cryptocurrency wallet is a service that is used to digitally store and access your funds. Each wallet created has its own address on the Diem Blockchain. A digital wallet interacts with the blockchain on your behalf to make and approve requests for financial transactions.
A digital wallet like Facebook’s Novi allows you to safely send and receive digital currencies while ensuring access to your digital funds are tightly safeguarded. Novi promises instant transactions and “no hidden fees” for cross-border money transfers and payments. Once Novi is available in your country you will be able to send and receive Diems using the Novi wallet, but to become a Novi customer you will need to register.
Registering for the Novi wallet includes undergoing a basic Know Your Customer (KYC) procedure which requires providing basic information on yourself such as your legal name and birthday, as well as presenting a verifiable government-issued ID.
Diem Transfers Are Quick, Easy, and Free
Diem transfers are instant, so the person you’re sending money to should receive the amount instantaneously. The value of the amount they receive will be in Diem Dollars, but they also have the option to redeem the sum in their local currency.
If you would like to review the Diem transactions you’ve made in the past, you can view them in the dashboard of the Novi wallet app or your digital wallet app. To learn more about Diem, including what it is and how it works check out more articles from the First Blog and Knowledge Base.