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In announcing his intention, Zuckerberg is paving the way for a new type of Facebook payment system, one that is private, secure, and encrypted. Done correctly, it will make Facebook a global player in financial services—and the world economy. Facebook vs. Tencent China is miles ahead of the United States when it comes to mobile payments. Like Facebook, WeChat has a huge network of brands and publishers who host their own WeChat pages, and WeChat Pay makes it easy for them to accept payment.
Think of it this way: when was the last time you bought something on Facebook? As you can see in this video, WeChat Pay lets you can easily buy from retailers and restaurants by scanning a simple QR code. Imagine if you could easily pay at practically any register, or any website, with your Facebook app not to mention WhatsApp or Instagram, also owned by Facebook.
Then payments can truly be private, secure, and encrypted—rather than running through traditional payment rails like Mastercard and Visa. Credit Cards Paying with credit cards online is a hassle. Each site requires you to re-enter your credit card, you have to manually pull out the credit card to check the three-digit code, you have to update credit cards when they expire, and you have to pay interest if you carry a balance. Diem could be a massive improvement over credit cards by simply attaching to your bank account, transferring your fiat currency into Diem, then making the payment — which the recipient could immediately transfer back into dollars, or keep denominated in Diem.
Using a decentralized currency, you could summon a driver using your Facebook app, then pay him directly, getting rid of both credit cards AND Uber: This has massive implications, as both you and the driver might elect to keep more of your money in Diem, which is reportedly designed to hold its value against the dollar. Cash China has become an almost cashless society: Alipay and WeChat Pay are so widely used that the Chinese government has to remind merchants that they still have to accept cash.
In a digital age, paper money is pretty terrible. Paper money is dangerous you can get robbed if you carry it around. However, physical money, while it is still legal tender, could be the last vestige of privacy we have.
As central banks rapidly move towards their own digital currencies which could give them control over every facet of your financial life. A user-friendly cryptocurrency. The challenge for digital currencies is making them so easy that your grandfather can use them. Given that your grandfather is pretty much the target Facebook demographic, Diem may open the floodgates of digital currency to grandparents everywhere.
A new digital payment standard. A new global economic power. By creating a new Facebook cryptocurrency, Zuckerberg is giving traditional government-owned currencies a run for their money. Which is one of the reasons for the projects continuing delays, as they try to get regulatory approval from the governments they could be disrupting.
Who would have thought that Facebook, with all its centralized power, could emerge as the new model of decentralized payments? Cryptocurrencies are speculative, complex and involve significant risks — they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance.
Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service including its legal status and relevant regulatory requirements and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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