On Friday, July 1, 2022, Meta, Mark Zuckerberg’s social metaverse company, announced that it would shut down Novi, its last crypto project. Come September 1, and eleven months after its launch, the project will offer its last prayers. This announcement on Novi’s website douses Mark’s crypto ambitions incorporated in the Diem project.
The Diem project, launched in June 2019, came into the limelight as Facebook’s digital currency. It started with the name ‘Libra.’ The plan was to create a stablecoin, backed by fiat currencies, as a means of payment in the social network.
However, a barrage of criticisms assailed Libra’s launch. Economists and regulators raised concerns that Meta could exploit its power and influence to catalyze the circulation of Libra. The consequence of this, as predicted, would be weakened fiat currencies of unstable economies and privacy violations by Facebook.
Thus, the Diem project felt like an empire built in a day, with haste — and crumbled like a house of sand. The departure of the project’s leader, David Marcus, in November 2021, came after the first project, Libra, faced severe backlash and scrutiny.
After David Marcus, Morgan Beller and Kevin Weil — co-project managers — followed suit. These departures foregrounded the unstable fate of a digital currency touted as a stablecoin.
How the Journey Began
Following a momentous growth in cryptocurrency in 2019, resulting in a historic bull market, Facebook (Now Meta) announced its digital currency named Libra. The Facebook-sponsored Diem Association backed the cryptocurrency in June 2019.
The plan was to back Libra up with cash reserves, especially the US Dollars. This would qualify the coin as a stablecoin (like Tether), making it non-susceptible to the crypto market’s volatility.
However, this backing raised a deluge of criticisms from economists and regulators. Critics agitated against a global reserve backing of Libra, with concerns that it could destabilize currencies, including the US dollar.
Judging from Meta’s troubling precedents, from political to financial, formidable oppositions didn’t give the initiative a breath of fresh air. Several inhibitions descended on it, and it became fated to fail.
Concerns were around the notion that combining a stablecoin issuer, wallet provider, and a powerhouse commercial firm could lead to a market monopoly. The reality made major partners withdraw from the cause, including PayPal, Visa, Mastercard, eBay, and Stripe.
The wave of opposition made Meta rebrand the projects. Libra got rebranded to Diem and the Calibra wallet to Novi. On October 19, 2021, the project leader, David Marcus, the former president of PayPal and Vice President of Messaging Products at Facebook, tweeted:
‘Remittances are a critical way to achieve financial inclusion. Today, we’re rolling out a small pilot of the @Novi digital wallet app in two countries — the US and Guatemala. People can send and receive money instantly, securely, and with no fees.’
The attempt at rebranding was to distance the project from Facebook. However, it was unsuccessful.
Following the criticisms, David Marcus, Facebook’s crypto project leader, left the project in its cold infancy. Other co-project founders followed suit. This marked the beginning of the failure of the first two projects: the Libra coin and the Calibra digital wallet.
How the Journey Ended
On the 31st Jan 2022, Silvergate, a crypto-inclined corporation, announced its purchase of the intellectual property and assets of the Facebook-sponsored Diem association, with Diem CEO Stuart Levey citing the inhibitions of federal regulators as the reason for the sale.
Diem association, headquartered in Geneva, is an association that concerns itself with the creation of a global currency and is strongly funded by Meta. Silvergate’s acquisition marked a significant setback for Meta’s visionary cryptocurrency ambitions with Diem, turning it into a botched experiment.
Even the then CEO of Twitter, Jack Dorsey, took a subtle jab at Mark Zuckerberg upon the announcement of the sale by tweeting ‘Carpe Diem,’ the Latin expression which means ‘seize the day.’ But in Jack’s subtle jab, it could mean the seizure of Mark’s funded Diem and its dreams.
Now, Novi, the money transfer service project, the only surviving remnants of the Libra-Diem-Calibra-Novi project, is about to take the exit door and embrace extinction by September. On Novi’s website, the business made customers aware of the impending shutdown by stating that ‘The Novi pilot is ending soon’ and won’t be accessible after that time.
Users of Novi should take any remaining funds out of their accounts before the closing date, according to Meta. According to the organization, customers can either withdraw their remaining balance as cash or transfer their remaining balance to their bank account, as appropriate.
Novi touted to be the accessible channel for money transfers, is now becoming history in what appears to be a not-surprising event. Besides the earlier failures recorded by its creator company, Meta, the cryptocurrency market presently suffers from massive successive losses.
While Novi’s crash could be the result of the crypto sell-off, it could also be the result of Meta’s failure to live its cryptocurrency dream after a series of backlashes, opposition, and regulations.