Newest cryptocurrency News

Mark Zuckerberg’s plans to launch a Facebook-backed cryptocurrency have hit a dead end.

The Diem Association has sold its assets to crypto bank Silvergate Capital for $182 million.

Silvergate’s CEO Alan Lane said the bank hopes to bring a stablecoin to market this year.

What is cryptocurrency and how does it work?

Cryptoassets or cryptocurrencies are “cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically”, according to HMRC’s definition.

This basically means a cryptocurrency is a digital asset that can be traded and used to pay for things. It’s not based on any actual asset, so there’s no intrinsic value; the value is determined by supply and demand – essentially, it’s only worth what a buyer will pay. This makes cryptocurrencies speculative, unpredictable and hard to accurately value.

Meta’s experiment with cryptocurrency, Diem, is shutting down.

The Diem Association, which runs the project, announced the sale of assets of the cryptocurrency venture to Slivergate Capital Corporation for $182million. Launched as Libra in 2019, the project quickly ran into opposition from policy-makers.

The association said it became clear from “dialogue with federal regulators” that the project could not move ahead.

“As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate,” Diem chief executive Stuart Levey wrote.

“The Diem Association is a separate organisation from Facebook, although its funding came from the firm.”

Facebook intended Diem to be a stablecoin which, as the name implies, is a type of cryptocurrency designed to be less of a financial rollercoaster, its value linked to less volatile assets such as national currencies or commodities.

Venture Causing Concern

“This is an alternative money,” Prof Ross Buckley at the University of New South Wales quoted on the BBC , in 2019, warning that it was unlikely to get the kind of easy treatment from regulators that an in-game currency might,

In a research paper, Prof Buckley and colleagues argued the currency was “the ultimate example of something that is highly likely to move from ‘too small to care’ to ‘too big to fail’ in a very short period of time”.

Regulators and politicians did indeed put Diem under the microscope.

Facebook’s former crypto head and Diem co-creator David Marcus said on Twitter the idea might fare better with a more “acceptable” promoter.

The Financial Times wrote that “regulator hostility put a stop to the Diem experiment”.

Facebook’s size, the newspaper argued, meant that Diem was a “challenge to the status quo” and it was surprising the firm had not foreseen the problems ahead.

But for Diem’s Stuart Levey, the technology it developed addressed many key concerns that have emerged as cryptocurrencies have taken off: “One of our highest priorities in designing the Diem Payment Network was building in controls to protect it against misuse by illicit actors.

“Among these controls was a prohibition on anonymous transactions, which pose both a sanctions and money-laundering risk”.

Mr Levey added: “We look forward to seeing the design choices – and the ideals – of Diem thrive.”

Stephane Kasriel, head of Novi – Meta’s digital wallet project – tweeted that the company “would continue to execute on our existing fintech plans to create economic opportunities and champion greater financial inclusion today, and as we look ahead to the metaverse”.

How many cryptocurrencies are there and what are they worth?

Depending on whether you include failed ones or not, there are around 5,000 to 7,000 cryptocurrencies in existence. Bitcoin is the largest cryptocurrency, with a market cap of around $600bn, followed by Ethereum. Other popular cryptocurrencies include XRP, Tether, and Litecoin. The top five cryptocurrencies currently account for more than 80% of the market.