All About Facebook's Diem: A Comprehensive Guide to the First Federated Cryptocurrency

Facebook has recently announced his cryptocurrency called the Diem cryptocurrency which has been made open source and will be launched in the first half of 2020. Diem cryptocurrency is based on blockchain technology and is decentralized (distributed over the network). Facebook says that it’s a global currency and can be used by people all around the world. So, it doesn’t matter where do you leave you can take advantage of Diem from anywhere until and unless your country’s government bans it from being used.

The main difference between Diem cryptocurrency and Bitcoin cryptocurrency is that Diem is a federated cryptocurrency whereas Bitcoin is a public cryptocurrency. Public cryptocurrency simply means that it is not controlled by a particular entity whereas in federated cryptocurrency it is been controlled by some group of companies i.e here, in this case, the Diem Association which consists of companies like Facebook, Spotify, PayPal, Mastercard, Visa, etc.

The Diem Blockchain white paper: https://developers.diem.com/docs/technical-papers/the-diem-blockchain-paper/

What’s the difference between Cryptocurrency and Blockchain?

Before we move ahead lets first understanding what exactly the cryptocurrency and blockchain means.

Cryptocurrency and Blockchain they both are two different things. People usually get confused between them. Cryptocurrency is a virtual currency that can be transferred over the internet in a digital format. Cryptocurrency is based on blockchain technology. Blockchain is a kind of a cryptographic system that uses hashing techniques mainly SHA- 256 to make the transaction secure.

In Blockchain, there are ’n’ number of blocks and each block has its own hash key. And each block contains an SHA key of its previous block. Whenever we make even a small change in one block then its SHA key changes, as well as the keys of the remaining block. Each block is linked with another block forming a chain of blocks so-called Blockchain.

Every block in a blockchain system has 3 things data, previous block’s hash key, and its own hash key. A ledger is a database that keeps track of every transaction and is maintained by each block (node) in a Blockchain. And there is a Proof of Work (POW) which maintains a list of blocks in the blockchain. So, when someone tries to hack the blockchain system or try to make any changes within it then that particular block’s hash key changes.

Learning Resources:

• Blockchain Revolution

• Bitcoin and Cryptocurrency Technologies — A Comprehensive Introduction

What is Diem Association?

Diem Cryptocurrency is governed by Diem Association whose members include various businesses such as PayPal, Mastercard, Facebook, Spotify, etc. It’s an independent, non-profit membership organization, who is headquartered in Geneva, Switzerland. The goal of the Diem Association is to promote open source and manage the growth and stability of the Diem currency.

As of 2021, there were 28 members in the Diem Association.

The Move is a newly created programming language developed by Facebook specifically for the development of Diem Blockchain. It will be used to create custom transactions and smart contracts. This language has been developed keeping the safety of the system in mind.

To get a detailed understanding of the move programming language and how it works you can read the official white paper “ Move: A Language with Programmable Resources “.

For Developers

Since Facebook’s Diem cryptocurrency is open source which will eventually give developers an advantage to look into the source code of Diem and get the understanding of how it has been built. A developer can easily modify the code and make some changes to it and can learn about this technology in detail.

For more information about getting the Diem source code, you can check out the official Diem cryptocurrency developers page: https://developers.diem.com/docs/welcome-to-diem/

Before you can download the Diem source code you first have to download the following packages otherwise you will get an error.

• curl: sudo apt-get install curl

• cargo: sudo apt-get install cargo

• zlib: sudo apt-get install zlib1g-dev

Creating the first transaction in Diem Blockchain

Consider we want to transfer Diem coins from one account to another account. For this first, we will need a Diem Blockchain account that must have some Diem coins available in it then only we can transfer the Diem coins to another account. It’s the same as PayPal where we add money to our PayPal account first from our bank account before we make a transaction.

After you have downloaded the source code you can run the test network by running the following command.

./scripts/cli/start_cli_testnet.sh

Your prompt will now change to %diem which indicates that you are running the test network. Here you can create and execute your transactions.

Commands for executing a transaction:

For a detailed example of the Diem transaction and to learn more of such commands you can go to https://developers.diem.com/docs/tutorials/tutorial-my-first-transaction/

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