Diem and Novi are, respectively, one private money (private currency) which is not legal tender despite being anchored to an equivalent value in official currency which guarantees its convertibility, and a transfer system peer-to-peer of this private currency. Both were created by Facebook and run by his own company.
In less technical terms, this means that Facebook users (and even those who are not) they convert their legal tender money into a sort of voucher (Diem) that they can transfer through a bank-like system (Novi) and use only in those shops that accept them instead of institutional currencies. So, in short, the system works if the sender and recipient are conventionally willing to accept Diem transactions negotiated through Novi.
What does it mean to lose the legal tender of a currency
Convert your money into Diem (or any other private currency) means losing a fundamental characteristic: legal tender (or legal tender). If in Europe I want to pay something in euros, no person operating in a country that has adopted it can refuse to accept it. And if I have dollars, yen or pesos I can convert them and then use them. If I want to pay in Diem (and maybe I only have those) I have, however, only two options: hope that someone will accept them or change them into legal currency through the Facebook bank. It is clear, therefore, that if I convert euros into Diem I give my wealth to a private person and in return I get the promise that the corresponding voucher will be accepted by someone else.
The difference between public currencies and private currency
True, legal tender coins also work on assuming that someone is willing to accept them, but the fundamental difference between a state currency and one private currency it is in the different juridical nature.
The reasoning I developed on cryptocurrencies in an academic article in which I wrote: “From the functional point of view, the characteristics of money were modeled before the advent of electronic money or, better, of electronic funds transfer, on the physical object that expressed the exchange value. Therefore, traditionally it is believed that, to be such, a currency must have, at least, i requirements of: non-perishable (to allow the permanence of value), scarcity (to allow the exchange and, therefore, the circulation of money, but without lowering its value), divisibility (to allow the payment of differentiated prices). Abstractly, cryptocurrencies have the same properties: a Bitcoin, like a banknote or coin, is not consumed with use, it is scarce (there is a limit to the number of Bitcoins that can be produced through mining) and it is divisible into Satoshi. But the fact of possessing the functional characteristics of a currency does not imply that a cryptocurrency, regardless of the way it is called, can be recognized as such in a legal sense. To coin money and therefore to control the wealth of the associates / subjects / citizens, in fact, is a prerogative that the established power has always exercised, even if the complete theorization according to which this power is an exclusive attribute of state sovereignty matures in the sixteenth century, when in 1578 Jean Bodin wrote The Six Books of the Republic where he argues that “the power to legislate includes all the other rights and characteristics of sovereignty, so much so that it could be said that this is the only attribute of sovereignty itself since all the others are part of it how to give and take away value and weight to coins “.
Hence a substantial difference between Diem and cryptocurrencies. Even though with all their criticalities, as I have already written on this blog, “Until Bitcoin and its derivatives traded on separate circuits from those the financial system had at least one ideological function: to remove the monopoly on creation from the state of value and therefore at least partially realize the anarchic utopia. “
Because Diem and Novi can be a problem
Unlike cryptocurrencies that have remained out of financial speculation, however, Diem and Novi were originally born as tools that centralize wealth in the hands of a single private subject produced by each individual by returning the simple expectation that Diem will be accepted by other people. Even if the comparison is not very precise, it is like being paid for your work with coupons that can only be spent in (or through) the shop of the person who issued them.
It is also true that Diem, unlike a cryptocurrency, is guaranteed by the equivalent of a state’s gold reserves and therefore it has its own stability. However, the fact remains that Novi is the only point at which it is possible to convert Diem into legal tender currency.
Finally, these services take advantage of the pull effect of being Facebook marked and therefore they are candidates to occupy significant market shares. In this way they will reinforce the already dominant position that Facebook has on the life of each of us.
A more serious and structural problem
After the VPNs for Google users and the Private Relay for those of Apple, the announcement by the latter of the exercise of self-attribution of criminal prevention powers, Diem and Novi are the umpteenth declination of a theme that is as critical as it is neglected by governments and parliaments: the continuous expropriation of the prerogatives of the state carried out by Big Tech, by now they have become, to all intents and purposes, lords and masters of ever more extensive and important parts of our life.
The value that we create with our work, the safety and the right to decide what we can think, say, read, see and hear are in the hands of subjects other than the state. And we have nothing else left, as in the world of Matrix, which produce energy to allow the architect to exist, and then precipitate, once they become useless, in the drainage pipes. For Neo, this was the moment of liberation. For us, instead?
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