Market potential of digital assets in developing countries: the case of Diem

Abstract

Libra, announced in June of 2019 by Facebook and later rebranded to Diem, has not been released yet. This paper investigates Diem’s possible effects on unbanked people and shows the most critical factors for targeting people without bank accounts. The report also elaborates on Diem’s market potential. To further investigate the existing research gap, relevant literature is examined, and technical characteristics are given. In addition to that, eight experts from the areas ‘cryptocurrencies’, ‘blockchain’, ‘fintech’, and ‘finance and banking’ are interviewed on the topic. The paper finds that Diem can achieve broad adoption in emerging markets, increase financial inclusion and facilitate remittances. However, this can only be achieved if the current hurdles of the project are overcome. In particular, important is an agreement with regulators. The paper also estimates how much revenue this project could generate and what problems and risks could arise regarding negative interest rates and data protection.