The permissioned blockchain-based stablecoin payment system called Diem (formerly called Libra) was put up by the American social media company Meta Platforms. A cryptocurrency-based private currency was also included in the plan. The launch was initially scheduled for 2020, however, only the basic experimental code was made public. The Diem Association would manage the project, currency, transactions, and encryption with businesses from various sectors as members. The project was formerly known as “Libra” before December 2020, but the name was changed to Diem as a result of legal disputes over the name and logo. Opposition from regulators, governments, and the public, citing concerns about sovereignty, stability, privacy, and antitrust, led to the project’s demise. In January 2022, the Diem Association previously the Libra Association shut down and sold the undertaking to Silvergate Bank. In January 2023, Silvergate wrote down their Diem stake.
Understanding Diem cryptocurrency
Diem cryptocurrency promises to create a stable, low-volatility digital currency. It is constructed on a blockchain-based network. It is less prone to price volatility than typical cryptocurrencies because it is backed by a reserve of real-world assets like government bonds and fiat money.
Mining Diem
Unlike Bitcoin and other proof-of-work cryptocurrencies, Diem does not use conventional mining techniques. Instead, it uses the DiemBFT, a Byzantine Fault Tolerance (BFT) consensus process, which depends on some validator nodes to agree on the transaction history.
Nodes of validators and consensus
Participants in the Diem network must fulfill certain requirements and stake a sizeable number of Diem coins as collateral to become validator nodes. These nodes are in charge of ensuring the integrity of the network and validating transactions. These coins are given as compensation to validators for their work.
Reward system
This digital currency’s reward scheme is based on a combination of transaction costs and fresh coin production. When validators process Diem transactions on the network, they are paid a transaction fee. Additionally, as a reward for maintaining the network’s performance and security, fresh coins are created and given to validators.
Profitability elements
The profitability of mining this cryptocurrency depends on several factors:
Diem coin value
Diem coin market value is a significant factor in influencing the profitability of mining. When validators receive their awards, higher coin prices result in higher earnings.
Transaction volume
A high volume of transactions on this digital currency network means that validators have more opportunities to process transactions and earn transaction fees.
Network difficulty
The rivalry between validators is impacted by the network’s difficulty level. Lower network difficulty levels can increase profitability while higher difficulty levels may diminish the likelihood of winning rewards.
Validator staking
The number of Diem coins that validators stake affects the likelihood that they will be chosen to validate transactions. Higher stakes increase the chance of selection, increasing the frequency of rewards.
Threats and challenges
Diem cryptocurrency mining has its own set of difficulties and dangers:
Centralization
Since only well-capitalized companies can afford to participate, the staking criteria to become a validator node may promote centralization and jeopardize decentralization ideals.
Regulatory concerns
Diem’s connection to Facebook and the scope of its possible adoption have alarmed regulators everywhere. Regulatory ambiguities could affect its general viability and acceptance.
Technology problems
Diem, like all cryptocurrencies, may be susceptible to network and security problems, which could have an impact on its stability and profitability.
In summary, this digital currency mining is currently quite unprofitable. The payment for mining a Diem block as of August 5, 2023, is 10 Diem, or roughly $0.84. Even with a piece of powerful mining equipment, it would take a long time to mine a block of it due to the difficulties of mining this material. How profitable mining is also heavily depends on the cost of power. Power costs can change contingent upon where you dwell, yet they are generally $0.10 each kilowatt-hour. Mining this digital currency could rapidly wind up costing you more in power than worth if you pick equipment that utilizes a ton of power. Overall, it is currently rather unprofitable to mine this cryptocurrency. Make sure you carefully balance the costs and likelihood of making a profit if you’re considering mining it.
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