Facebook has been working to utilize the power of blockchain so that it can expand into the finance business. Despite not getting the expected success in its Libra project, Facebook continued to work on that front. The social media giant has now started rolling out its cryptocurrency wallet Novi in partnership with Coinbase. The launch is still in the testing phase and is available in the United States and Guatemala. A small number of users in these locations can sign up for the digital wallet in these locations. A small pilot of Novi comes over two years after the company first announced it. Users will be able to send and receive money instantly and securely.
The most important thing is that users will not have to pay any fees for this, according to a statement. To be specific, users will be able to deal in Pax Dollars or USDP – a stablecoin that has been created by Paxos and tied with USD. It was earlier addressed as Pax Dollar or Pax but the technology company recently rebranded it to USDP. For this, users need to download the Novi app and create an account. They can add money by using any payment method, say a debit card. Whenever a user adds USD, it will be converted to USDP. No fees will be charged for this.
A Novi user will be able to send USDP to other Novi users. Once again, Facebook is not going to charge anything for this. Users will most likely be not in a position to pay rent or in-store using Novi, therefore they will be allowed to withdraw their Novi balance at a cash location. Also, they would be able to transfer their balance to a bank account. But this is apparently just an intermediate step and the social media giant ultimately plans to replace USDP with Diem. Coinbase will be managing the funds for the pilot. In other words, all cryptocurrencies will be in the custody of Coinbase. Head of F2 (Facebook Financial) David Marcus said that the pilot program is meant to demonstrate a viable use of stablecoins for payment. “This will also let the company test core feature functions and operational capabilities in customer care and compliance,”
Marcus said. But all eyes on the fact that Facebook decided to launch Novi without its biggest feature, which is Deim cryptocurrency which is backed by Facebook. However, Marcus touched this point in his announcement and said that Novi is still committed to Diem. He went on to say that the Novi will be launched with Diem once it goes live. However, he did not mention any timeline for this. Facebook had huge plans with regards to the crypto project. So much so that that the social giant even created a consortium of companies called the Libra Association. The main aim of the association was to launch the Libra cryptocurrency.
But several central banks opposed Facebook as they feared that Libra could become a quasi-sovereign currency in some countries. Following this, the company last year had to announce that it has reduced ambitions and would focus on single-currency stablecoins. A stablecoin is kind of a crypto asset that has a fixed value that remains the same over time and does not fluctuate. For instance, Libra Association was planning to launch the LibraUSD that would always be worth one USD. A few months later, the association was rebranded as the Diem Association. Moreover, the company went on to rebrand its wallet project. Calibra was rebranded to Novi.
The social media giant unveiled cryptocurrency first in 2019. However, the crypto ecosystem has undergone a drastic change since then. Also, some stablecoins have become extremely popular. For example, the combined circulating supply of USD Coin and Tether is more than USD 100 billion. Will Deim be able to catch up with these stablecoins are something that would be interesting to see.
Carolyn is a technology graduate and loves to write about anything related to technology as well as writes in others sectors. Carolyn is a professional writer with over 7 years of experience. Initially starting off as a programmer, Carolyn decided to combine her knowledge about technology and writing and that’s how she joined Reporter Expert.