Formerly known as Libra and then Diem, Facebook’s (NASD:FB) scaled-back entrance into the digital currency sector has announced the firm’s Novi digital wallet pilot program is rolling out – starting with Guatemala and the United States. The pilot is designed to confirm operational readiness as Facebook makes a huge move in the Fintech sector.
A long, long time ago, Facebook considered creating a global, non-sovereign currency based in Switzerland. The ill-fated Libra venture terrified policymakers and regulators around the world forcing Facebook to rethink its approach and thus the emergence of Novi – a digital wallet and Diem an erstwhile stablecoin. Facebook says its commitment to Diem has not changed but then actions speak louder than words.
Novi is partnering with Paxos and Coinbase. the leading US-based crypto marketplace, using the USDP (or Pax Dollar stablecoin) to allow people to send and receive value via its platform. Facebook says it expects to migrate Novi to the Diem network at some point in the future – pending regulatory approval. Novi will be interoperable with other digital wallets.
Facebook says it selected USDP (Paxos) because it has regulatory and consumer protection attributes. USDP reserves are fully backed by reserves and include dollars and “cash equivalents.”
If you are interested the Novi app is available now for iOS and for Android. Facebook says privacy and security “will always be top of mind.”
So is Novi relevant in the booming world of digital currencies and wallets? Absolutely. The millions of users on Facebook, Instagram, WhatsApp are ripe for a universal, streamlined payments system. Will Novi/Diem upset policymakers? Perhaps, but then some people will never accept the advent of digital currencies or simply hate Facebook whatever it does. That being said, the digital transfer of value has been around for years. What has changed is blockchain/DLT technology that can reduce friction and affiliated cost along with the fact there is a new generation of tech firms enabling payments and transfers – something most elected officials cannot comprehend.