WhatsApp Pilots Cryptocurrency Payments With Novi Wallet
WhatsApp, the popular instant messaging service used by more than two billion people, which announced testing its cryptocurrency payment function in the US starting with a limited number of people. With this new feature enabled, users can connect to the Novi wallet and send and receive cryptocurrency without leaving WhatsApp, just like sending a message or a photo. That said, currently Novi only works with the Pax Dollar (USDP), a stablecoin currency pegged to the US dollar issued by Paxos.
Meta (formerly Facebook) is the behind-the-scenes creator of the Novi wallet, which appears to be already gearing up for the metaverse by trial-running cryptocurrency payment through WhatsApp Messenger. According to information received so far, WhatsApp users can use its encrypted currency transfer function for free and instantly, with no limits on the number of payments sent, and no fees for keeping a balance in your Novi wallet nor incur any fees to withdraw to your bank account. This distinguishes it from mainstream cryptocurrency exchanges, which typically charge deposit or withdrawal fees, no doubt a way to attract customers in the early stages.
The tactic is similar to the paid promotion approach commonly used by Internet companies, except that as Novi absorbs the transfer fee, this makes it an utterly cost-free promotion method. Although there are no fees for using Novi to transfer, deposit, or withdraw money, users may be charged bank fees and taxes when performing certain key transactions. In terms of security, Novi has stated that it will refund any unauthorized transfers and that any personal information provided by users will be encrypted. Novi’s operations appear to be deliberately aimed taking market share from other digital wallets and cryptocurrency exchanges.
What does this mean for cryptocurrency investors?
The combination of the Novi wallet and the new WhatsApp functions marks yet another advancement in Meta’s cryptocurrency entry. Because the company encountered regulatory challenges when launching its stablecoin, Meta chose to collaborate with Paxos and Coinbase. Using Pax Dollar in the Novi wallet is a great way to help the country. Meta is still planning to launch its own Diem stablecoin in the future. As reported in The Verge Meta’s then head of Novi David Marcus said that the company is still committed to Diem when he announced the launch of the Novi pilot in October. “We intend to launch Novi with Diem once it receives regulatory approval,” Marcus tweeted.
BigONE believes that it is difficult to say what this news means for the entire cryptocurrency industry. Any effective method of increasing user usage is beneficial to a new product, not to mention that Novi users can save a lot of money when using encrypted currencies for international transfers. According to World Bank statistics, 6.3% of every dollar transferred to an international account is lost. Therefore, although it is unclear whether people are willing to convert USDP to the country’s legal currency if Novi can launch a free transfer function globally, it is inevitable that those users who need to use international transfer services regularly will benefit significantly.
Nonetheless, many long-term cryptocurrency holders believe that if a large company like Meta becomes involved in cryptocurrency payment and transfer functions, it will violate the core concept of blockchain decentralization. Blockchain technology can alter how people interact with social media platforms. A blockchain-based decentralized Internet can effectively protect users’ privacy while using decentralized functions. However, Meta’s decision to enter the cryptocurrency market has been heavily criticized from all sides, particularly if it ends up monetizing users’ data. Some investment firms believe that as larger companies enter the crypto field, many existing projects may struggle to survive. Simply put, several established companies are hoping to embrace blockchain technology and launch their own cryptocurrency. If they are successful, they may radically alter the current cryptocurrency industry.
With the implementation of regulatory policies in the crypto field in many countries and regions around the world, BigONE believes that more and more new rules related to stablecoins will be issued shortly. Will the new rules have an impact on WhatsApp’s Novi wallet? Right now, it is unclear how these stablecoins will evolve if the government requires them to adhere to new regulations and policies. In addition, the self-interest of governments in key markets such as India, in promoting their own central bank digital currency (CBDC) and cracking down on cryptocurrencies, may also have implications for the success of Novi.
