WhatsApp has added a cryptocurrency wallet called Novi that will allow users to send and receive money on the instant messaging app. There’s a ton of confusing history behind the move, so here’s a short breakdown. Facebook originally announced a cryptocurrency called Libra and a wallet called Calibra for it. After intense scrutiny, Libra plans were shelved and Diem rose from the ashes. Novi, on the other hand, was built on the foundation of Calibra and launched as a standalone wallet without any trace of the Diem cryptocurrency.
USDP (Pax Dollar) is a stablecoin and currently coverts at 1 US dollar to 1 USDP, meaning there's no loss or gain in value during conversion. USDP is issued by an entity called the Paxos Trust Company, is backed on a 1-to-1 basis by US dollars, and the New York State Department of Financial Services acts as the regulator. The Novi wallet itself is available to download as an app from the Google Play Store and App Store, although there is currently no user-facing functional cryptocurrency aspect to it. However, Facebook aims to eventually transition Novi to its own Diem coins, a cryptocurrency that uses the company’s own blockchain-based payments system.
Stephane Kasriel, the Novi lead at Meta, has today announced that Novi wallet integration is now available to a small number of users in the US, allowing them to send money through the messaging app as easily as sending a message. The premise is as simple as sending or receiving money using WhatsApp Pay, except there is no cryptocurrency side to WhatsApp Pay. Novi, as mentioned, will using USDP stablecoins. Of course, users first have to create a Novi account and then link it to WhatsApp in order to use the wallet. For those who trust Facebook with their information and want to try the new feature, it could prove useful.
Laying The Foundations Of A Shaky Crypto Future
It is super easy to transfer money using the Novi wallet in WhatsApp. The transfer happens instantly and there is no transaction or processing fee involved. What the sender transfers from their Novi wallet is exactly what the recipient gets deposited in their wallet. The exact same amount can later be transferred in the form of US dollars to a bank account. The company is providing 24/7 customer support in English and Spanish (the service is being tested in Guatemala too). Another key aspect is security. Novi says all financial data is encrypted for security and that's an important point considering users will be uploading some sensitive details, such as photo ID. Facebook doesn’t have a particularly good track record with handling user data, which means some WhatsApp users might need solid convincing before jumping on the Novi bandwagon.
Another promising aspect is fraud protection and the full refund policy. “If we determine a transaction is unauthorized, we will provide a full refund back to your Novi balance,” the Novi website says. It is unclear whether the amount sent by users to a bad actor is pulled back after the transfer, or if Novi is going to compensate for it at first. Lastly, linking the Novi wallet to one’s WhatsApp account won’t make any change to the messaging app’s privacy, especially the heavily-advertised end-to-end encryption. The latter is the best privacy protocol out there, but in Facebook’s case, there are scenarios where WhatsApp moderators can take a peek at conversations. As for the cryptocurrency future of WhatsApp and Novi, it will take some time and probably some regulatory approval as well.
Source: Stephen Kasriel/Twitter, Novi