Whatsapp will crypto payments novi wallet
WhatsApp has started allowing users in the United States to send and receive money via cryptocurrency within a chat, powered by Meta’s Novi digital wallet. The pilot is available only to a ’limited number’ of users and it does not affect end-to-end encryption on WhatsApp.
The Novi wallet launched as a pilot last October, enabling people to send and receive cryptocurrencies from inside of a chat using Pax Dollars (USDP), a stablecoin made by Paxos linked to the US dollar. Payments are instant and there’s no fee to make a transfer.
However, the crypto wallet project has a history of regulatory push-back and withering support. In fact, Facebook scaled back global rollout plans for Diem in 2019 following concerns that its technology could enable crime and harm users’ privacy.
Instead, Diem focuses on creating a stablecoin pegged to the US dollar to avoid the volatility that makes other cryptocurrencies challenging to use. That means a $1 Diem is always $1 in fiat currency and does not rely on the cryptocurrency exchanges that Facebook has partnered with.
Previously, Facebook was planning to launch its own cryptocurrency called Libra that would be backed by partners and associated with the social media platform. But that plan was put on hold by regulators who were worried it would give Facebook too much power over the world’s money system.
Now, the company is looking to replace Libra with a new crypto wallet called Novi that supports Pax Dollars. This will reportedly be a replacement for the original Libra wallet and support future Diem coins once they start rolling out.
To use Novi, users will need to have a phone that’s compatible with the Messenger and WhatsApp app and they will also need to have a bank account in the US or Guatemala. They will be able to store their funds in the digital wallet and withdraw them to their bank account or sell it directly on the platform.
The company is also partnering with Coinbase, a US-based cryptocurrency exchange, as its custody partner for the Novi wallet. This will ensure that all users’ funds are safe and will make it easier to use the service in the United States.
In a blog post, WhatsApp explained that the feature is designed to help people in the United States send money to their friends and family more easily and securely without affecting WhatsApp’s end-to-end encryption of personal messages. It’s only available for a limited number of users in the US right now, but will be expanded globally later this year.
Will Cathcart, Head of WhatsApp, announced the news on Twitter on Wednesday saying that “people use WhatsApp to coordinate sending money to their loved ones and now Novi will help them do that securely, instantly and with no fees.” He added: “Now you can even send money directly in your conversation with someone – no extra steps required.”
The company is currently testing the service in Guatemala and the US. But only a limited number of users will be able to access the service at the moment, so it’s a small pilot that isn’t likely to be widely adopted soon.