Facebook is considering supporting non-forgeable tokens (NFTs) within its Novi digital wallet. The wallet, which has yet to launch, will coincide with the launch of Diem, a stable digital coin that Facebook initially created in 2019. A stablecoin is a digital coin backed by a fiat currency such as the US dollar. The launch of Facebook’s stablecoin Diem will provide cryptocurrency trading opportunities and a NFT-backed environment.
Who is developing the Novi digital wallet?
Facebook Finance, also known as F2, is the in-house group that developed the company’s Novi digital wallet. A digital wallet is a software service that allows you to pay and receive digital currency. It facilitates cryptocurrency transactions and stores a number of other items, such as gift cards and entertainment tickets. Digital wallets that handle cryptocurrency transactions directly generally focus on creating an address for customers to transfer and trade cryptocurrencies.
Facebook faces regulatory concerns
Digital wallets and the potential for cryptocurrency trading have drawn regulatory attention from the U.S. Congress.Facebook was able to pivot quickly in 2020 as pressure from Congress pushed the company to move away from its initial cryptocurrency Libra concept to a new stable coin called Diem.Production of Diem will be in partnership with Silvergate Capital Corp. bank to carry it out. Facebook has found a partner that has made the bank’s cryptocurrency company a core part of its business. Using a stablecoin backed by a fiat currency such as the U.S. dollar would avoid the volatility of other cryptocurrencies such as bitcoin and ethereum.The Diem network will be registered with the U.S. Treasury Department and its Financial Crimes Network.The Diem network will provide access to peer-to-peer payments and the ability to shop for goods and services on the Facebook platform, though the platform will also be open to other wallets. This type of wallet would be detrimental to cryptocurrency trading, as the coin is pegged to another fiat currency.
Since a dollar is worth a dollar in the United States, the risk of changes in the value of the dollar will be subject to inflation. This means that as the price of goods or services increases, Diem coin purchases will decrease, similar to the US dollar. There will also be changes for those who purchase Diem coins from outside the US. Individuals who use Euros to purchase Diem coins in US dollars will be affected by changes in the exchange rate between Euros and US dollars. Therefore, if you purchase 100 Euros worth of Diem coins in US dollars and the exchange rate moves in favor of the US dollar, the value of Diem coins purchased in Euros will increase.
As Facebook continues to prepare for the launch of its digital wallet and Diem, the company is facing a lot of criticism. According to sources, Ether founder Vitalik Buterin said that Facebook lacks trust. These comments aren’t the only jabs at Facebook’s foray into cryptocurrency trading, but sources hope to build an entire new internet on the Ether platform.
What is NFT?
Facebook wants to use its platform to facilitate the creation, purchase and sale of non-forgeable tokens. Non-forgeable tokens (NFT) are data or programming code stored on a digital ledger, called a blockchain. A blockchain is a ledger that records transactions and allows them to be authenticated by proof of work or proof of stake. Every transaction on the blockchain needs to be verified. One way to verify is for a miner to answer a puzzle that proves the transaction. That miner will then be rewarded with Ether on the Ether platform.
Another strategy is proof of stake. Instead of providing proof of work, miners can show that they have skin in the game. When this is successfully completed, a file can be created on the blockchain.NFTs can represent photos, videos, and other types of digital files. While copies of these NFTs are available for purchase, these digital files are tracked on the blockchain to provide proof of ownership separate from copyright.
The bottom line.
The result is that Facebook has created a digital wallet where you will be able to save digital coins and facilitate cryptocurrency transactions. In Facebook’s digital wallet, you’ll be able to hold Diem, their cryptocurrency that allows individuals to purchase goods and services on the Facebook platform. You’ll be able to buy and sell non-forgeable tokens (NFTs), digital files, and strings of programming code that live on the blockchain. An NFT is an original document that will be placed on the blockchain through the concept of proof of work or proof of stake.